Can an employee of a company of 20+ employees opt out of the plan for a private Medigap policy?

Thanks for your help

Ken

Does anyone know if the PPA technical corrections bill was passed?

A company is closing Dec 31 and I need guidance of what needs to be done to terminate the 401(k) plan. Any helpful resources would be appreciated.

Also, the plan has been slowly laying off people since July and have had issues with making contributions since so we will have to figure excise tax and lost earnings. Of course the 401(k) is not the only thing they haven't been paying. The bank and creditors are lining up outside their door looking for money. Maybe I'm getting a little ahead of myself, but what if they run out of money before all contributions, excise tax and earnings can be made up?

An employer decided, effective with the plan year beginning 1/1/08, to add a safe harbor match to an already existing 401(k). They sent the notice on December 1, 2007 but, yes - you know what's coming - they missed a group of employees (about 15%) when sending the notice.

Can this be corrected and the safe harbor status maintained? The 401(k) reg don't appear to allow the plan to have a fall-back ADP/ACP testing if it is a safe harbor. Question #10 from the June 2006 ASPPA Q&A's indicates that it could be corrected under VCP but I'm not sure what the correction is:

http://www.irs.gov/pub/irs-tege/epcrs_asppa_qas.pdf

Has anyone used VCP for this before? I guess that the company could go back and eliminate the safe harbor match (giving notice of course) which is really not to the advantage of the participants. I don't know that they have actually signed the plan amendment yet. Am I missing something here - there should be a better way to fix it. Other ideas? Thanks.

PAL

potential client referred to me was told (in writing by a major HR firm) that it is too late by regulation (not laziness) to start a 401(k) Plan for 2007. "plan must be in effect for one month. 12/1 was the deadline."

this is not a Safe Harbor plan - there are no employees.

I have searched about and can't find any reference to any deadline other than last day of year.

(I told him to tell HR company to set up the plan with a 2/28/08 year and then have a short year 12/31/08. seems to work around OK to me. can't be that easy if that is a real reg.)

thanks

I wrote an e-mail to Americans United for Separation of Church and State:

Hello, I have been familiar with your group since at least reading an interview with Mr. Lynn in American Legion magazine in the early to mid 1990's.

I work for the IRS, and an issue that occurred to me and my fellow trainees is that it is mentioned that churches do not have to file 5500s for their defined benefit or defined contribution retirement plans, but once they do, they are locked in to doing so afterward-so we wondered why they would do that. I dug up a book by Paul Blanshard which pointed out that in the recent past (after 1870), the courts had stopped deciding property disputes in favor of the lay members of the congregation ( i.e. the non-clerical members) and had started deciding matters in favor of the bishops and hierarchy. I will include an excerpt of this passage from Blanshard at the bottom of my e-mail, but I draw your attention to it only in that it reminded me of the fact that in court cases lay members of churches can easily stand to lose in favor of the bishops.

So, do you know of, or have you handled, any court cases involving defined benefit plans or defined contribution plans and churches where the churches filed a 5500? Or retirement plans where the churches did not file a 5500? If so, in these cases, who won? The lay or clerical members?

________________________________________________________________________________

_______________________________

* I remembered a book by Paul Blanshard called God and Man in Washington. On page 60 of that book, the author writes "In matters of institutional power, the Court cannot maintain such neutrality. When a quarrel for the possession of physical property breaks out in a church, someone must decide which faction has title to its physical assets. In such cases the Court follows the charter of the church and not necessarily the conventions of democracy. If the charter is congregational, the congregation rules. If the charter is autocratic, the bishops rule. This policy is something of an innovation, since the courts before 1870 tended to say that any church could be ruled by a majority of its members. What Professor Mark DeWolfe Howe of Harvard has described as "enforced congregationalism" has now been abandoned". Howe used that phrase in Leo Pfeffer's Church, State and Freedom, specifically Volume I of the Conference Proceedings of "The Institute of Church and State" of Villanova University, 1958.

Blanshard mentions two notable cases regarding Church property, Kedroff vs. Saint Nicholas and Saint Peter's Roman Catholic Parish vs. Urban. The former case involved the conflict with the Moscow home church and a New York located church in 1952, and the latter case involved Bishop John F. Dearden in Pittsburgh and the Urban Redevelopment Authority.

Their answer:

No, we’ve never handled any cases like this. A tax attorney who specializes in non-profit organizations would be a better resource for you.

http://public.findlaw.com/mboards/webx.htm...0@.ef068a3/1977

IRC Code 414(u) military deferral, Rev Proc 96-49, CFR

1002262, IRC 414(u)(3), DOL Reg. 20 CFR 1002.265©

I was doing some research on these topics. I have a

brother in the military. Does anyone have any info on

how this applies to a benefit plan.

t has to do with military leave. What happens if the employee benefit plan has a last day provision, and the employee goes off for his or her military service before the last day of the year? Does the employer have to make a contribution for that year?

Also, anyone with any info on plan terminations?

Can't seem to find a clear answer on this...

Grandmother owns a traditional IRA. She dies. Mother is sole beneficiary. Mother starts taking RMDs at age 70 1/2.

Mom now dies. Son is sole beneficiary. How are the remaining IRA assets treated?

1) Does he have to take it all in the year of death?

2) Can he take it over Mom's life expectancy?

3) Can Son take it over his life expectancy? (I don't think so).

4) Something else?

Co A has a 401(k) and was purchased by Co B in an asset sale. The 401(k) was not part of the sale and is in the process of terminating. Co. A has a couple of 'EEs who are age 70 1/2.

Am I correct in that those 70 1/2 employees would have to take a MRD from the Co. A's plan? Or does it matter if Co. B purchased Co. A prior to the termination of A's plan and they (A & B) would have been considered a controlled group and therefore those 70 1/2 employees have not yet terminated employment from the controlled group yet?

NQDC plan was set up some time in 2002. Plan has 5 participants who all made deferrals until 6/30/05, then stopped. Plan has not yet been amended for 409A.

Is there a violation of 409A?

If so, I understand the penalty to be income taxes + 20% excise tax + interest, right?

Can this be avoided by amending the plan to be compliant with 409A prior to 2009?

Thanks!

A stock appreciation right vested in 2006 and was not in compliance with 409A. (It is subject to 409A because it doesn't fit the reg 1.409A-1(b)(5)(i)(B) exception to deferred compensation). Part of the violation included the employee having the right to elect and in fact electing to postpone payout until 2008.

For 2006, there was 409A income subject to withholding and reporting in an amount equal to value in 2006 (stock value less exercise price), when the employee first had the immediate right to exercise the stock right. However, the employer did not realize its reporting and withholding obligation with respect to the amount that vested in 2006.

The stock price has gone up since 2006.

Does the employer have to report and 'withhold' on the 2007 increase? or just wait until 2008 when actual payout will take place?

Also, any suggestions about how to handle the missed 2006 reporting and withholding at this late date?

There have been rumors around that COBRA audits on the horizon...does anyone have documentation or knowledge on this? I have contacted the regional office and they were not very helpful.

Regarding a Keogh Money Purchase Plan: If MPP is frozen in Jan 2008 can the contribution for 2007 tax year be made after it is frozen (Feb or March 2008)? If the contribution for 2007 must be made before it is frozen (ie contribution made in Jan and plan frozen on March 1) will a contribution need to be made for the first two months of the 2008 tax year? Thank you!!!

I'm working at a TPA firm where they suggest clients with late deferrals go through the Voluntary Correction Program. I have not encountered this at prior employers - we always filed 5330s and deposited the lost earnings and called it good. I went through an audit a year and a half ago in which a client had late deferrals and had filed a 5330 & deposited the earnings - the auditor was satisfied with that alone.

I currently have 2 clients who have late deferrals totaling less than $3,000 each. I'm wondering how many of you use the Correction Program in a case like this and if something has changed recently where the industry is using the Correction Program for late deferrals.

Thanks!

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