When doing 414(s) compensation testing for a plan year, can we exclude otherwise excludable employees ( as we would in adp testing?)??

Hey Everybody,

When applying for an EIN for a Defined Benefit Plan Trust using the online EIN application at http://www.irs.gov/businesses/small/articl...=102767,00.html, for nearly every Plan sponsored by a Sole Proprietor, my application will not go through. I am then told to call into the IRS to get the EIN by phone. When I do this, I am occasionally given an EIN for the Plan Trust, but most of the time I am told that DB Plans sponsored by Sole Proprietors do not need an EIN for the Trust. I do not know how this is possible since the Plan assets need to be legally separated from the company sponsoring the Plan, and since on Form 1099-R for distributions there are sections for the EIN of the payer (Trust) and the EIN of the recipient (Sponsor). I was wondering if anybody else has run into this problem when applying online or by phone for a DB Plan Trust sponsored by a Sole Proprietor.

Any help would be greatly appreciated.

I have seen little discussion of the DOL fee disclosure rules that were released last month.

NEW DOL REGS

You're probably already in compliance. It's the opposite of "don't ask, don't tell".

The fiduciary now has a responsibility to ask the service provider for all fees and commissions relative to a 401(k) plan, and the service provider now has the responsibility to disclose everything.

Good luck in achieving full compliance with this for small plans. The service providers will not notify the fiduciaries of their duty to ask so that they have an excuse for not disclosing.

Company X enters into a project labor agreement ("PLA") with Union Y. The PLA says that any business Company X subcontracts with must sign a letter of assent ("LOA") to the PLA agreeing to be bound by the PLA's terms. One of the PLA's terms is that the Company (and by virtue of the LOA, any subcontractor) must participate in a multiemployer pension plan (the Central States, Southeast & Southwest Pension Fund). Company Y accepts a subcontractor job from Company X and signs an LOA. Company Y makes payments to the multiemployer pension plan as it is required to do. The project is completed and Company Y moves on to other construction projects in the area. Company Y receives a notice of withdrawal liability from the multiemployer pension plan. The total contributions made to the plan on behalf of Company Y's employees over the course of the project amounted to $200,000. The demand for payment of withdrawal liability is $300,000. The multiemployer plan's vesting schedule is a 5 year cliff schedule. The project lasted for 4 years which means that unless an individual for whom a contribution was made has service on other projects covered by the multiemployer pension plan, they are not even vested in the contributions that were made. In the worst scenario, Company X has already paid $200,000 to benefit the workers of other employers and, if the withdrawal liability sticks, will have to pay another $300,000 to benefit other employers' workers.

The project was a construction project and Company X and Y are both in the construction industry.

Since the project involves a construction industry employer, the multiemployer pension plan's "free look" rule is inapplicable (the plan has not been amended to extend the "free look" to construction industry employers as permitted by the Pension Protection Act of 2006). Also, it appears the construction industry exemption is inapplicable since Company Y's obligation to contribute under the PLA has ceased and Company Y continues to perform work in the jurisdiction of the CBA (PLA, in this case) of the type for which contributions were previously made.

I guess an argument could be made that "work in the jursidiction of the PLA" means work on the particular project (as opposed to work of the same type) and, unless Company Y resumes work on that particular project within 5 years, there is no withdrawal. Is that a crazy argument? What does "continues to perform work in the jurisdiction of the collective bargaining agreement" mean? Does anyone have any other suggestions to keep Company Y from paying withdrawal liability of $300,000?

I'm not sure if this is the correct board, and I know nothing about this topic. Please forgive me if I sound dense:

Doctor contributed appx $100,000 to a "welfare plan" (using a life insurance policy as the funding vehicle) for which he took tax deductions. He is now wanting to surrender the policy for it's surrender value (appx $70,000)

Question: Is the surrender value taxable to him as income?

Thanks.

Does any one have a Relius to Quicken solution?

Our participants aren't interested in CSV to Quicken via Big Red Consulting.

Thanks.

I looked over some issues related to Erisa 412(a)(1), Dol. Reg 2580.412-2, 412(a)(3), DOL Advisory Opinion 2004-07A (July 1, 2004), DOL Reg 2580 412-27-30, 2580.412-31-32, DOL Advisory Opinion 2004-07A, DOL 2580.412-2.

Anyway, my main question has to do with who has to get covered by a bond. Just employees? What about the people at the asset management company, in a hypothetical situation? Or since the asset management companies probably already have their employees bonded, is it not an issue for the employer supporting the plan?

Hi. Does anyone know where I can find a list of all the mandatory amendments to DC plans going back as far as 1996? I have a new client that didn't amend their profit sharing plan since 1996 and now we are getting ready to go through VCP. We have restated the plan (so the document is compliant), but we need to state all of the amendments that should have been made since 1996 to present. Anyone know where I can find a list by year?

Thanks.

Under PPA 2006, beginning in 2008 it is no longer necessary to include gap period income when correcting for ADP and ACP excesses. I have still not seen anything from the IRS interpreting whether this change is mandatory or not (i.e., whether plans can voluntarily continue to calculate and return gap period income even though it is no longer required). Has anyone seen guidance on this?

I've tried to upload a file (263 kb Excel spreadsheet) to provide to Mr. Austin Powers (austin3515), but when doing so, I am provided this message:

"Upload failed. Please ask the administrator to ensure the uploads directory is writeable"

Everyone is hired after 8/1/06 so they are otherwise excludible for 2007 ADP testing.

Plan has immediate eligibility/entry.

For 2008, to use prior year testing, do I have to run 2007 ADP test with everyone in the test? Is there anyway to exclude any of the employees but not all? (I don't think so.) I think otherwise excludible testing is "use statutory rules" as only option.

2008 would be first year of testing but not first year of plan.

Bunch of new employees started in November and did not defer, so current 2007 year average is very low.

So I have a 0% first year average for 2008 or I have to use 2007 actual and go current year testing for 2008, 2009, 2010 & 2011.

2012 I could switch to prior year.

So, I guess question is, am I forced to use current year testing? Any techniques here to consider?

thanks

For a S-corp, how can I pay bonus for 2007 before Jan15th? DO I treat it like a regular payroll run? I'm assuming I can do my 15500 deferral through my bonus amount. Is there a limit or ratio for bonuses compared to salary ? Also, does the gross annual salary then include the entire bonus amount or bonus - tax deferred amout.? Thanks for all the help.

The S417 interest rates for a given month are contained in the IRS notices which are generally published towards the end of the month following the month for which the rates are applicable.

I need to do a payout calculation now where the look back month is December 2007 but I have been unable to find the December 2007 rates. The IRS notice with the December's S417 rates won't come out untill the end of January.

Where can I find these rates ahead of the IRS notice?

I hope someone can point out where my thinking is incorrect about this!

The issue concerns a participant transaction in a fund on the record date of a dividend in that fund.

The settlement price for the sell part of the transaction reflects the dividend payment (the price would be lower).

When Relius allocates the dividend, the participant's share balance is less or 0 and the participant receives a reduced or no allocation of the dividend.

For example. Participant owns 50 shares of a fund and the share price on the day before the dividend record date is $150. The price on the record date drops to $125 per share because of the dividend distribution of .20 shares/ share. On the record date, participant requests a transfer of 100% of the fund balance to a different fund. The transaction is processed on the record date. On the settlement date the fund price is $125 and the 50 shares processed are worth $6,250. When the dividend is posted, the participant receives 0 shares because he is treated as having 0 shares.

Am I missing something here? Seems to me the participant just got ?X@!!'d.

How are people handling PPA for pooled accounts? Are you just going to attach the relevant section of the pooled investment statement? Are you just going to give a listing of the funds and perhaps what percentage each security is of the total?

A X-tested PS plan was set up effective 1/1/08. Client now says he intended to exclude a certain group of employees from participating. The data for the excluded group was never provided during the proposal and plan set up process. Some fo the employees in the group have been employed for a few years, but none has ever worked more than 1000 hours and possibly never worked more than 500 hours. The plan currently has no age or service requirements for eligibility or to receive an allocation. If the plan is amended to exclude the group effective 2/1/08, they will receive an allocation for January of 2008. For rate group and average bfts testing, can the excluded group be excluded from testing since they never worked 1000 hours and thus would not have met the statutory eligibility requirments of age 21 and 1 year of service?? Thanks.

Bob owns 100% of company A, 60% of company B so no controlled group exists

well, I guess, except for 415 limits, if I understand how the silly rules work.

to receive a contribution, each plan requires 1000 hours.

does he have to work 1000 hours at each because no controlled group exists?

well, besides simply having the census note that he 'worked' 1000 hours at each company.

Question 1

The final 415 regulation modify compensation that is used for code section 415 (which is also used for purposes of determining highly compensated employees and applying the top heavy provisions) and deferral compensation (so that a participant cannot defer out of post-severance compensation that is not 415 compensation).

Assume we amend a plan so that the plan’s 415 compensation definition is the same as the plan’s compensation definition (i.e. for allocation purposes).

Thus, the following would apply for allocation and deferral purposes:

The plan would include compensation paid the later of 2 ½ months after employment or the end of the year that includes the date of the termination for compensation for services performed during regular working hours, etc. and amounts paid for unused sick time, vacation, etc.

However, before the decision (January 10, 2008) was made to change the definition, as defined above, one participant terminates (January 5, 2008) and is paid his final paycheck (which included unused sick and vacation time) and no deferrals were withheld. The participant had an election on file and clearly would have wanted deferrals taken out.

Is this a problem?

Question 2

If the plan includes payments to a participant who is permanently and totally disabled under the 415 regulations, do the employer contributions have to be 100% vested.

404(a)(7) does not apply if no employee is a beneficiary under more than 1 trust. Suppose Joe Cubicle is a participant in a DB plan but has no accrued benefit because it is completely offset by his profit sharing account.

Is he considered a beneficiary under the DB plan?

Thanks in advance for any thoughts on the subject.

Are there special rules for partners in a 401(k) Plan. A LLP has a 401(k) Plan that matches 4% on employee deferrals. Can the partners also get the match?