We are a TPA firm working on a large Plan were an Audit is required. We do not have a SAS 70.

The auditor is telling me what since we do not have a SAS 70, they will have to do a full scope audit, as opposed to a limited scope audit.

The custodian and recordkeeper of the Plan has a SAS 70. The TPA does not.

Is a full scope audit required if the TPA does not have a SAS 70?

ABC Company has a 401a and a 403b. They would like to map participants who have previously been defaulted into a money market fund into the age appropriate Target fund.

Plan has 3 providers. Would they need to do this for all employees?

The plan has not chosen the TRFs as the QDIA. They only have it set up as the default. Would they be required to have all 3 provider lifecycle funds as QDIAs in order to get ther 404c protection when mapping the assets?

Al owns 100% of AlsCo LLC and 100k goes to his se tax

Al owns 50% of AlandBobs LLC and a loss of 10k goes to his se tax

That's a non-passive loss

AlsCo LLC has a profit sharing plan. Normally we would use 100k less 1/2 the SE tax X 20% to get the max contribution for Al

How do we treat the losses on his SE tax?

I've been studying sections 414(e) and 3121(w)(3) to determine if a seminary that sponsors a money purchase plan and a 403(b) plan is exempt from non-discrimination testing.

I've determined that the seminary's money purchase plan qualifies as a church plan and is exempt from nondiscrimination testing because section 414(e) applies.

However, it seems that the 403(b) plan uses the section 3121(w)(3) definition and that plan would be subject to nondiscrimination testing.

First, I'm wondering if my thought process is on target; and

Second, I'm wondering if anyone else has experience with a plan or plans maintained by a seminary.

I have recently taken over a plan that has whole life insurance as an asset. What value do I use for valuation purposes, Surrender or Cash Value? or something else?

The owner/sponsor wants to purchase the policy from the plan, how do you determine the value of the policy for the purpose of buying it out of the plan.

Where is this covered in the Code or Regs?

Thanks

XYZ Company has a 401a and a 403b. They would like to map participants who have previously been defaulted into a money market fund into the age appropriate Target fund.

Plan has 3 providers. Would they need to do this for all employees?

The plan has not chosen the TRFs as the QDIA. They only have it set up as the default. Would they be required to have all 3 provider lifecycle funds as QDIAs in order to get ther 404c protection when mapping the assets?

We have just found out that an accounting client, who has been operating a SIMPLE IRA since 1999, is being audited by the IRS with regards to the SIMPLE plan. We have also discovered that the number of employees earning more than $5000 for the years 1999 - 2007 are:

1999 - 2001 - under 100

2002 - 101

2003 - 93

2004 - 112

2005 - 101

2006 - 107

2007 - 111

I believe that using the 2-year grace period, the employer became an ineligible employer in 2007, although I am not sure how the employee count in 2002 might impact that.

I read an earlier post on such a problem, but it was dated some time ago and I was hopeful that someone could point me in the right direction as to how to correct this problem.

Thank you.

Kate Smith

We took over a plan last year, and I am reviewing their 2006 5500 in preparation to complete the 2007 5500.

I noticed that they included a Schedule A for Oxford Health Insurance, Inc. on the 2006 5500.

My question is should a separate 5500 have been done for the Welfare Benefit Plan, or can it be included on the 401(k) 5500?

What happened to the Q & A column on Davis Bacon Plans?

Any other good sites with info. re- these plans?

Calendar year plan. Company normally funds plan year contribution during the plan year, such that contribution is fully paid by Dec 31. For 1/1/08 AFTAP, I have the following:

--funding target: 10,000,000

--assets: 8,500,000

--carryover balance: 650,000

--assets less caryover: 7,850,000

--AFTAP: 78.5%

--burn carryover balance: 150,000

--adjuste4d AFTAP: 80%

--AFTAP certification in April 2008

Now in May 2008, we find the company paid an additional $100,000 contribution for the 2007 plan year. I think we are "allowed" to consider receivable 2007 contributions paid after 12/31/07 for the 1/1/08 AFTAP, but I don't think we have to. If we don't consider the receivable, the AFTAP is as shown above. If we do consider the receivable, the AFTAP is:

--funding target: 10,000,000

--assets: 8,600,000

--carryover balance: 750,000

--assets less caryover: 7,850,000

--AFTAP: 78.5%

--burn carryover balance: 150,000

--adjusted AFTAP: 80%

The 2007 Schedule B will show a credit balance of 750,000. If we don't change the 2008 AFTAP, is the remaining carryover balance still $500,000 or is it now $600,000. If $600,000, do we need to change the 2008 AFTAP. Or, is this addressed in the "new" 2008 Sch SB.

What do you do if the plan does not pass the ACP test? How does 401(M) come in?

Hi,

Client inherited a 403b from a parent.

The contract was annuitized previously. Client can choose:

1) Lump sum distribution

2) Continue annuity payments

The investment provider (TIAA) says that client cannot roll the lump sum to an inherited IRA.

Does this sound right? Where can I get the details?

Thank you

As you know, the 401(a)(17) limits how much total compensation can be taken into consideration regarding the 404 limit and the deduction for the employer's contribution to the retirement plan. It also limits how much compensation can be taken into consideration when one allocates a contribution to an individual.

So, for example, there exists a 401(a)(17) limit of $220,000. Somebody has compensation of $300,000. So let us say that there is an allocation step where you multiply 5.5% of a person's compensation by his or her total compensation and excess compensation added together. Let us say excess compensation is $300,000 minus the taxable wage base (around $80,000; this is just a hypothetical situation, and I do not feel up to looking up the actual figure). Well, that brings the figure to about $360,000 ($220,000+$140,000 [$220,000-$80,000].

So, in this first step, we are dealing with a figure of $360,000 that exceeds the 401(a)(17) limit of $220,000. Is this allowed? Must all figures entered into any step of an allocation process automatically get reduced to the 401(a)(17) limit (in this case, $220,000)? Can anyone produce guidance regarding this?

Employee enrolls for 401(k) plan last year. Deferrals start, then due to glitch, they stop for several pay periods. Company making QNEC for missed deferral contributions. Company also making related match. Is the related match a QNEC? EPCRS says it is if the employee was not "provided an opportunity to make elective deferrals". He was. But on the other hand he wasn't.

A plan has 4 participants, 2 HCEs, 2 NHCEs, as of 1-1-2008.

They want to amend by June 30, 2008 to provide full vesting for all participants in the plan 1-1-2008.

New entrants July 1, 2008 and thereafter are subject to the graded 20% schedule.

Any problems doing this?

An employer has a calendar year 125 plan with an FSA. The same employer is considering a mid-year health plan renewal that would result in higher co-pays and deductibles to employees. We know the current calendar year FSA elections cannot be adjusted in any way, but could the employer establish a 2nd cafeteria plan that would allow employees to elect a 2nd FSA, presumably to cover the potential additional financial exposure that the new health plan would require?

I have a company that acquired a new company during March 2007. I don't know if it was stock or asset sale. The plan is counting prior service for eligibility purposes. The acquired company has one employee earning over 100,000 in 2007. I don't have the 2006 compensations. In determining the HCE's for 2007, does the compensation from the acquired company count? If it does, can I test the acquired company separately? This person is deferring a high percentage and will make the adp/acp test fail if he is determined to be a HCE for 2007. The plan has 3 companies participating and is a controlled group.

Does anyone know a good software package that can handle new comparability? I don't need a full recordkeeping system, just a stand alone package, so I'm looking to stay away from Relius. Thanks all.

I came across a 401(k) Profit Sharing Plan with 3 eligibles (2 are the owners) where we calculated the recommended maximum contribution for 2006 (required 3% SHNEC, discretionary PS-integrated allocation & discretionary Match) and they deposited the staff's portion of the ER contribution by the due date of their tax returns but they did not deposit the owner's portion (they still have not done it). They took the full deduction on the company's tax returns. Corp is the plan sponsor, and each owner is a separate sole prop that co-sponsors the plan.

I believe the companys tax returns have to be amended. They can only take the deduction for what they put in timely, correct?

If they put in the remainder of the contribution due for the 2006 plan year now, can they can take the deduction in 2007? As long as total eligible comp for all employees (calculated SEI + W-2's) support the total deduction...

Any excise taxes to deal with on this? Any other issues I am forgetting?

Any input would be greatly appreciated.

Thanks!!

If an employee changes classification from regular FT to per diem status and is under age 59 1/2, does this initiate a qualified distribution whereby the participant would be eligible to distribute money from the vested portion of an employer contribution source?