An employee left 12 years ago after participating in a profit sharing plan for 15 years.

At termination of his employment, the employee was a vested participant and took a full dist'n.

Now, the employee has been rehired.

The rule of parity applies to participants who are not vested in their accounts.

In this case, because the participant had been vested, is he eligible to begin participating immediately?

If he does being participating immediately, is he considered a participant who already has 15 years of service for profit sharing calculations?

Thank you

Plan has transferred most account from brokerage firm A to firm B. One account for a terminated participant lags behind; we track down the participant and tell firm A to transfer the funds to firm B.

Firm A, for reasons that I cannot begin to fathom (I guess total incompetence is a "reason"), pays everything to the participant, who cashes the check.

The participant is entitled to a distribution, and forms have already been completed electing a cash distribution, so at least we have the paperwork needed. And I think we have convinced the participant to return the unvested money (minor detail!).

As to the withholding...I don't think there are any real consequences to not doing it. I think the participant has some kind of legal claim to force the plan to pony up the amount not withheld, but then the plan would have a legal claim to recover the same amount, so it's a wash. I don't think the IRS will actually do anything about it; the 1099-R will be filed showing what actually happened (taxable distribution with no withholding).

Has anyone had experience with this? Is there any point in putting the brokerage firm on notice that if there are any consequences, the plan intends to hold them liable?

Individual has an IRA and is also a participant in his company's 401(k). Individual is age 74 and is still actively employed by his company. Individual has been taking the MRD from his IRA but now wants to roll over the remainder of his IRA (minus the MRD for this year) to his company's 401(k) to avoid MRDs from his IRA in the future.

Any problems? Couldn't find anything prohibiting this but seems too easy to avoid future MRDs from the IRA.

We have a client that wants to exclude a certain type of reimbursement from the definition of compensation for allocation purposes. The reimbursement consists of funds paid to an employee (through payroll) that affirmatively elects out of receiving the company's health insurance that would have otherwise been paid by the employer towards the insurance premium. At this point there is only one NHCE that would fall into this category of receiving the reimbursement.

The plan is a 401(k) PSP on a prototype document, is top-heavy, and currently allocates the 3% safe harbor non-elective contribution each year. They generally do not do a profit sharing contribution (if they do it is allocated pro-rata).

Any thoughts on this?

Thanks!

I have a client that has a safe harbor 401(k). The are making the 3% nonelective contribution to NHCEs. Their intent is to not make this contribution to any of the owners of the company. However, they have 3 employees that are HCE and not owners. They would like to make the safe harbor contribution to NHCEs and these 3 HCEs. Can they do this? If so, do you have any authority? By the way, this is for 2007.

If we cannot use DFVCP what can one do?2004-2006 nevr filed in takeover case

I submit my post to this board because the H&W board doesn't appear too active.

Say a husband and wife own a company and implement a welfare benefit plan.

The actuarial level reserve to pre fund their post retirement medical benefit of 100k each is 15k each for a total of 30k.

Say they contribute and deduct 20k and the plan earns 4k in investment income leaving 24k in plan at year-end.

Since the 24k is less than the 419 deduction limit of 30k does that mean none of the income is subject to taxation?

Or is the 4k income subject to taxation?

Thanks.

I am soon starting a 5500 clean-up project would like to receive suggestions on an approach from anyone who may have experience with a similar problem.

A plan was a Profit Sharing plan through 2005. The employer then set-up a new 401(k) plan for 2006. The 401(k) has assumedly been administered correctly (albeit independently) since 2006 including filing of Form 5500 but only on the 401(k) plan assets.

No further administration (including 5500 filing) has been completed on the original Profit Sharing Plan.

Is it advisable to treat this as an amendment of the PS plan at the time of the establishment of the 401(k) plan and then deal with this in terms of a need to file amended form 5500's that would now include the assets of the PS plan.

If this is not advisable then is it true that the proper approach is to utilize the Delinquent Filer program for the PS plan 5500's?

Any help is appreciated.

Thank you very much.

A participant was deferring at 5%, and quit working for the employer.

He is rehired 3 years later, and somehow, the 5% starts right back up again.

He was rehired in 2007, and quit in August of 2008, and is now saying that he never wanted the deferrals, and wants the money back.

Is there any basis to return as a mistake in fact, since he never did actually elect to have these deferrals taken?

I have recently been assigned a Non qualified deferred compensation plan and I wanted to seek some advice as this is my first NQDC plan.

I have been notified by my client that their payroll company does not understand how to calculate the FICA tax on contributions being made to the plan on the participants behalf. They have a handful of participants that became 100% vested for 2007 and as such the participant contributions made to the plan are subject to FICA and FUTA. It is my understanding that the payroll provider will need to calculate the tax which should be reported in the last month (or quarter) of the following plan year. So, the required tax for the 2007 plan year will need to be reported in December 2008. This pretty much wraps up the extent of kwowledge that I have on this and the partner at my firm is unavialble until Monday. I am to have a conference call with the client and the payroll provider this afternoon and I am not sure if there is more information that I will need to provide. Has anyone had this situaton where a payroll provider was unclear on how to calculate the tax? Do you know of some way I can better communicate what needs to be done for the client and the payroll provider? The worst thing is that I don't even know what I don't know!!!! Any help anyone could provide would be awesome!

Has anyone heard of an option that starting in 2010, plan participants would be able to convert all or part of their 401(k) balances into the Roth portion of their plans. I've been told it will be most beneficial for participants, who have saved enough money to cover the additional taxes that will be generated by this transfer. But I don't remember seeing anything about this.

In June, 2007, my company converted from a C-corp to an S-corp which changed our tax year from a fiscal to a calendar year. We failed, however, to amend our Safe Harbor 401K plan to reflect the change in the plan year. Can anyone shed some light on the best method to retroactively amend our plan document (SCP or VCP)? Thanks in advance for your help.

What the top 5 issues that the US faces in the 21st century? I selected 5 because it's a lot harder to settle on 5 than on 10. There will no doubt be major disagreement with visceral responses. Each has his/her own list and there are no right or wrong answers. Here are my top 5. Let's hear it from the peanut gallery.

1. National Security

2. Population control

3. Financial aid to elderly

4. Public high school and college education

5. Cost of criminal juctice system

Can someone tell me if the son of an owner is hired in July and will not be eligible for the plan until he has a year of service. Is he still considered HC for 2008?

Matt Damon recently joined the actuarial community when he said - "You do the actuary tables, there's a one out of three chance, if not more, that McCain doesn't survive his first term, and it'll be President Palin. It's like a really bad Disney movie, "The Hockey Mom.' Oh, I'm just a hockey mom from Alaska, and she's president. "She's facing down Vladimir Putin and using the folksy stuff she learned at the hockey rink. It's absurd."

If McCain is 72, I calculated about a 10% chance of death during next 4 years, but Damon was really good in Good Will Hunting.

Husband and wife owners of S-Corp failed to deposit their own deferrals from their final paycheck in 2007. The funds were withheld from their paychecks and reported on their W-2s, they simply neglected to send them to the investment. Since it is obviously well past the deposit deadline, what is the correction for this?

Thank you.

Kate Smith

Do you see any problem in writing an eligibility rule as follows?

"Non-Shareholder Physicians are eligible immediately; all others must complete one Year of Service."?

The physicians will likely be HCEs within a year or two; but since they can't be HCEs in year one, it seems to be a viable approach. Any disagreements??

Hey Reader(s),

I am fairly new in the benefits world but I have come into my career knowing a little bit more about 401k plans vs. 403b plans. I have now run into this situation: 403b plan that we "had", was "frozen" and the assets were rolled into a 401K plan. We have been filing a 5500 for the 401k but not the 403b.

Now we have "people" telling us that we need/needed to file a 5500 for the 403B. Does that make sense?

Thanks

A plan's determination period begins July 1st. The COBRA premiums increased as of that date. However, due to a billing error, the July COBRA premium billing that was sent out included the lesser premium rates from the previous determination period. The error was fixed with the August billing. However, the employer would like to collect the July underpayment amount from the qualified beneficiaries, and terminate coverage (after satisfying all requirements for doing so) if a qualified beneficiary refuses to pay the difference between the lesser amount billed in July and the actual COBRA premium amount that should have been billed.

Is this permissible?

Say a one person/owner has a company. Actually it is a one member LLC.

He wants to contribute qualfied direct costs and annual additions to the plan.

The post retirement medical benefit is an account value of 100k at retirement to be used for medical expenses.

My thought is that as long as the contributions are within the 419 limits they are deductible.

And any investment income in the fund is taxable.

Are my above comments correect?

Thanks.