Have a client with a traditional IRA that contains old investments that are now worthless (bond syndicates). Would like to distribute the investments basically as a $0 distribution to get the them off our books. Does this sound like a good way to handle this? In my mind, it would be a non-tax event correct? Thanks for any thoughts.

I'm a "qualified plan" guy - so, pardon my Roth IRA ignorance - but, then, that's what these forums are for, right?

Individual ("recipient") is to receive half of her ex-spouse's Roth IRA incident to a divorce (part of the court-ordered property settlement).

Is the start date for the "5-year clock" for the recipient the same as the original Roth IRA owner's? In addition, if the recipient is disabled, can the transferred Roth IRA be distributed as a tax-free "qualified distribution"? Or, is it far less or (more than likely) far more complicated than this?

Thanks for any and all input.

Agreement provides that in the event of employee's termination of employment, company (private) has the right to purchase company stock acquired by employee. If the right to repurchase violates a loan covenant or other agreement, the company has the right to make the payment in the form of a five year demand note in favor of the employee, accelerating upon a liquidity event occurring.

Is this problematic under Section 409A (as possibly disguised deferred comp) or am I crazy and this is totally outside the scope of deferred compensation? Thanks.

I do not see where this question has been raised before. Section 404(a)(1)(D)(ii) states UCL shall not include the liability attributable to HCE beenfit increases resulting from a plan amendment which is made or becomes effective, whichever is later, within the last two years. Specifically, if a plan amendment increasing liabilities was signed 3/28/06 effective for the 2005 calendar year, can the maximum deduction of the UCL be used in the 2008 calendar plan year? Or does the signing of the amendment in 2006 force us to wait until the 2009 calendar plan year?

Please confirm that Top Heavy remains a potential issue annually with the regular SH Match (versus the new automatic enrollment w/cola SH Match). Thanks a million....mind has gone blank!

How is rollout of split dollar life insurance taxed for income AND for payroll tax purposes? Policy was entered into in the 1990s and is governed by Rev. Rul. 64-328. Policy was not materially modified, and so does not seem to fall under the 'new' rules of the final regs. issued in 2003. I'm having no luck understanding the rules.

Thank you for any guidance.

Pat

I have a controlled group. Companies A and B sponsor a P/S plan and companies C and D sponsor a 401(k) Plan. To calculate the top paid group, I think I need to count all employees of the 4 companies. The top 20% of the group came to 31. To divide between the plans, do I start with the top 31 highest paid of the group and then see who falls into each plan? The 401(k) has 86 employees to be included and the p/s plan has 73 for a total of 159. 20% of the 86 is 17. Is it possible that only 9 of the top paid group would be considered for this plan? or is each plan considered separately? (I hope this isn't too confusing)

Client has a Volume Submitter 401(k) plan with cross tested language. Plan has last day language for the profit sharing contribution with an exception for termination due to Early Retirement, Normal Retirement or Disability. Plan document provides for Doctors in one group and all other employees in the other group. One of the doctors in the group left the practice due to Early Retirement so he would normally be entitled to share in the profit sharing contribution for the year. Would it be possible to amend the plan before year end to establish a separate group for the retired doctor and elect to not fund that group?

Those who do CB plans regularly, do you do BOY or EOY valuations? If EOY do you plan to change to BOY due to PPA's unresolved issues? If BOY do you use EOY census?

Thanks for any feedback. I want to avoid EOY vals like the plague, but is this feasible and mainstream with CB plans?

Folks:

Today's Benefits Link provided Field Assistance Bulletin 2007-04.

This answers a lot of concerns we had several months ago regarding whether certain individual policies would be considered group health plans.

Policies that are "excepted benefits" are not group health plans.

Go to:

http://www.dol.gov/ebsa/pdf/fab2007-4.pdf.

Don Levit

Are any federal (or state) anti-discrimination laws violated if 100% of pay is continued for the first 8 weeks on maternity leave while all other paid (including paternity) leaves are paid 66 2/3% of base pay for the first 8 weeks (if so, which ones)??

I can't find anything in IRC 125 that says a cafeteria plan must have a specific "open enrollment period" and that employer must inform employees of the specific "beginning" date and "eding date" of the open enrollment period prior to the start of the open enrollment period.

Also, does IRC state the minimum and maximum number of days the open enrollment period can be?

Can anyone direct me to the various open enrollment rules that employers are required to communicate to employees?

the rules say you are allowed to have a SIMPLE IRA and still allocate forfeitures to another plan. not sure of the reason for this, maybe because you are not deducting anything in regards to the forfeitures.

anyway, came across an indivual who had a DB. the DB was terminated and the excess assets were rolled into a new DC plan. so of course the question becomes: can you 'allocate' the excess assets and still have the SIMPLE IRA?

We have had a participant who lives in her dad's house request a hardship withdrawal because she is behind on her rent owed to her dad. The dad expects his rent money to be paid by the summer and won't allow the participant or her sons to live at his house if the debt is not paid. Has anyone else run into this situation before? Would this situation count as preventing eviction from the participant's principal residence? I think that it would since she will indeed be forced out of her principal residence even though she is renting from her dad, but just wanted to hear some other thoughts. Thanks!

My company just imformed me that I'll be considered an HCE in 2008 and that the company's 401(k) plan limits an HCE's contribution to 10%. I am a 50+. I wonder how the 10% HCE limit will affect my catch-up election.

From what I have read, deferrals are treated as catch-ups only when a limit has been violated. This is how I see my situation:

1) Since I will not be allowed to defer more than 10% per payroll, I will not exceed the plan imposed limit.

2) Since my gross pay will be less than $155,000, I will not exceed the regular $15,500 limit (at a 10% deferral rate).

3) If the company passes ADP testing, I will have $0 catch-up.

4) If the company fails ADP testing, my excess deferrals to be recharacterized as catch-up may or may not reach $5,000.

Am I analyzing this correctly? Is there a way that I can max out my catch-up for sure?

Thanks in advance for any advice.

Anyone encounter this before?

Employer is planning on selling the company as an asset sale in 2008. All employees will be terminated from the employer by 3/1/08 and none will work 500+ hours prior to termination. Partial termination of the plan will occur. The two partners will be closing down operations over 2008 & 2009 collecting self-employment earnings off K-1s. Is there any problem passing 410(b) coverage in 2008 if none of the terminated employees get a 2008 profit sharing contribution? None will have worked over 500+ hours, so no 410(b) coverage failure right? Am I missing anything else?

Anyone have any practical thoughts on what we'll be doing with split-funded plan with whole life insurance as part of the overall contribution ? PPA 06 minimum and maximums have their statutory funding method that doesn't project benefits (beyond a salary scale) to NRA where we'd normally subtract out the guaranteed CSV and fund the side fund for the difference.

Maybe we just continue to run it in Ind. Aggregate/ILP or some pre- PPA 06 projected funding method but just have the minimum and max calculated as required under PPA 06 ?

I guess I was hoping to work with the PPA 06 funding method, without having to run a separate valuation with a PPA 06 overlay for mins and max, but I'm not sure I can see how to do that. Any thoughts ?

I just found out that a client with both a Profit Sharing Plan and a Defined Benefit Plan has made Profit Sharing contributions so far this year that are aprox 8% to 9% of payroll for the year. The DB minimum contribution is well in over the 25% limit for the combined plans.

It is not my PS document and I can find nothing in it regarding refunds on account of error.

My question is what happens to the excess?

Is deductible next year?

Is it allocated this year?

Are there any qualification problems.

Aloha!

Situation - I have a new 401k client having their recordkeeping done on a fund groups platform. I was informed by the client that an audit revealed one of their participants exceeded 402(g) in 2006. I prepared a distribution request with instructions to use Code 8 on the 1099-R and sent it to the recordkeeper who prepares the distributions. The recordkeeper (big national firm) gets the form and tells me they will not process the distribution until I confirm the plan is using EPCRS and the 1099-R code will be 'E'. This makes absolutely no sense to me......I maintain it should be code 8 for the full amount and there is no need to use EPCRS. Am I missing something obvious? Anyone have a similar situation - thought I would see if anyone has a comment!

Mahalo nui!

yes, its time for me to be nasty again, so I am posting the puzzle again.

though there are even more songs than before (its now 120) along with the song list (getting soft in my old age)

of course there are more songs on the list than 120, but if you saved last years stuff then you should have 100 done already.

no, I did not create the puzzle, I am just a nasty grinch who wants you to get behind on your office work.

yes, that really is me.