This seems like this should be an easy question, but I can't find a reference, and did not find anything on my search here.

We file a 5500 in a timely manner and distribute the SAR in a timely manner. Later we find an error that requires filing an amended return, due to a change in the net assets on Schedule H.

Do we have to distribute a new SAR? Do we get to apply some level of materiality check?

Thanks for any help

My husband & I worked for the same company and participated in the 401k program. He died July 2006 and I was laid off in April 2007 at age 50. I have no income now and need money for my house payment. Can I withdraw my husbands 401k money to make house/living payments until I find work again without taxes or penalties? Am very scared and getting a bit desperate. His 401 has enough to sustain me for at least another year or so if needed. I am the sole beneficiary and personal representative of the estate. Any help is greatly appreciated as I do not know where to turn or where to look for this information. Thank you all.

409A uses the 416(i) "key employee" definition to define a "specified employee," including among other things 'officers' that make a certain salary.

The regs for 416 say that determining who is an officer is based on the facts and circumstances, but that an officer is generally an "administrative executive."

Does anybody know of any clear guidance on determining whether somebody is an "administrative executive" and, therefore, an "officer" for purposes of 409A? Are there cases/guidelines that say doing "X,Y or Z" means the person is an officer?

Thanks!

Hello everyone I have two questions.

1. I opened an Roth IRA in Dec 2006 and now I want to move it to another Roth IRA account, I only have about $1000 dollars in it. When I move the money, will it be counted as 2006 contributions or will it be counted as 2008 contributions?

2. Will the 5-year rule start over again now that I've opened the new Roth IRA account? Or will it still be 5 years from the original account date?

Thanks in advance for your feedback!

a dept of company A broke off and merged with company B for the year of 2007, now dept coming back to company A do they need to start wating period over for MEd and Dependent care FSA or is that up to Company Handbook??

Would a plan with a additional formula (above and beyond an enhanced matching formula of 100% on the first 4%) of 0% on the first 4% and 100% on the next 2% meet the ACP safe harbor requirements?

Initially I thought it would not but it looks like I have to combine the two formulas together to see if it meets the safe harbor requirements.

PLR 9419025 concludes that a municipal employee who relinquishes a right to a cash payment for accrued sick leave and exchange that right for additional pension service time recognizes taxable income in an amount equal to the cash the employee was entitled to receive. What if the municipal employee's choice is either to defer a portion of accrued vacation and sick leave to a 401(a) plan or to relinquish the right to defer a portion of accrued vacation and sick leave to the 401(a) plan in exchange for additional pension service time? If the employee chose to defer a portion of the accrued vacation and sick to the 401(a) plan, based on PLR 9840006 the employee would not recognize taxable income for the portion that was deferred into the 401(a) plan. If the employee relinquishes the right to defer in exchange for additional pension service time, does the employee recognize taxable income in an amount equal to the portion that could have been deferred to the 401(a) plan? Any thoughts on this would be greatly appreciated.

If the S Corp is totally owned by an ESOP can all employees of the S Corp participate in the Cafeteria Plan - since essentially there are no 2% or more owners anymore?

Assume a Sub S ESOP owns 45% of the stock and the two other shareholders/employees have a vanilla buy/sell agreement between themselves. Do you think that the agreement counts as synthetic equity under 409(p)?

I can't believe no one else is having this problem, but it appears that the .DAT files generated under American Funds' Recordkeeper Direct platform (identical to the MFS platform, so that's the Relius interface we use) have been modified by the company that maintains the recordkeeping platform, DST.

The new files do not import to Relius because they have an extra column. I have (very unhappily) tried modifying the files in Excel, Notepad and Wordpad, and something about the structure is changing and they can't be cleaned up.

Relius is aware of the problem, American Funds is aware of the problem, and the only answer I am getting is that DST has to fix it, and is working on it, but I can get no word on when - a day, a month or a year from now.

Does anyone else have any insight on this?

In perusing the IRS's (near) New Year's Eve present of a 74 page proposed reg, we note with sadness the demise of IRS Rev. Rule 77-2.

Am I to understand correctly that if say in January '08 we decide to freeze a calendar year plan (that contains the 1,000 hour service rule) effective March 1, we must recognize a full TNC in the funding equation? In such case, such result -- at least in theory -- could force a plan to become overfunded. In short, if you want to freeze a Plan and pay a reduced fare, you now have to have an amendment adopted (sounds like that means signed) by the valuation date, which will in most cases be the first day of the plan year.

I, like everyone else am still waiting for opinion letters for my EGTRRA Restatement. Let's assume they come out today. Would I still be able to put new clients onto my GUST Restatement until I have the system ready for EGTRRA, or do all new clients / amended plans have to get put onto the EGTRRA document?

A timely election was made to have 2007 income placed in an established 457b (non-profit) plan. Due to clerical error, benefits office admits it neglected to do so and instead included the amount in December pay. This was not discovered until 1/01/08 (no hard copy of direct deposit advice, only on organization's web site. Employer states that it is not permitted to reverse any entries given that 2007 has passed. Upon what regulation are they relying? Is there a ruling that provides a minimum time period (past year end)? Obvious end result of receiving about half, after taxes, of what should have gone into a 50 year old's retirement account.

I have a new one to me that I'm hoping someone can help me with. I have a client who is a small employer and is looking for new cheaper options for insuring a handful of employees. They have found that the premium rate for 6 individual policies is cheaper than the group rate they can get for all 6 employees. They want to know how they can still enjoy tax benefits if the employer purchases these individual policies and then the employees pay a portion just as they would under a group plan. I am not sure how to answer them on this. It wouldn't appear there is any "double dipping" ocurring. I'm just not sure how to set this up. Any ideas?

Available benefit if benefit distribution restrictions apply is lesser of 50% of lump sum or 100% of PBGC maximum. We have the following from our joyous August proposed IRS regulation:

(iv) Present value of PBGC maximum benefit guarantee. The amount described in this paragraph (d)(3)(iv) is, with respect to a participant, the present value . . .of the maximum benefit guarantee under section 4022 of the Employee Retirement Income Security Act of 1974, as amended.

Does this mean that a Plan not subject to Title IV (e.g., one-person plan) cannot pay a lump sum since there is no guarantee under ERISA or is this simply what the words say and not the intention, which is the reference to the PBGC maximum is simply a number that applies irrespective of whether the Plan is subject to PBGC coverage? Unless I overlooked it, I don't see where the proposed regulation states the latter.

The automatic IRA rollover rules took effect 3/28/2005.

I am looking over the documents of a plan (new to me) that has an amendment reducing the mandatory distribution threshold from $5,000 to $1,000, rather than specifying auto IRA rollovers.

The problem is that the amendment was signed 3/7/2006, stating that it applies back to 3/28/2005.

In operations, the plan failed to make automatic distributions to former employees regardless of the how small their accounts, either $5,000 or below prior to 3/28/2005 or $1,000 or below on and after 3/28/2005.

I was unaware that there was any retro period for adopting the automatic IRA rollover rules (or reducing the mandatory distributions threshold to $1,000), effective back to 3/28/2005.

Is this a situation where there has been an interim amendment failure needing VCP?

I know most of the Early Retirement Incentive discussion is made in the defined benefit plan setting, but can an employer offer the ERI as a employer discretionary contribution in a 401(k) PSP, to those that meet the age/service/job classification requirements? I would really appreciate the input - thank you in advance.

We received a QDRO. The participant has an account balance of $33,100 with an outstanding loan balance of $11,400. The spouse is entitled to 50% according to the QDRO (excluding any loan accounts). How much is the spouse entitled to? $16,650 or $10,850??

I'm reading proposed regs for cash balance plans, and they have a list of options for acceptable Market Rates of Return. They were nice enough to reserve sections for Equity-based rates and fixed interest rates, so basically we have the 3rd segment rate, various treasury yields, and eligible cost of living indices.

I'm trying to wrap my brain around how these interact with the PPA funding rules, and just speaking in very gross generalities:

*If we use the 3rd segment rates, our target normal cost can be higher than the contribution credits because contributions are projected at the 3rd segment rate, and discounted using potentially all 3 segment rates (assuming 1st and 2nd segments are lower).

*If we use any of the treasury yields, our target normal cost can be lower (project out at a low treasury rate and discount at higher segment rates).

*I'm assuming that the eligible cost of living indices are along the lines of many of the treasury yields, so same problem.

Would anyone be willing to give your thoughts on how you are selecting interest credit rates for your new cash balance plans?

At first, I leaned towards using the 3rd segment rate because it seems to produce a target normal cost that is close to the contribution credit, although it seem silly to have a funding cost larger than the contribution credit. If I use a treasury rate, the target normal cost seems to come out extremely low because there is a large disparity between the treasury rates and the segment rates. I suppose that as time progresses, you have enough range in the maximum to make up for any shortfall, so maybe that's the way to go.

Anyway, thanks for humoring my ramblings.

Looking at an integrated DB plan that was clearly originally designed to conform to 401(l) in terms of annuity benefits because the early retirement factors are right from the 401(l) tables and the plan looks like a the safe harbor offset.

The plan now provides, however, that a lump sum is offered and the lump sum amount is based upon the total accrued benefit and is the greater of the amount that would be derived from PBGC rates (e.g. 3.50% or so immediate, 4% deferred) and UP84 Mortality, or the amount that would be derived from use of the GATT rates.

I think that continued use of a lump sum factor that might exeed the 417(e) requirements violates 411(l) and creates the need for the general test.

Cite is 1.401(l)-3(B)(4)(E).

Agree/Disagree?