I need help and fast. I have to choose whether or not to stay in my 401a plan through my employer and Great West Retirement System or switch to the TRS system of WV. In my TDC plan I pay 4.5% and my empoyer pays 7.5%. If I switch to TRS I will start paying 6%. It seems like in the TDC the money is mine, but maybe more risky. When I looked at the estimated graphs based on 7% return, my monthly income seems to be about the same in both. Is this a conservative return? I'm afraid that the state will cut the percentage in the formula they are using by the time I retire. I have about 20+ years before I retire. I have grossed about 35 ,000 over 8 years in the TDC. Which system is better for me and my family. I'm married with 2 children. My husbands retirement is a 401K.

What is the procedure to transfer the contribution made to Sep-IRA in 2008 (by ignorance) to a solo-401K which established last month (2008)? So far the total contribution may be more than the limit allowed by SEP alone, but definitely less than the limit of Solo-401K.

If I can not move the money around, will rollover the Sep-IRA account to solo-401k solve the problem? Or what other solutions available?

I tired to find a local competent tax adviser, but all the people I talked to, seems have no knowledge about this.

Thank you very much for the help.

PPA provides a special rule that extends 404© protection during “fund mapping” as long as the following three requirements are followed:

1. Notices provided at least 30 days before.

2. The participant or beneficiary does not provide affirmative investment instruction before the effective date of the change.

3. Immediately before the effective date of the change, the participant’s or beneficiary’s account was invested in accordance with elections made by the participant or beneficiary.

So, if I am reading this correctly, you have to allow the participant to make investment elections. Correct???

Most times if we take over a plan the participant’s account is mapped and they are allowed to change elections after the initial mapping.

How do others handle take over plan??

If an employee terminates employment with another employer and is eligible for COBRA under the employer's FSA and health plan, is the individual eligible for his new employer's HSA as of the first of the next month? For example, Employee A terminates employment with Employer X on 5/01/08. Employee A was participating in X's FSA and health plan and receives the cobra paperwork on 5/15/08 (and has 60 days to complete it). Is employee A eligible for HSA coverage under her new employer's plan (Employer Y) on 6/1/08? Does eligibility matter (or just participation)? If Employee A indicates she is not going to elect COBRA, is that enough?

I am in the process of preparing a cash balance plan proposal to be implemented for 2009.

The plan will include many doctors who will want to have large credits to the plan.

For a first year is it feasible (if the accrued benefit is equal to the account balance) for the first year contribution requirement to be equal to the cash balance credit? I am planning on not having the account receive interest credit until year 2.

Under pre PPA I believe it was possible if the actuarial interest assumption was set equal to the interest rate credit.

I need to get this assignment done in a couple of days, thus the reason why I cannot do all the research on my own in this short a period and must work with Benefits link.

Thank you.

I understand the definition of Change in Control in 409A. And I understand the various Change in Control events described in 409A. Applying a definition within a plan document that is less restrictive would certainly be contrary to 409A. However, can the plan document establish a Change in Control definition that is more restrictive? For example, could a Change in Control definition be established that provides for the 409A definition PLUS a change in management? Would such a definition comply with 409A and allow for a distribution only at the time that both criteria are met?

We have been having the most difficult time with rolling over money for participants that do not respond to their termination packets.

It seems that every financial institution wants the participant's signature on their paperwork for compliance reasons. If we could get the participants signature, it would be on the termination paperwork...they won't respond.

...and doesn't this put the plan in jeopardy since these amounts are not being rolled over?

What do you do?

How does your company handle the vesting of restricted stock for employees who go on a paid or unpaid leave of absence? Does vesting continue while they are on a paid or unpaid LOA?

I have a plan in which an HCE had a $15,500 deferral. The plan failed, and he received a $5,500 refund.

How much can his PS be for 2007? Is it $29,500 (using the $15,500 of deferrals) or is it $35,000 since there were a "net" $10,000 in deferrals?

(Assuming all the other tests will pass)

Calendar year straight PS plan.

Employer went from Sole Proprietor to a professional S Corp effective April 1, 2008

Also added safe harbor 401(k) provision effective May 1, 2008

Plan is to remain a calendar year plan.

Do we need to file two 5500 forms for 2008? One for the sole proprietor, and one for the S Corp because of the change in ID #? Or can we simply use that section on the 5500 form where it asks if there has been any changes to the name and/or EIN of the plan sponsor?

The plan is NOT terminating, it's the same plan, and same sponsor: Only the entity and ID changed as well as adding the 401(k) provision.

I am not very familiar w/ the ins and outs of ESOPs but it looks like (against my recommendation) our firm will begin administering a leveredged ESOP. I have a question regarding other assets in the ESOP. The question sounds very strange to me because I know how it would work in a non ESOP 401(a) plan but I'm wondering if there is something different for an ESOP. The employer established a savings account to be used for making distributions. The account is in the name of the ESOP. The prior TPA has not accounted for this asset on Form 5500 as a plan asset (I don't think that is correct). My question is this. Don't the contributions to this savings account have to be counted as employer contributions and be allocated to participants? Is there some ESOP provision that would allow for this type of account to exist by the ER simply depositing money into the account and not having to allocate that money?

I was asked to look at a plan(s) and came across some unique situations and was wondering what FLAGS these concerns would raise:

1) The existing "main" plan is id 002 (Profit Sharing only - trustee directed). Old plan 001 was a MPP back in 2002 (MPP source is segregated properly). A payroll company opened a 401k plan for the NHCE's in 2006 under 001. Is 001 OK? Does this need to be changed to 003? The TPA of plan 002 does not know anything about 001 being opened... either did their accounants...

2) Plan 002 is using an EIN from a long time ago (est 1998) before it switched/merged to an LLC. The new 401k (plan 001) is using the correct EIN. Does changing plan 002 to the correct EIN raise any flags? and or should any corrected filings be made with the correct EIN for all those years?

Thoughts from anyone?

Thanks

I read an article on quarterly contribution requirements that came to me through an e-mail newsletter (BenefitsLink or TAG, I think), but I can't seem to find it again. I wanted to go back and read it again to see if I correctly understood what I read.

The article had a discussion on unexpected consequences due to the use the credit balance to satisfy quarterly contribution requirements. If I remember correctly, it said that an election to use the credit balance to satisfy the quarterly would satisfy the quarterly requirement, but not count towards any minimum funding.

Over simplified example, if your minimum was $100,000, your quarterly was $25,000, and your credit balance was $25,000. You elect to use your credit balance to satisfy your first quarterly installment, so the first quarterly is deemed to have been made even though you didn't deposit a contribution to satisfy it. At the end of the year, you are still required to put in the full $100,000 adjusted for interest due to missed quarterly 2,3 & 4 and whatever other interest may apply.

Does anyone recall seeing this or have any insight on how this works?

Thanks!

We're having a little bit of debate on this. One opinion (including me) thinks you cannot use a QNEC toward your gateway minimum, since 1.401(k)-2(a)(6)(ii) requires you to pass 401(a)(4) both with and without the QNEC. Another is that this isn't true, and since 401(a)(4) was around before gateway, then this rule doesn't apply. I don't quite follow that argument.

What do y'all think? Can you use a QNEC toward satisfying gateway?

I am starting to restate my Plans for EGTRRA and there are many things I am considering recommending my clients change in their documents.

In the past, if they wanted to allow hardship withdrawals, I always recommended the safe harbor.

Does anyone prefer the the other provision for Hardship withdrawal, and if so, what are your reasons?

Thank you in advance, to anyone who puts in time discussing this.

My physician group is starting to think of setting up an SEP-IRA to replace our profit sharing plan. We currently contribute the maximum allowed to all of our employees, but we wish to simplify the administrative requirements and cost associated with maintaining our current plan. The SEP seems to allow for full investment flexibility and we could eliminate costs to the P.C. for plan administration. In addition, the lower paid employees support much of this cost through 12-b-1 fees to the plan advisor who also directs investments. We feel that we could then, lower both the corporation and the individuals costs (those with larger $ amounts go with self directed accounts and get lower fees from their money managers than the people who are stuck with the mutual funds).

Anyway, if we do this, it would seem to make the most sense if we terminated our current plan which has been in existence for decades and is the product of a consolidation of a profit sharing and money purchase plan. Can we easily terminate the plan and allow participants (all are fully vested) to roll into IRAs? It may not be worth the headache as we have many terminated employees still in the plan, loans, insurance policies etc etc. It seems attractive though, as our group is likely to shrink over the next few years and we are looking to minimize overhead and siplify as much as possible.

This apparently, is a non-qualified plan.

I'm reading Example 5 of §1.415(b)-1©(6): A plan provides an option to receive a 100% QJSA with a 10-year certain feature. Assume the following: The annual benefit payable as a 100% QJSA with a 10-year certain = $100,000. The SLA factor = 11.7941; the 10 CC factor = 12.3204; the 100% QJSA (w/o a certain feature) = 14.3569; 100% QJSA with a 10-year certain = 14.3954. FYI, the annuity factors have been computed at 5% interest and GAR94 mortality.

I think what's called for (and for which I'd like someone to confirm) is that the SLA equivalent = 100,000 x (12.3204 / 11.7941) = 104,462. Although configured a little differently, I believe that result is consistent with the "old" 415 regulations.

If I were left on my own, I would have concluded that the 100% QJSA option factor = 11.7941 / 14.3569 = 0.8215. Consequently, the "notional" SLA equivalent = 100,000 / 0.8215 = 121,729. So, the QJSA portion that is not charged against the 415 limitation = 21,729. Next, I would have determined the SLA equivalent based on the 100% QJSA with a 10-year certain option factor (which is equal to 11.7941 / 14.3954 = 0.8193). Hence, the SLA equivalent based on the form of payment under the plan is 100,000 / 0.8193 = 122,055. Therefore, final adjusted SLA = 122,055 - 21,729 = 100,326. Thoughts anyone?

Employee was participant in Client's SEP. Works less than 500 hours. Client wants to close the SEP and start a 401k with 1 yr/age 21 eligibility. Since employee never worked 1000 hours in a year, he is not eligible for the 401k - regardless of having been a participant in the previous plan.

That OK?

Folks:

I tried accessing on legalbitstream.com, but was unable to locate several TAMs.

If someone could let me know how to access TAM 9541003, I could then access others.

In addition, if anyone knows how to access a specific text of the Internal Revenue Manual, I would appreciate it.

I am looking for a few texts, one of which is IRM 7751, Text 935.

Thank you.

Don Levit