I have run across a couple of qualified defined benefit plans for non-union employoees that were drafted by another attorney and that do not include the "top 25" pre-termination benfits limitation language that I thought was supposed to be included under the 401(a)(4) regulations. Is anyone aware of any reason why the top 25 language would not need to appear in a non-union DB plan? I have to say that the IRS reviewers who reviewed these documents did not challenge these absences in prior detrmination letter filings, but that could have been their oversight.

We have a take-over plan that one of my admin's just discovered an error from the 2006 plan year. Apparently, the prior RK set-up what they thought we additional matching funds as a receivable in the valuation. Upon examination, these funds aren't really due. However, the balance containing this "$1300" in receivable match was reported on the Form 5500. Is it going to raise a red-flag if we have a different starting balance for the 2007 plan year? this appears to have been occurring since the 2004 plan year, we don't have the ability to go back & correct multiple years valuations & 5500's. How would you address?

For that matter, when would ER funds ever be set-up as a receivable to be carried from year-to-year? In my experience, plan sponsors have always been required to pay whatever funding is due within the prescribed time-frame, not carry it over plan years. Is there a reason for this that we are missing? To me, it's over-stating participant's balances if you credit them with a balance on a statemetn that hasn't actually been funded by the sponsor.

I have a client who has already gotten an opinion from his CPA, but I wanted another one. Background: Self-employeed individual, who set up DB plan for he & 1 employee (wife) 3 years ago. HIs circumstances have changed & the money to fund this won't be available. Now terminating plan & setting up a SEP IRA.

First issue: He didn't realized until this week that the cash he was expecting wasn't availabe to fund his DB plan. He sold securities yesterday, but they won't settle until Monday to fund what should've been done before 3/15. Corporate return has already been filed.

Second issue: Let me preface by the fact that I haven't worked with DB plans in 10 years & this got dumped in my lap. Can this plan now be terminated w/o IRS consequences since it hasn't been in existence for very long? They don't have the ability to fund any longer & actually probably should've never set this up.

OK, all these rules are starting to blur together.

If I have a new 2007 DB plan and have the data to do the 2007 valuation, I can do the 2007 AFTAP based upon the 2007 EOY valuation data, right ? (I know I can't use 12/31/07 data for 2008 AFTAP pending technical correction bill).

I realize it drops 10% on April 1st, but just want to confirm or correct my thinking on the above.

Two spouses are the two partners of an LLC.

They each receive separate Schedules K-1 reporting their self-employment income subject to SE taxes.

Say the net SE income (after 50% SE tax deduction) is equal to 200k for the husband and 100k for the wife.

So we are left with a total of 300k of net SE income.

Should (or could) the 300k be split between the husband and wife in total between pension and pension compensation?

Should (or could) the 200k for the husband be split between pension and pension comp and the 100k for the wife separately?

Other approaches?

Obviously, if we work with the total 300k it enables more flexibility.

All of the above ok, if spelled out in partnership agreement?

It may also depend on if they file jointly or separately.

Thanks.

Looking for insurance carrier suggestions to cover Expats, Third Country Nationals and Host Country (where appropriate) for Life, AD&D and LTD. I'm having a hard time finding a carrier who will handle all of this. Suggestions?

We have a 401(k) Plan that allows for Elective Deferrals, Roth Deferrals, Wage Rate Contributions & a 4% match. The plan document states that "Wage Rate Contributions are Qualified Non-Elective Contributions".

When running the ADP test for this plan, can I include Wage Rate Contributions along with the 401(k) pre-tax & roth deferrals - and if so, is there a limit as to how much I can include (like 10%? or 5%?)

Any input would be greatly appreciated!!

Thanks ;-)

We just took over a plan from Lincoln and the assets were transferred to another vendor. The plan sponsor is still using the Lincoln document until later when we restate. I have everything on the document including amendments, AA, SMM, SPD.... but I do not have a letter of determination.

The plan is a standard match plan using Lincolns document.

An employee has left employment and the financial vendor he/she is rolling to wants a copy of the LOD. I said to the finanical vendor that the document is a prototype and did not file for its own determination and is just working off that documents LOD which will not contain the plan sponsors name or address.

The LOD is generic to all who use this. Does anyone have a copy of the LOD face page that can be sent to me?

50237590001-003 Prototype Standardized Cash or Deferred Arrangement

Is anyone aware of a discount prescription card that an individual can use that will still allow them a discount even if they have insurance? I have a client whose husband works for a company with a prescription benefit that pays 80% of the cost. He is on a high cost medication that is costing them $300 monthly as their 20%. They are looking for something that will help get that cost down.

Anyone aware of a product that fills that need?

How does a Sole Proprietor split his contribution for deduction purposes between his employees for Schedule C and himself for 1040?

Is any reasonable method acceptable?

In the past, using IA, the NC for each participant is shown and, I suppose, you could allocate the contribution on that basis.

What about for PPA (or prior years where there was some amortization charges)? Still make estimates based on the NC of each participant?

I would be sure to include a caveat that this cost allocation should not be used in any other manner to mislead the employer or employees regarding the true value of their benefit, or somesuch.

It was my understanding that IF I was valuing a lump sum for a participant that the following methodology would apply:

1 Calculate the lump sum at each age between attained age and normal retirement age using 417e assumptions

2 Multiply by the probability that the participant actually leaves at that age

3 Discount the result back to current age using funding target assumptions

Is this correct OR should the first step be that the lump sum is calculated using funding target assumptions as well??

Thanks for any and all commentary.

Met with a company that has 48 employees. Five participate in the FSA HealthCare Account and of course all five are the HCEs- CEO, VPs Controller. No rank and file employees. The HR person indicated the outgoing CFO said they did not need discrimination testing as they were in Safe Harbor, like the 401K. Is there safe harbor for FSAs? Are they confused or am I missing something?

Thanks

Phil

if participant goes into a QDIA i would assume it is necessary to provide a prospectus at or near the time the investment is made. for example a prospectus could be mailed to the participant after the cash is invested. the regs dont mention prospectuses at all but 404© requires a prospectus be made available to the participant after the investment is made.

our client has both plans though they are not linked or set up as a wrap-around arrangement. basically the administrator gives them an estimate as to how much their HCE's can put into the qualified plan each year and whatever else they want to save they must make an election in their NQDC plan. this year they have ADP refunds and they want to put the refunds into the NQDC plan. i feel that this would easily violate 409A but i am curious if others agree.

The EPCRS (Rev Proc 2006-27) has an example of an eligible NHC not given the opportunity to defer from 1/1/03 to 9/1/03. This is Example 4 on page 71. In this example, the NHC defers $400 from 9/1/03 to 12/31/03.

To determine the corrective QNEC, it says to take 50% of the NHC's missed deferrals. This is determined by taking the 2003 NHC ADP (3%) multiplied by a pro rata of the NHC's 2003 compensation (8/12 of the compensation). The corrective QNEC comes out to be $360 in this example.

That is all straight forward enough.

Here is my question though. When preparing the 2003 ADP test, how is this participant included?

1. Are they left out all together?

2. Are they included, but only with compensation and contributions from 9/1/03 to 12/31/03?

3. Are they included with the full year compensation but only contributions from 9/1/03 to 12/31/03?

Thoughts?

Our company just upgraded to Relius 12.0. Does anyone have any helpful hints on working with the new status codes and sub codes?

I have just imported my first census after the upgrade (or at least pieces of it). I have imported my new employees (basic data) and compensation for everyone. I have not imported status dates, etc. yet, as I wanted to post eligibility before doing so.

It seems like previous year rehires are causing issues, and the eligibility won't post. We work with some fairly large plans that have a lot of rehires, so any helpful details on how to deal with them in the most efficient manner would be greatly appreciated.

One example:

Employment Status: Hired 3/26/92

Plan Status: Active 7/1/93

Employment Status: Terminated 7/11/99

Plan Status: Inactive: 12/31/99

Employment status: Rehire 1/20/00

Employment status: Terminated 10/11/00

Plan Status: Inactive 12/31/00

(this person was rehired again in 2007, but that is not in Relius yet)

It seems that in the conversion, or because of the manner in which we reset rehires prior to the update to 12.0, that there's a Plan Status date missing from the 1/20/00 rehire.

The error message that I received for this person when I tried to post eligibility was: "A Plan Status record was not added (Inactive (Employment status)) because the start date (10/11/00) was before the existing record."

I know that I can rebuild each individual person's history, but I am wondering if there is any easier method. I am fairly new to Relius, so that is not helping me much either.

Again, any help -- no matter how big or small -- would be greatly appreciated.

If a plan has a termination date prior to 2008, is any AFTAP required for 2008? We know that such a plan is able to distribute based upon pre-PPA applicable rates and mortality, but the 436 and 430 regs seem silent on the AFTAP issue.

Any thoughts?

A pension plan provides that the normal form of benefit is a 50% joint and survivor annuity. One of the optional forms of benefits is a 100% joint and survivor annuity. The plan provides that if a married participant elects an optional form of benefit but dies prior to the benefit commencement date, then the surviving spouse is entitled to receive the greater of the benefit elected by the participant, or the death benefit (50%) provided under the plan. I am currently dealing with a situation where a participant elected the 100% joint & survivor annuity. However, before she submitted all of the supporting documentation necessary to determine the amount of her benefit (e.g., husband's birth certificate, tax witholding forms, etc.), she unexpectedly died. The plan sponsor sent a certified letter to the woman's husband notifying him that the plan allowed them to honor his wife's election of the 100% joint and survivor annuity, but only if they received certain information (his birth certificate, her death certificate, etc.) from him within a certain time period. The husband missed the deadline for whatever reason but shortly thereafter sent the requested information, and now the plan sponsor insists he is only eligible for a 50% QJSA, rather than the 100% his wife elected. So my question is this: Given that the plan itself does not impose any sort of deadline, shouldn't the participant's (the wife's) election of the 100% joint and survivor annuity hold? Does anyone know of any legal authority that allows plan sponsors to impose these sorts of deadlines? The plan in question is a church plan, so it's not subject to ERISA; therefore, any non-ERISA arguments in support of or opposed to the deadline will be most helpful. Nonetheless, the plan typically operates in accordance with ERISA, so any ERISA-related guidance can certainly be taken under advisement. Thanks!

does 408(d)(5)(B) allow the taxpayer to avoid the excise tax on excess IRA contributions due to an error by a financial institution or just the tax due?

A client has a Simple IRA and they are doing the 3% match. A participant contributes 10% for the first six months of the year and $0 for the last half of the year. Does the client have to make a match of 3% of full year comp or just on the six months of participation? The plan document does not specify if the match is payroll by payroll or annual. I am used to 401(k) plans that always specify the computation period.

Thanks!