I have a participant whose termination date is 12/28/06. That is the last day he worked. The payroll ending date for his last paycheck was 1/5/07. SO he has compensation and deferrals on his 2006 W2.

Should he be in the 2007 test? He did not work one single day in '07, and the pay he received was for work in 2006.

I work for a company with a 40% ESOP ownership. The current ESOP valuation was influenced by a trustee(CEO) to lower the value. The CEO felt the value was high and the firm doing the valuation lowered the price. It appears the valuation was improperly influenced because the audit firm had already issued a preliminary value and further conversations caused the value to be reduced. In all of the previous years, the value had never been reduced after the preliminary value was issued. BTW-the trustee is no ESOP expert and this appears to impact the independent requirement on the part of the audit firm.

Is this legal?

Thoughts PLEASE.

I work for a company with a 40% ESOP ownership. The current ESOP valuation was influenced by a trustee(CEO) to lower the value. The CEO felt the value was high and the firm doing the valuation lowered the price. It appears the valuation was improperly influenced because the audit firm had already issued a preliminary value and further conversations caused the value to be reduced. In all of the previous years, the value had never been reduced after the preliminary value was issued. BTW-the trustee is no ESOP expert and this appears to impact the independent requirement on the part of the audit firm. Is this legal?

Thoughts PLEASE.

We recently filed 5558 forms for two clients. The forms were sent USPS, with a return receipt attached. Due to an error in calculating the postage, the package was returned to us, postage due. The timing of the return has me a little perturbed. The package was originally posted on 7/11. It was not returned to us until 8/8. We are resending the forms today.

What are the chances that these forms will be considered timely filed? There are now two sets of machine printed postage on the package, the first of which is dated 7/11. My understanding is that the delay in the package being returned would have been caused by the IRS' delay in refusing it. I realize we made the error in applying postage, but this long delay in getting the package back seems unreasonable.

More importantly, should I wait until these clients get late filing notices before pursuing a course of letter writing with the IRS? Or perhaps would it me more appropriate to include such a letter with the 5500 when it is actually filed?

Thanks for any input.

So if an employer is the plan administrator, how do they avoid Hippa compliance issues?

Please help me untwist my mind!

The 409A(a)(1)(B) heading says "Interest and additional tax payable with respect to previously deferred compensation."

The detailed rule in 409A(a)(1)(B)(i) says "If compensation is required to included in gross income under subparagraph (A) . . . the tax imposed . . . shall be increased by . . . (II) an amount equal to 20 percent of the compensation which is required to be included in gross income."

So, the heading to 409A(a)(1)(B) refers to "previously deferred compensation," but the detailed rule makes no such reference. And, I can find no such reference in the committee reports (unlike the committee reports' discussion on the interest rule). In fact, the conference committee report states "The amount required to be included in income is also subject to a 20-percent additional tax."

My question is whether the 20% additional tax applies to amounts which arise under the plan for the current year and are included in gross income for the current year, and thus are not "previously deferred compensation."

Thanks,

Ken Davis

Univ. of South Alabama

We have a plan that didn't submit census data to us for 2006, so we did the 5500 with the info we had on the record keeping system. We have since got the information and found that our participant count changed by about 5 or 6 for questions 6 & 7 on Form 5500.

Changing the numbers would not be the difference between filing a schedule I or H. So would you amend the 5500 for a few people? Especially since one year's numbers have no bearing on the next or the filing type?

The original proposed PPA technical correction bill had provisions for a mandatory non-spousal rollover option in qualified plans. However, that bill was never passed.

Has any subsequent legislation been passed which requires plans to include mandatory non-spousal rollover option?

a safe harbor 401k currently has the following employer funding: 3% safe harbor qnec, 3% employer p.s. and an employer match of 100% up to the first 3% of deferrals. I understand a Safe Harbor utilizing the basic safe harbor match formula could be enhanced, yet could not incorporate a regular match as well, but could they fund lets say a 5% qnec? This is a unique plan with unique features(i.e. employer funding, monthly entry, etc). We have tried to simplify matters, but this is a group of architects and simplification is not in their vocabulary.

Interesting. the new Corbel document, for Normal Retirement Age includes the following "However, solely for purposes of nondiscrimination testing... the employer may deem the social security retirement age as the Normal Retirement Age"

so, that implies (at least with those documents) you can now use SSRA as testing age. It is my understanding that you would still have to do a BRF on the different SSRA ages.

Accountant wants to dissolve a p.c. but the pension plan is still in existence. There are some issues preventing it from being terminated.

Is there a recent change that allows such pension trusts without sponsors?

An employer's fiscal years end 3/31. The employer has a cafeteria plan with medical FSAs, and the plan years end 3/31.

A local "co-op" of optometrists are offering a 'vision card' to employers that amounts to a flex account, but may only be used at one of the co-op optometrists. The co-op has an IT system that will track usage of the vision card, keep the supporting documentation, produce statements for the employee and employer, and invoice the employer periodically. All the employer needs to do is pass out SPDs and sign up sheets.

This employer wants to add these vision card FSAs in addition to the general use medical FSAs in its cafeteria plan, as vision insurance is being dropped. The challenge is that the co-op only offers these vision card FSAs on a calendar year basis. Each March employees would elect their new medical FSAs for the upcoming plan year to begin April 1, but then they'd also be able to elect each December for the vision card FSA for the upcoming calendar year.

May the employer adopt the vision card FSAs as a second cafeteria plan, along side the PYE 3/31 cafeteria plan with a general medical FSA without violating the rules against mid-year election changes? If the two programs would in essence be considered just one, then I think the answer is no. If the two cafeteria plans would be treated distinctly as two, then I suppose that this might work.

A participant in a calendar year plan terminates on 12/31/2007. Their final paycheck is paid on 1/15/2008 and includes only pay for hours worked in final pay period. The compensation will be shown on the participant's 2008 W-2. (The compensation was not used as part of the 2007 plan compensation.)

Should this participant be included in the 2008 ADP test since they had plan compensation paid in 2008? Or are they not included in the 2008 ADP test since they are not actually an employee in 2008?

Thanks.

Employer wants to set up deferred comp agreement where it agrees to pay 10% of company's fair market value to employee on the first of certain specified events in the future.

Fmv is to be determined by company's cpa or appraiser and must be agreed to by the employee or an arbitration process will be initiated.

Would that be a 'determinable amount' under 1.409-3(i)?

So Company A has a Safe Harbor 401k plan, they match 1/2 of the first 8 % of your contributions. The acquiring company, company B has a traditional 401k plan..

1. Can a Safe Harbor plan be converted to a traditional 401k plan?

2. Will company B's employees be grandfathered into their current plan?

3. What else can happen or what would normally happen in this situation??

Client has a safe harbor 401(k) plan. TPA misses that detail, prepares an ADP/ACP and instructs client to take refunds due to a failed test. Client processes the refunds as instructed. TPA later discovers its error and instructs client to deposit the refunds back to the plan. Client has spent the cash and refuses.

How do you fix this mess?

New plan with an initial effective date of 10/1/07. Plan has 3% SHNEC with additional ps. Using accrued balances, plan is top heavy for 12/31/07.

Document says "For a Participant's initial year of participation, Compensation shall be recognized for the full calendar year."

1 - Is the comp limit pro-rated to $56,250 because of the short plan year?

2 - Are the top heavy minimum and safe harbor contributions based on compensation earned between 10/1/07 & 12/31/07, or is it the full 12 month period ending 12/31/07.

My question is does any one have any type of signoff exhibit/language they they send with completed tests that requests that the client review the data and/or the tests and/or the plan specs and sign off and send back for their records?

This question concerns a plan that is covered under Title I of ERISA but is not qualified under 401(a). Prior to 2008 a funding deficiency existed but funding waivers were never requested since the plan is not subject to the penalties applied to underfunded 401(a) qualified plans. The question is, does the funding deficiency still exist at 1/1/2008, or does it go away along with the FSA? PPA seems to have only contemplated credit balances in this situation, not funding deficiencies. Thanks for any thoughts.

Assume you have a controlled group of corporations with each corporation sponsoring their own 401(k) plan. From what I understand, if each of those 401(k) plans passes 410(b) using the entire controlled group population you can run ADP/ACP tests for each plan separately without taking the other plans into account. Is that exception limited to ADP/ACP? What about 401(a)(4) benefits, rights and features? Do you need to review the benefits, rights and features being offered under the different plans if they each pass 410(b)?