Just want to make sure I am not missing anything.

Basically, the 404 adds a cusion amount of 50% of the Funding Target (CL @ BOY) to the minimum required contribution.

For a new plan without past service credits, the Funding Target and the cusion amount would be zero and the minimum/maximum would be the same.

This is not in line with the current 150% of CL less Assets limit which is available to new plans.

Has this been addressed by any guidance?

I am revising a money purchase plan, and the employer wants to remove as many optional forms of benefits possible from the plan. Right now, we have 50% QJSA, 15 year annuity, lump sum, and purchase of an annuity contract as optional forms of benefits. I know that we have to keep the lump sum and the QJSA. The question is, are we required to have a single life annuity form of benefit? If so, where should I look in the regs/Code for authority.

Thanks.

Business and qualified plans are merging. New Trustee decides to move other plan's assets [a few million $$] to an investment house who happens to be a client of the business the Trustee owns, even though the new funds have much higher expenses - Trustee is trying to recipricate business relationships. Is this a prohibited transaction, or at least a Trustee liability issue, since the decision is being made to benefit her business rather than to act on behalf of the participant's best interests? No due diligence was involved in this decision. Any authority or other sites on similar issues appreciated.

The examples of permissible payment options for individual insurance premiums in Prop. Treas. Reg. Section 1.125-1(m) appears to have a typo--it gives three examples of options, ending with:

(iv) The cafeteria plan issues a check in the same manner as (iii), except that the check is payable jointly to the employee and the insurance company; or

(v) Under these circumstances, the individual health insurance policies are accident and health plans as defined in §1.106-1.

There appears to be something missing after the "or" at the end of (iv) (perhaps something along the lines of, "The cafeteria plan issues a check directly to the insurance company.")

I haven't found anything indicating an IRS acknowledgment that this is an error or a correction. Does anybody know of anything on this?

Say you have a plan with Profit Sharing contributions, forfeitures, employee deferrals, and a matching contribution. In no particular order you have 402(g) violations, 415© violations, ADP and ACP failures, and just to make life interesting, it is an off calendar year. (This has been happening for at least 5 years). These failures were all corrected timely according to the plan document.

Is there any citable authority for the order in which to make corrections?

For advance credit - consider that in addition to the above failures, there is also an operational failure which occured in each of the above years in the Profit Sharing contribution which has just been discovered. Correction of the operational failure will change and maybe eliminate most of the prior failures.

And yes, the client is being billed.

Starting up a new qualified plan in 2008 and client is undecided at this point if he wants to commit to the 3% safe harbor. However he does like the idea of automatic enrollment and he likes the idea of a 2-year vesting schedule if he does later commit to the safe harbor 3%.

Is anyone aware of anything in the current regulations that would probibit a "maybe" notice with a QACA?

A client is starting a Death Benefit Only plan. The benefit is paid by the employer if the employee dies while still working. There are no salary deferrals. Are there any filing requirements for this type of plan?

I know that if an account holder is 65+, he can use his HSA account to reimburse for health insurance premiums. What if it is the spouse's health insurance, and the spouse is under 65? Can he pay for her insurance premiums out of his HSA? Anyone else run into this question?

New Comp Plan for 2007. Two Owners & 15 HNCE's.

Owner # 1 has 2007 compensation of $20,000.

Owner # 2 has 2007 compensation of $100,000.

Can someone clear up what tests need to pass in order for a New Comparability Plan to meet all Non-Discrimination Testing requirements, specifically the Plan itself, and then each HCE Rate Group.

Can the Plan pass the Gateway test and the Ratio % test, but fail the Average Benefits Test and still pass all Non-Discrimination Testing requirements?

What about the Plan passes the Gateway Test, Ratio % test, and Average Benefits Test, but one HCE Rate Group fails the Overall Ratio Test? Is this allowed?

Thank You in advance.

Is the "need to prevent foreclosure" defined anywhere. For example, must eviction actually be threatened by the lending institution? Or is a simple, "you're two months past due" notice sufficient? Is there any published guidance anywhere?

I posted this question as a response in a different thread, but believe it will receive more attention as a separate topic.

A client is having trouble finding a bank or insurance company that will set up a deferred annuity for a missing participant in a MPP.

I have to believe this comes up frequently. Does anyone have any recommended annuity providers?

The old TPA of a Plan I am taking over badly mixed up the records when they took over a Plan a few years ago. For many people, they have some or all of the SHNEC (Safe Harbor NoneElective Contribution)money mixed in with the SHMAC (Safe Harbor Match Contribution) money.

I think it may be possible for me to straighten this out. But maybe not, I am trying to get records now. I am sure it will be a heaache.

In the future the Employer does not expect to ever put in a match, again.

I would like opinions:

What do people think about just having both types of money in the SHNEC account from now on?

Plan Sponsor currently has participants out on active military leave in Iraq. Sponsor continues to pay their salaries even though they are abroad as w-2 employees. Sponsor is implementing auto-enrollment 1/1/2008. Some of these guys do not have deferral elections. Has anyone ever run into this and decided whether or not to auto-enroll them?

Does the transition rule in Notice 2007-46 allow an employer to amend a 409A deferred compensation plan that would otherwise not pay out until 2011 to pay out all deferrals in 2007? The argument is that the employer is amending the plan to comply with 409A by taking it out of 409A by having payments qualify under the short-term deferral rule.

The regs state that termination and distribution of participant accounts prior to the effective date of the regs is permissible if the contracts are updated to comply with the final regulations. The plan I'd like to terminate has a plan document. Other than adding a provision that allows for distributions upon termination, does that document have to comply with the final regs or can we terminate "as is"?

Person is beneficiary of an inherited IRA. He dies after he has been taking RMD's. Estate is beneficiary. Can the estate continue to take distributions in same manner as he was?

Client has a new corp from which he willtake a small salary. Can a db plan use a high 3 average comp from his previous sch c income to fund for a benefit that is higher than 100% of the current year w-2 income? No previous db plan.

If a prohibited transaction occurs, and the plan terminates but the PT has not been corrected, is there any effect on the PT or correction method?

The ERISA Outline book says that the taxable period for determining the amount of the excise tax on a PT is the first of the following dates:

1. The date the IRS issues a notice of deficiency for the excise tax,

2. The date the tax is assessed, or

3. the date the transaction is corrected

I understand the corrected part, but what triggers the first two?

My example, a client has land in their 401(k), and they want to buy the land from the plan. If they buy the land and pay the excise tax, the transaction is not corrected, so the taxable period continues. What would cause the issuance of Notice of Deficiency, or cause the IRS to assess the tax?

I'm not an expert on PT's, but I want to give the client some things to consider with their attorney when they start considering this.

Any pointers would be greatly appreciated.

This is a very bad joke. The punch line is going to hurt. What is really sad is I drag it out so long. I wouldn't be surprised if Dave Baker kicks me off for this one. Exit now before it is too late.

Ok. You were warned.

Our story takes place in Russia, back in the good old days, before the glorious revolution, before there was talk of ‘proletariat’ and ‘bourgeoisie’ and other terms I have no idea how to spell. And it concerns a certain Rudy Rudovich, who lived in one of the small villages that surrounded Moscow. Rudy was a poor dirt farmer. That is being kind, perhaps in a good year he had a bumper crop of ‘dirt’. You see, Rudy was missing a few screws, so to speak. And our hero was quite the hen-pecked husband.

Once when I was telling this joke someone stopped me and said I shouldn’t be redundant. Hen-pecked and husband go without saying. Now, I have to take the individual’s word for it. I have never been married, and as I am in my mid 40’s maybe I will never find that out. Well, anyway, it was “We need more firewood, Rudy” and all he could reply was “Yes, dear.” Or “Are you done with the dishes?” “I will get to them as soon as I finish the sweeping, dear”. Poor Rudy. Day after day. Month after month. Year after year.

If I had more time, I would explain where the term ‘hen-pecked’ comes from. But that is another bad joke, and it’s Christmas, and having you hear one bad joke is unkind enough for the season.

One spring day, the sky was dark and threatening. But it was mid-April, and Rudy always sowed the seeds that day, and he wasn’t about to break his pattern. His wife had invited some ladies over. They were playing bridge, and drinking tea, and eating cupcakes with frosting on them. You know, the ones cutely decorated with those little round silver candies on top. Yeh, I thought you knew. Well, Rudy grabbed his seed pouch and headed out the door. Oh, maybe some of you don’t know. Those little silver candies are called dragees. You can get about 2 ounces of them for a couple of bucks. Well, maybe if they are on sale you can get them cheaper, but they are not that expensive. And you get so many of them, I don’t think they would ever sell them in bulk. Did you ever read the label on them?

It says ‘Use only as a decoration’ and ‘Non-edible’. I’m not kidding. That’s why they make them out of sugar so kids won’t eat them. Yeh, right. But seriously, look at the ingredients: Sugar, corn starch, gelatin, acetic acid and silver. Honest. They actually use silver in making these. That’s why you aren’t suppose to eat them. You could get silver poisoning. Oooohhh. A plot for a muder mystery. Slowly poison someone by…oh, that’s another story. Anyway, do the math, silver sells for around $4.50 an ounce [gee whiz, 5 years ago, now its around $14.50] and you purchased 2 ounces of these things for a couple of bucks. There must be enough silver in these things to, hmmm. And that would be if you ate the whole container of them. Guess I wouldn’t lose sleep over whether you ate any or not.

Ok, see you learned something new, so maybe it was worth reading this far. Now leave before you get to the punch line because it is going to hurt.

Where was I? Oh yeah, Rudy was going out the door to plant the crop. About 5 minutes later there was a clap of thunder, and the skies burst forth with a torrential downpour.

Of course, one of the ladies blurted out “Guess it won’t be long before your husband comes back, huh?” to which his wife replied “Rudy? That idiot hasn’t got enough sense to come in out of the rain”

And so it was true. One hour, two hour, all morning rain, rain and more rain. And still Rudy had not returned. Finally, about lunch time Rudy swung open the door, soaking wet. The ladies looked up at this somewhat pathetic looking figure, but rather than express any words of comfort or sympathy, there was nothing but giggles. And then his wife let into him.

“Don’t you dare track mud in the house”

“Yes, dear”

“And don’t you dare hang your wet things over the furniture”

“I won’t. dear”

“Rudy, I swear, I don’t think you even know what rain is, do you?”

“Guess I don’t dear”

Looks like it’s gonna be another banner year for the dirt farmer!

So spring passed by, summer followed. One Wednesday evening, about 7 there was a knock at the door. Rudy’s wife looked up from her book and shouted “There is someone at the door”

“I’ll get it, dear” Rudy said, emerging from the kitchen, soapy hands, apron and all.

He opened the door, and standing there 6 individuals – members of the newly formed communist party. They had a very good sales pitch. “Be a Red, or be dead”. A convincing argument, especially when accompanied by the guns they brandished. They wanted Rudy to go their meeting that night, and, though he wasn’t the brightest, Rudy knew it was in his best interest to go. He had started to walk out the door when that old familiar voice resounded “Not until you finish the dishes, mister”

Rudy returned to the kitchen “Of course dear. How silly of me”

One of the communists took a step in and said “Listen lady…” but that was as far as he got.

“Excuse me. Did I invite you in?”

Wisely, he took a step back. Perhaps the world of events might have been different if there were more Mrs. Rudovich’s!

It took Rudy about 5 minutes to finish his chore and off he went. Secretly, his wife was glad. She put her book down, got up from her chair, went over to the bookcase, and behind the third book on the middle shelf pulled out a chocolate bar.

The Wednesday night meetings went on for about two months.

(By the way, I could have picked any night of the week, it has nothing to do with the joke if you are trying to figure out where this is headed. I will warn you again to give up on this one, it will save you a big groan at the end.)

After about two months, the communists (or Reds, if you will) decided they weren’t making much progress with Rudy. They convinced him he would best serve the party by simply growing food – they would handle the nasty end of things. They even managed to convince him it wasn’t a good idea to plant in the rain, as the seeds washed away. And to top things off, they gave him a red bandana to wear. “Remember Rudy, be a Red or be dead” Wear it for your health. Rudy was only to happy to comply.

Fall came and went, followed by winter. Rudy put up a Christmas tree (well, this is a Christmas joke, I have to fit Christmas in somewhere). It was one of the few times of the year there was peace in the house. Ok already, the rest of the year his wife gave him a piece of her mind. But that’s not the punch line I have been warning you about. It is coming. Beware!

Spring came at last. And it was almost like déjà vu. Threatening skies. The wife had the ladies over for bridge. There were iced cupcakes, but no silver candies on top this year. No, not because they were worried about the warning labels, but simply because Rudy’s wife was on a diet.

Rudy headed out the door armed with his seed bag. And just like last year the skies opened up. Terrible rainstorm. Of course the ladies started in with some nasty remarks, remembering last year’s fiasco. Finally, to climax the snide remarks Rudy’s wife said “I told you that dolt doesn’t know what rain is”

And at that moment, the door swung open, and banged against the wall. Now Rudy’s wife was sitting in the chair with her back to the door. She didn’t know Rudy was dry – he had been standing under the eves on the porch rather than being out in the garden. The other ladies were somewhat speechless, so his wife, bidding 2 hearts, added “Don’t track mud in the house”

“Not muddy dear” Rudy replied.

“Well don’t drip water all over the place”

“Not wet dear” came the reply.

“Look, Mister. Don’t get wise with me. I know you don’t have enough sense to come in out of the rain. Like I was telling my friends, you don’t even know what rain is. Just what have you got to say for yourself?” And turning, her jaw dropped as she saw her husband standing there, dry and clean.

And the Rudy, waving that red bandana the communists had given him simply said

“Rudolf the Red knows rain ….dear”

I warned you it was bad.

All kidding aside, may God bless your holidays! Much Peace in your homes!