I have a client who had a contributing SEP -IRA with a business partner. The business has concluded its business and the SEP-IRA still exists for both owners. No cotributions are expected or desired to be made for tax year 2007. The client has since started a new business with one employee who will be retiring this calendar year but wants to include a contribution for him for tax year 2007. Can he start a new SEP-IRA for this new business and include one employee if the former partner and his SEP-IRA is still open and active?

Employer (corporation) has a PSP (with 7 participants). Employer deposited $40K into the plan in November 2007 and in January 2008 told the TPA to allocate $35K among 2007 plan participants and to let the plan hold the remaining $5K as a 2008 contribution.

Here's my question:

Can the corp deduct the entire $40K in 2007 (the year that employer paid the $40), even though only $35K is going to be allocated to 2007 participants ?

I've read that IRC 4972 says that a 10% excise tax penalty is imposed on contributions in excess of the deductible amount. But it fails to explain what the deductible amount is. In my case, is the deductible amount $40K or $35K ?

I'm aware that the maximum deduction in any one year is 25% of eligible wages. (Pleae note: 2007 eligible wages for the 7 participants is roughly $300,000. So max allowable 2007 contribution is $75,000 ... which is far less than both the $40K and 35K.)

i have an employer (a law firm) that is adding a new partner. they want to credit this employees past service with another employer. they have never done this before. is this discriminatory per se or can a case be made since there are no other NHCEs and there is a valid business purpose it would be ok.

this may be a remedial question, but can a cb plan have a vesting schedule that isn't as good as a 3 year cliff? (1-25%, 2-50%, 3-75%, 4-100%)

Does anyone have any experience with the PBGC and waiver of penalties for underpayment of penalties? Is waiver granted freely or do they strictly interpret their reasonable cause guidance?

Hi. We are adding a few procedures as covered under our health plan. Our plan document does not state specifically what health procedures are and are not covered under the Plan. However, the SPD does go into that. Do I need to send out and SMM? When does it have to be sent?

Does a one participant defined benefit plan need a Summary Plan Description?

Excess contributions have been discovered for an SEP plan. There has been no Form 5329 completed for any prior years. The questions I have are:

1. Are there any penalties that will exist?

2. How should I correct this?

3. How many years must I go back to adjust?

Attached is a class action complaint regarding allegedly abusive 412(i) plans. It was filed against Indy Life, Hartford, PacLife, American General, ECI, and Kenny Hartstein.

08.02.12_Berry_Complaint_Class_Action.pdf

Does anyone know of a good source of information on NQDC plans other than the NQDC Answer Book?

Our local library is considering a SIMPLE IRA plan. Currently, they have 1 employee making pre-tax contributions to a non-ERISA 403(b) with a mutual fund family. Does the fact that this 403(b) arrangement exists prevent them from setting up a plan this year since the sponsor can't make contributions to another qualified plan in the same year? Thanks.

Is anyone else having problems with OPM processing division orders resulting from a divorce for benefits that are already in a pay status? I have three orders with OPM, some since the summer of 2007, that have not been processed. When we finally contact someone at OPM, the answer is always the same. OPM claims not to have a certified copy of the order, etc, etc, etc. Does anyone know how to contact someone at OPM who really knows what's going on?

my friend was terminated from her job because she embezzeled company funds. She has not been charged to date. So she closed her 401k but the check was mailed to the employer. Who is holding the check until he does the research to fine out if he can legally keep it as a repayment.

So does anyone know if the company can do this.

Or, if the company can just hold the check until the case goes to court.

Hello--

I recentely took over a plan and it appears the prior Administrator was using the original signed plan document to allocate the Profit Sharing Contribution each year. There is a restated document but the client never signed that document. The profit sharing allocation formulas are different. The original document has a comp. to comp. formula but the restated document has a cross tesed formula using 3 groups.

Should the Administrator use an unsigned document or was he correct to use the original signed document. Please advise. Thanks.

Emily

Any input on this situation is appreciated:

Patient participates in his Employer's Cafeteria Plan, and saves enough money for $3,000 elective eye procedure. Patient has eye procedure performed by Doctor, and pays using Cafeteria Plan debit card. Patient is not satisfied with eye procedure, and Doctor agrees to refund the $3,000.

First, when a cafeteria plan participant is due a refund, how is this usually handled? In this case, Doctor may be able to refund to the card that was used. What about a situation where a participant incurs charges and submits reimbursement requests... how would the refund be handled?

Second, patient is upset, even if the money is credited back to debit card, that he will not be able to use it before March 15. Patient wants the $3,000 check directly; does not want it funneled back into the plan. Seems like patient has evaded tax on that money. Should Doctor issue a 1099? Should Doctor notify patient's employer? Any other solutions?

Thanks for any help.

Sorry guys, I'm a noob. When trying to get a rough estimate of my MAGI, do I subtract my 401k and 457 contributions?

for example, last year i made 119g but i also contributed 20g to my 457 and 401k. so am i automatically under the roth caps on MAGI?

I can't get a straight answer out of anybody on this. I hope you can help. thanks

While preparing my Tax Year 2007 tax return, I just discovered I exceeded my tax Year 2006 Roth IRA contribution limit (limited by MAGI) by $570. I have read so many descriptions of how to correct this that I am completely lost. I have also exceeded my my 2007 limit, but I'm pretty clear about how to handle that prior to April 15, but cleaning up the previous year's situation has me confused. Any advice from someone who has navigated - or knows for sure how to navigate - this would be most appreciated.

Last week, a class action lawsuit related to allegedly abusive 412(i) plans was filed in federal court in Dallas, Texas. The defendants include Indianapolis Life, Hartford, Pacific Life, American General, Economic Concepts, and Kenny Hartstein. A copy of the complaint is attached.

08.02.12_Berry_Complaint_Class_Action.pdf

The shares are not publicly traded. We're okay with participants voting their allocated shares for the pass-through-matters, but the plan currently says that the Trustee shall not vote the shares in the suspense account. We're thinking about amending the plan to change that provision so that the Trustee can determine how those shares are voted.

We just want to make sure there isn't a prohibition against the Trustee voting those shares.

I have a plan that wants to add a provision that would add years of credit for benefit accrual, vesting and participation in the event of involuntary termination under certain circumstances.

The benefit could result in a person with two years participation, receiving a seven years participation benefit and instantly becoming vested.

The entire arrangement seems problematic.

I see issues with benefits rights and features discrmination and I think it may be impossible to get this to pass the 411(b)-1 accrued benefit requirements.

Even if we could pass a general test, is there a way around the 411(b)-1 issue?