Any opinions whether compensation to a service provider that is not taxable compensation to a service provider (for example where there is an exclusion under IRC 132 from taxable comp. Thus, not reported on a 1099) but that same compensation meets the definition of "indirect compensation" under Schedules A and C?

For example, a service provider hosts an educational event for TPAs. The Service Provider can take a deduction for the expenses. Also, the Service Provider is not required to report the value received by the TPA as compensation on a 1099 due to the exclusion under IRC 132. However, Schedules A and C have a broad definition of compensation (both direct and indirect) that would capture the value received by the TPA, which must be reported on Form 5500.

It seems that since there is no similar exclusion from 5500 compensation as there is for taxable comp that such compensation would have to be reported on Schedules A and C. There are only two options here, one is to report the compensation on Form 5500 and the other is to exclude it since it is not taxable compensation. In other words, report the “indirect compensation” on Schedules A and C even though it is not taxable comp reported on 1099, or not report on the Schedules because it is not taxable compensation.

Any thoughts?

In HR 3361, the Technical Corrections bill to fix certain aspects of PPA 2006, there is a provision that inserts "described in paragraph (8)(b)(iii)" after "eligible retirement plan" in 402©(11)(A). I can't figure out why that change is being made, as that would indicate that until 2009, when other changes to 402©(11) kick in, only qualified plans can permit direct rollovers by non-spouse beneficiaries to inherited IRAs. In Notice 2007-7, the IRS clearly stated that 403(b) and other plans could permit the same rollovers. Is Congress tryint to retroactively reverse that position?

If an employer deposits their safe harbor match at the end of the year do those who deferred and terminated during the year receive a safe harbor match? What if they didn't work 1000 hours? I thought initially you couldn't impose such restrictions but didn't it change where terms would not receive a safe harbor match?

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?