Sam (owner) has an IRA and a 401(k). Sam's DOB is 5/21/1937. He will be 70 1/2 on Nov. 21, 2007.

During early 2007 (say January) he rolled his IRA over to the 401(k) plan. This rollover occurred prior to his turning 70 1/2. No RMD was done from the IRA.

To calculate his RMD for 2007 his 12/31/2006 balance would be used. Do I need to use his IRA balance as of 12/31/2006 to calculate even though it wasn't part of the 401(k) at that time?

Thanks

A doctor in a 3 participant pension plan has a USAA life policy with a face amount of $300K and a cash value of over $200K, they have to pay quite a bit in PS 58 costs each year on the policy. The doctors wife was inquiring as to how this may be avoided and if the policy could be assigned in the doctors name rather than the plan. I explained this would possibly be a taxable event. He is 65 and still in practice. If he gives up the insurance he loses the face amount. Is he stuck with these costs? A 1035 exchange???? I always felt life policies had no business being held in a qualified retirement plan

Co. A is 100% owned by Able

Co. B is 100% owned by Baker

Co. C is 50% owned by Able and 50% owned by Baker.

Is it true that A&C are in the same controlled group and B&C are in the same controlled group, but that A and B are not in the same controlled group?

If Co.s A and B should merge into C, retroactive to mid-year 2007, what effect would this have on testing?

I've been asked by a client if I could tell them an "average" matching contribution formula or perhaps what the most common match formula might be that we see in Qualified Plans.

I've been in pensions for 17 years and in the old days it was very common (in our area anyway) to see a 50% match up to 6% deferred.

But...that WAS in the old days. There are so many different possiblities now, along with the safe harbor match plans, that I can't even begin to imagine a general average match formula.

Also, many of our small clients have suspended or eliminate their match formulas for economic reasons.

This particular client uses a 50% up to 4% match and was told by an employee on their benefits panel that the match was low.

Any thoughts?

In a profit sharing plan, a participant hired in February and eligible in June. When calculating their portion of profit sharing contribution, would you base it on all wages for the year or only those since their eligibility date?

Suppose two companies, each who maintain their own retirement plans, are determined to be an affiliated service group under the management organization definition. Yet they have operated independent plans with different eligibility requirements and employer funding. Definite VCP candidate?

If a participant of a 401k plan made deferrals and received match contributions then terminated and is fully paid out from a plan by the end of the plan year should they be included in the ACP test?

Fact scenario: Parties were divorced in 1997 and the settlement agreement provided that the parties would divide pursuant to a QDRO the husband's Optional Retirement Plan. The ORP is NOT DIVISIBLE by QDRO and the Participant cannot withdraw any amounts from it until retirement (or death, of course). In the intervening years the parties attempted through their original divorce attorneys to agree to a settlement of this problem. Now in 2007, I have been asked to attempt to remedy this problem and my proposed solution is to require husband at the time of retirement to rollover to an IRA in his own name (a permitted transfer under the plan) the amount due his ex-wife and then to change the name on the IRA account to her name.

My question is whether the agreement the parties sign to effectuate this transfer will be "a written instrument incident to a divorce decree" for purposes of section 71(b)(2)(A) and 408(d)(6).

I suppose that I could draft the agreement as an amendment to the settlement agreement but because I generally deal only with QDROs I was not certain of the best way to handle the form of the agreement.

Finally, I think that the transfer would be tax-free under 1041 as the fact scenario likely satisfies the requirements to rebut the presumption in regs.

Any thoughts would be appreciated.

does the 401(a)(26) Minimum benefit have to pass in the cb alone or does the aggregate allocation of the nc and cb have to pass it if we always test together?

This is a stupid question, but I have searched high and low and cannot find anything that directly answers this question: Were SEPs required to be amended for GUST? If so, please provide me with a cite to specific materials. Thanks!

A 401(k) plan permits designated Roth contributions. If a participant terminates employment and takes his/her entire account balance and then is rehired, does the 5-year Roth period start over?

I know that HRA's are subject to ERISA. But, are HRA's sponsored by a government subject to ERISA? I'd appreciate any help.

Our employers, with balance forward accounts, currently send in their 401k contributions in various formats such as spreadsheets, handwritten ledgers or whatever way they choose. Needless to say we feel like we are swimming in paperwork because they continuously come in weekly, semimonthly and monthly. Once the contributions are received we then manually input the figures into Relius.

Is there a way to have the employers send in a standard formatted contribution report via electronically so that the information can be imported into Relius? Manually inputting contributions is very time consuming, results in data entry errors, and the paperwork must be filed into file folders which becomes rather bulky.

I would like to streamline this process with the start of the New Year, and any help from the forum is greatly appreciated.

Thank you,

Denise Dupuy

We currently have a "one-man" PS Plan that we are filing a Form 5500EZ for. Now the participant has reached 72yrs old and will be taking out more money from the Plan than his normal deductions. If the Plan assets drop below the $250,000 required minimum do we still need to continue to file the 5500EZ or can we stop filing once the assets fall below the $250,000?

Thanks in advance for your help!

-Rachael

Greetings

Is there a legal mechanism to move an existing Whole Life policy from individual ownership into a new Defined Benefit plan?

It's more of an insurability issue than trying to do something fancy.

I would presume that the Plan buys the Policy from the Employee and that there are tax consequences of some sort for the selling Employee.

Any body know the answer off the top of my head or know where to send me for guidance?

Thanks

Christopher

If a company changes their payroll frequency will participants with existing 401(k) plan loans be required to complete new loan paperwork (i.e. promissory note, truth & lending, payroll deduction authorization etc..) or is a letter from the plan trustee sufficient to make the changes?

they just released the CPI value for Sept, so I calculate the limits as follows:

catch up - 5,288 round to 5,000 no change

deferral 15,866 round to 15,500 no change (last year was 15,501 so just got the increase last year)

comp limit 234,280 round to 230,000

415 DC limit 46,856 round to 46,000

DB limit 187,424 round to 185,000

key ee 152,282 round to 150,000

HCE 105,856 round to 105,000

twb is calculated differentely, but I expect that to be 102,300

and now, just released (I was off a little):

nope, must have just missed. the wage base will be 102,000.

In a recent conversation I was informed that there is a DOL "ruling" (more likely an advisory opinion) that states that if a 401(k) plan uses plan assets to pay for investment advice the registered investment advisor may not provide advice for outside or non-plan assets of participants. Does anyone know of the DOL piece referenced? Thanks in advance for any help you may lend.

Plan A was able to terminate the lump sum benefit provided to its participants (possibly due to the financial conditions of the plan). Plan A is now seeking to merge with Plan B. Since Plan A participants are no longer entitled to a LS benefit, if the two plans were to merge, do you think the merged plan would once again have to offer the LS benefit to the Plan A participants. I say no, because there is no LS benefit offered immediately prior to the merger.

The plan document allows for no minimum age requirement and therefore an employee is deemed to satisfy the age requirement upon hire.

However, is there any issue at a state level that could affect this participant's eligibility due the contractual nature of an enrollment form.

For example, say that a state has a contracts rule where a valid contract requires all parties to be age of majority (i.e. age 18). Is it possible that an employee age 16 entering into a salary deferral agreement with the employer could be creating an invalid or unenforceable contract?

I understand that ERISA rules have supremacy over state rules. It appears to me somewhat that ERISA may not have a specific rule regarding a deferral agreement (as a contract) and in the absence of a federal rule (such as ERISA) the state rule would hold.

Any thoughts?