We have a potential client if he is not an affiled service group.

He is a real estate broker who has Schedule C income.

He also owns about 30% of a real estate broker dealer ship.

About 90% of his Schedule C income is from deals run though the broker dealer he has ownership in.

To me this sounds like an ASG but I'm not sure because real-estate agents often fall under some strange employement relationship rules.

They clearly don't meet the controlled group ownership tests.

In the past it was permissable to restate a money purchase plan "into" a profit sharing plan. My questions are: (1) is that still allowed, and (2) what special issues need to be addressed? I know that "accured benefit" under the MPP must be provided for, and a "204(h) Notice" must be done. Alternatively, a merger and consolidation can be done, but a "direct conversion" by restatement would be cleaner, cheaper, and easier. Comments? Thanks!

My organization is looking at using a Professional Employer Organization to handle all of our benefits, payroll etc., and doing so would essentially make them the employer of record for payroll, tax and benefit purposes. We currently have a 403b and would offer the PEO's 401k if we opt to go this route. My question is, can our employees roll their 403b monies into the new 401k plan since we would no longer be the employer of record and the 401k plan would not be "ours"? Is that a distributable event? Thanks in advance!

An employer who terminates a 401(k) plan is not eligible to establish a new one for 12 months. Before the 12 months are over, employer A is acquired by employer B, creating a controlled group. Employer B would like to add employer A to its 401(k) plan as a participating employer. Must they wait until 12 months after the termination of employer A's plan to do that?

Would the answer change if employer A "froze" its plan rather than terminating it?

Related question: does freezing the plan trigger 100% vesting since a profit sharing plan without substantial and ongoing contributions is deemed to be terminated?

A sole proprietor passes away and now the spouse is trying to get the finances in order. A question came up about setting up a SEP based on the income from the business before he died. I'm pretty sure that can't be done, but just in case, I thought I would get some back-up from other practitioners. Thanks for your help.

A client of mine asked if the new $250,000 FDIC limit applies to Qualified Plans. I see where it applies to IRA's and I found a referance to covering "...Keogh plans, self-directed 401(k) plans..." Does that mean it applies to all qualified plans? including my one person DB Plan?

A severance agreement I'm reviewing provides for two possible payouts upon a separation from service. (It's a private company, no chance of ever going public.)

Payout #1 is payment of a severance amount -- annual pay X specified multiple -- within 30 days of separation from service. [intended to be a short term deferral.]

Payout #2 is payment of a higher severance amount -- annual pay X specified multiple X extra change in control multiplier -- within 30 days of separation from service AND the separation from service occurs 90 days prior to or within 180 days after a change in control. This period is the "protection period."

Does the part of the protection period covering the 90 days prior to a change in control work?

I don't have an issue with the part covering the 180 days after a change in control -- it's still a short-term deferral because the payment trigger is the separation from service.

But I cannot get my hands around the pre-change in control protection period.

Is that part of the protection period an impermissible "toggle"? 1.409A-3©(1) provides for limited period (2 yrs. max) toggle FOLLOWING a change in control.

Does the pre-change in control protection period destroy the short-term deferral. Example: Executive separates from service on December 30, 2009. No change in control at that time. He's paid the regular severance on January 29, 2010. But, then there's a change in control on March 19, 2010. So, the company then pays him an additional severance amount using the change in control multiplier formula.

I am a trustee on a health plan. I am aware of the DOL's position that service providers' fees must be reasonable. We have an attorney who charges a retainer. This retainer is IN ADDITION to any work done at an hourly rate. I'm not entirely sure what the retainer is for - just to keep him on the ready and answer any simple questions, I guess. Is this arrangement legitimate?

Participant has a loan for a 5-year period and has made the required payments. They now want to renegotiate the loan interest rate to see about lowering their payments and continue to repay at the same frequency and within the original 5-year period. Are there any pitfalls in doing this? Would this constitute a new loan and if yes, would there be any need to take into consideration the outstanding balance of the existing loan (E Outline Book indicates no need).

Is this as simple as just using the new interest rate on the remaining balance for the remainder of the 5-year period?

Some of my retirement is invested in Washington Mutual (which we all know is going down the river!)....Should I dump it now and salvage what little I can and reinvest or ride it out? What are the tax implications of the loss that I will incur?

Thanks for any advise.

Rich

Montana School District has draft 403(b) plan document ready to adopt this summer - based on IRS model.

Vendors are insisting that School District adopt the vendors' 403(b) plan document (not just info-sharing/services agreement and annuity contracts). This could mean 4-5 different plan documents;

Any thoughts or experiences? Has anyone been "forced" onto this situation?

MT law does not require acceptance of particular number of vendors.

I have read and re-read the regulations and notice, but simply do not feel comfortable that I could have this easy of an out.

DB plan that does not allow for in-service distributions has an NRA of the earlier of age 65 or the attainment of a "Rule of 85" -- total years and service equal to 85. The employer DOES NOT want to give up the earlier retirement age, but is not confident it can make the "reasonable to the industry" argument (and not interested in paying for a letter ruling or determination letter). Is there any reason why we can't satisfy the new rules on NRA by simply amending the plan to have NRA at age 65 (or anything over the age of 62) and ERA governed by the rule of 85 with no reduction in benefit and/or the early retirement benefit simply be the present value of what the person would have received, as a lump sum, at 65 (the final NRA)?

This seems too easy....

100% Owner of Company/Trustee of 401(k) Plan is also one of several trustees at an unrelated, publicly traded bank. He has asked if anything prevents him from purchasing bank stock (of which he is on the trustee board) in the 401(k) Plan. I've been looking at Party in Interest rules and prohibited transactions and can't find where this is a problem for the 401(k) plan. He is not an employee of the bank, he does not receive any direct compensation other than trustees fees that are unrelated to the number of shares bought or sold. Has anyone run into this before? It seems like it should be a problem but I'm not finding why it would be.

We used to be able to do this.

1.403(b)-5(b)(2) appears to restrict this. "universal availability".

Thoughts? Anyone have such a plan? popular in health care...

(also posted in 403(b) forumn)

Thanks

A 79 year old Sole Proprietor is taking a distribution from a plan in the form of real estate. It is my understanding that 20% withholding is required on the value of the real estate less the amount of the RMD for the year.

Does the withholding need to come from the plan, or can he use personal funds outside the plan to pay the withholding? If the withholding payment comes from the plan, this will require a larger total taxable distribution, which we would like to avoid.

I know this is probably an easy question: Does a davis bacon plan, sponsored by a government entity, need to file 5500s each year? I think the answer has to be yes.

Thanks

I see dozens of QDRO each year to settle marital property divisions. I have never seen one to pay child support, although it should be possible under the QDRO regs. Why not? Is there a legal impediment?

Your thoughts would be appreciated:

Employer, which is a C Corp, desires to offer an HDHP (and fund HSAs) for shareholder-employees only while providing a low deductible indemnity plan for all other full-time employees who are non-HCEs. In addition, the employer will provide an HRA to all full-time employees (shareholder-employees and all others who have employer health care coverage). The HRA will have a maximum dollar reimbursement amount for all participants but will be a limited purpose and post-deductible HRA for shareholder-employees but will provide for full reimbursement under Section 213(d) for all other employees.

Under the HSA rules (e.g. Notice 2004-50, Q&A 1 and Reg. 54.4980G-3 (Q&A 9, Example (2)), is the employer required to offer the HDHP and HSA to all full-time employees or can it consider only those who have been offered the HDHP as eligible employees for purposes of the comparability rules?

Is there any risk of violating the discrimination requirements under Section 105(h)?

A client of mine has an ESOP that is making annual payments to a number of terminated participants. They send out a mailing each year advising the participant of the upcoming payment, and asking if it should be paid in cash or rolled over.

The question is this - if the participant does not respond to the mailing, and the payment amount is over $1000 (the plan has not amended for automatic rollover) can they pay that to the participant less the 20% tax?

A participant in a cafeteria plan enrolls in the dependent care FSA to provide after-school supervision to her child who is under age 13. During the year, the judge awards custody of the child to the ex-spouse, who lives in a different state (shich is not contiguous to the participant's state). Is this a change in status sufficient to support the participant's desire to prospectively revoke deductions for the remainder of the year?