Can we incorporate 1.125-4 by reference, or do we need to do something like cut and paste the regs or copy them and staple them to our plan document?

Any thoughts?

Plan is a Safe Harbor Matching Plan. The client does not want to use the Safe Harbor Match Provision for 2008, do I have to amendment the plan or do anything? Or as long as the SH Notice does NOT go out for 2008, its fine?

My husband terminated employment with a sizable balance in his Flexible Spending Account. ADP is telling him that he had 30 days from termination of employment to submit his claims, not March 15. Can someone please tell me if this is in accordance with applicable law? Thank you!

Does anyone have any pro/con information regarding providing lower wage earners with higher employer subsidy to purchase health care benefits? I work in the government sector and have had an employee send a letter to our leadership stating that their belief is we should use this methodology to subsidize since the lower wage earners end up spending a higher percent of their salary on health care benefits compared to higher wage earners (and often end up not being able to purchase benefits as a result). I've looked everywhere I can think of to see if there is any information I can feed back to our leadership group regarding the pro's and con's of taking this type of approach and have come up empty. THANKS!

Due to an acquisition, Company A has a 401(k) plan (Plan Z) that will not be able to stand alone for coverage once the transition period ends on 12/31/07. Unfortunately, Company A does not have the resources and is not prepared to merge Plan Z into one of the existing plans of Company A, several of which are safe harbor plans. If Plan Z were changed to a safe harbor (with a match that mirrors on of the existing plans) effective 1/1/08, could Plan Z then be aggregated for purposes of passing 401(b) testing in 2008?

I did look and didn't see where this would be prohibited but admit that I haven't really dug into in detail yet. Any cites would be appreciated.

PAL

Plans definition of compensation is W-2 pay.

How does an employer withhold deferrals from noncash taxable income? For example, employer may give out gift cards as opposed to bonuses.

In a cross tested 401(k) profit sharing plan with two groups, partners and everyone else. Is it possible for the employees in the partners group to receive a different percentage in order to max each of them out for the year. As an example, partner A deferred 5% and received SH nonelective of 3%. He would receive a p;s of 12%. Partner B deferrs the max, receives the 3% SH, so his PS contribution to max out would be 22,400 or 10.18%. Is this possible as long as the plan passes all testing? I tried using the contribution optimizer in Relius and this is what it did. Just wanted to see if this is allowed.

Suppose you have a volume submitter DB that was adopted 1/1/2002. The plan meets all of the requirements in the instructions. If the plan terminates 1/1/2008 and is submitted shortly thereafter, does it still qualify for the user fee exemption?

CPA needs your input on a situation with a client's SEP plan. They made the SEP contributions for the client and her spouse. There was also one employee who was eligible and CPA had calculated the amount for them on her as well. In doing the monthly financials CPA saw that client had written the checks for their contributions but not ee. When questioned why this wasn't done, the client said the employee left their employment in 2007 so they weren't going to make the contribution for her (she was employed at the end of 2006)

Reaction is that they can't do that; if she was eligible she has to have a contribution made for her. The question now is what are the risks to the plan with them funding only 2 of the 3 accounts? Is the plan in jeopardy? Can a SEP be disqualified? Can client "fix" anything by making the contribution now even though it is past the 9/15 deadline for the corporate return?

Thanks for your advice.

Situation: Co A is owned 100% by Z. More than 1/2 of Co A's business is providing management services to Co B owned 100% by Y. We have an affiliated service group.

Co B sponsors a DB plan for Y, the sole employee of Co B. In determining if Z can waive participation without causing a discrimination testing problem, we need to determine if Z is a 'key employee' (since Z is not by earnings alone an HCE and we'd not want to have to make top-heavy minimum contributions for Z if he waives).

The key employee question resolves into what ownership percentage is Z considered to have. The relative revenues of Co B to Co A are 10:1. So, in deciding if Z is a key employee with respect to the plan, how do we determine what percentage Z is considered as owning of the affiliated service group? Is it 100% ownership because Z owns 100% of Co A, one of the constituents of the affiliated service group? Is is 9.09% (1/11) based on relative revenues generated by the companies? Or is some other measure the appropriate one?

401(k) Plan with automatic cashout feature for participant's with vested account balance less than $1,000. The distribution fee charged by the plan administrator for a distribution is $25. If a participant has a vested account balance less than $25 does the Plan have to distribute the balance? Is there any guidance on this issue? Thanks.

As per the PPA, we provide a notice called "Consequences of a Failure to Defer Benefit Commencement" to retiring participants under age 70 1/2. For a plan that has no late retirement adjustment and a participant between age 65 and 70 1/2, would this notice need to be given since the benefit will not be larger?

What are your thoughts on the following scenario:

1 - A Money Purchase and a Profit Sharing Plan merged but kept the sources of money separate;

2 - the new plan did not continue with ongoing money purchase contributions (only Profit Sharing);

3 - company now wants to split the plan to separate out the old money purchase plan assets;

Can the existing PS plan be split in a manner where the MPPP assets are separated out into a PS plan of its own?

The purpose is the client wants to eliminate the MPPP assets (i.e. avoid J&S requirements on that money type) by ultimate termination of a PS plan that only holds the MPPP assets subject to J&S.

Here are two questions I have had in the last few days about FSAs and HSAs. We do FSAs (including limited) but I'm pretty much clueless on HSAs...

1)"My wife just got a new job with excellent benefits that will begin on

December first. If we decide to go with her health benefits and

discontinue my health coverage how would that work since I am on the new

insurance this year? If you could let me know so we can decide which

route to go I would appreciate it." (He now has a HDHP with an HSA)

I would say that he can change because of the change in status.

2)I'm going to be opening a HSA in January. My husband will have a Flex 125. We both have single policies with our employers. He has PPO and I will have a HDHP.

Is this okay for me to have an HSA and him have 125? I know that he can't get reimbursement from my HSA and I can't get reimbursements from his 125.

I would say no to this. She would still be eligible to participate on the flex - even if she spit shakes and pinky swears not to.

Am I going in the right direction on these??

MissChele

I attended a benefits seminar yesterday and one of the sessions that I attended dealt with section 125 plans. The facilitator said that if a person owns 2% or more in a Sub-S corp they were prohibited from participating in the plan. As a recent owner of more that 2% of our corporation and a current participant in our plan, I was caught off guard. I wasn't able to get to the facilitator and question her before she left.

Was the facilitator correct or did I misunderstand her. If she was correct, what can be done at this stage?

In 2008 will a 401(k) plan be required to permit rollovers of tax-deferred contributions to a Roth IRA or will the plan sponsor have an option not to permit rollovers to a Roth IRA? Also, has there been any guidance issued on how the plan sponsor will report the rollovers of the tax-deferred assets to the Roth IRA? Finally, will the plan sponsor be responsible for making certain that the distributee's AGI is under the income limits?

In 2008 will a 401(k) plan be required to permit rollovers of tax-deferred contributions to a Roth IRA or will the plan sponsor have an option not to permit rollovers to a Roth IRA? Also, has there been any guidance issued on how the plan sponsor will report the rollovers of the tax-deferred assets to the Roth IRA? Finally, will the plan sponsor be responsible for making certain that the distributee's AGI is under the income limits?

I think I know the answer, I just need some reassurance and some guidance to citations, if possible.

There are a group of attorneys who have support staff. The company wants to offer and pay for health insurance for the support staff only and not pay for health insurance for the attorneys.

From what I can tell, there would be no discrimination testing b/c the insurance would be provided 100% through health insurance. Also, I'm assuming that attorneys vs. support staff would be an acceptable classification.

Any thoughts?

If an existing 457(f) plan has a rabbi trust and thus the substantial risk of forfeiture was being subject to creditors, how should it be amended to comply with 409A?

A Sole-P, over age 50, maintained a SEP-IRA to which he made a $6800 contribution in 2007. Later in 2007 he joined a 401k sponsored by an LLP (he is a partner) and made a employee 401k contribution of $20,500. Is this allowable or is he considered in excess of the limit?

Mahalo!