I’ve received conflicting answers to this question and I’m hoping someone can set me straight.

Do the contract exchange provisions of the final 403(b) regulations in effect apply to church plans today? Are they exempt until their delayed effective date of 1/1/10? In other words, can a church employee still do a 90-24 transfer?

In the good old days, quartlerly contributions could be satisfied if a plan had a healthy credit balance. However, going into 2008, we cannot assure we not have to "burn" these healthy credit balances. The answer is not (for calendar year plans) that the actuarial certification will be completed by March 31 so you'll likely know the 2008 contirbution. For many plans, draconian consequences or otherwise, the sponsor will not provide the census and assets in a timely manner.

Any thoughts?

Actuaries will thumb-wrestle over how large an active employee population must be before actuarial assumptions have statistical significance. Like Supreme Court Justice Potter Stewart (who couldn't define pornography but knew it when he say it), I feel the same about actuarial assumptions. It would be inappropriate not to assume pre-retirement decrements for the California State Teachers Retirement System and conversely, postulating pre-termination, disability, mortality, severance assumptions for a one-person DB plan makes no sense. Plans in between are subject to debate.

Under current law, using "no preretirement decrements" certainly affects the calculation of current liability, which in turn could affect the deductible limit. I'm unaware of no printed guidance that this assumption is permissible and yet this is common treatment. However, there appears to be no legal issue with employing this assumption to compute the basic cost elements (e.g., individual aggregate normal cost) so long as the assumtpion is reasonable. To the contrary, under PPA, the "no decrements assumption" and in particular, "no preretirement mortality" affects the basic cost computation which is now prescribed by law.

Unless I am overlooking some printed word (a realistic possibility), there does not appear to be any small plan exceptions, such as in the IRS proposed 2008 mortality regulation. What are actuaries planning to do in respect of small plans under PPA? I would suspicion this question falls under the category of "don't ask."

Re IRS Notice 2007-81. This deals with minimum funding and yield curves. If you have questions, contact an Enrolled Actuary. No one who is sane would ever bother to read this, and if they did, wouldn't understand it.

That's my tongue-in-cheek summary. However, the truth is probably substantially similar...

Is new plan language needed, and if so is there any good-faith language available, for plans wishing to allow non-spouse beneficiaries to roll Qualified Plan monies to a Non-Spousal Inherited IRA (with appropriate labelling/reference to deceased name as per Q&A #13 under IRS Notice 2007-7) ?

I don't remember seeing any kind of good faith amendment or model type of amendment but I believe these non-spouse rollover provisions are supposed to be available now in 2007. Did we get remedial amendment relief on this so that we can do it now and amend for it later ?

Any thoughts ?

Is it possible to terminate a 403(b) plan in the same year you start a 401(k) plan (i.e. would the 401(k) plan be considered a successor plan)? Also, it is my understanding you cannot directly transfer the assests from a 401(k) plan into a 403(b) plan. Does that hold true for a direct transfer of 403(b) assests to a 403(b) plan?

Does anyone have any experience with electing foreign plan treatment under Section 404A(e)? This election is required to exempt a foreign plan of a US corp from having to file a 5500. From what I've read, to make the election you need to claim a deduction for the plan or attach a statement to the corporation's tax return electing foreign plan treatment. Has anyone have any practical experience with making the election? Has anyone ever seen this issue be raised by the IRS?

Does anyone know where I could find a sample 415 amendment for both a DB plan and a DC plan. Sometimes companies like Relius publish snap on amendments. I know there's some language in the LMR for a DB plans that the IRS put out over the last few months - I'm hoping to find something a little more straightforward.

How do I go about terminating an HRA? What happens if there is still money in employees' accounts? Does it revert to the employer, do the employees have to be given a spend down option? Since it's a plan termination I don't think COBRA applies.

Plan Year 2006

A Highly Compenated Employee terminated on 11/16/2005, but was paid a commision in 2006 (3/24/2006) that was earned in 2005.

My question is do I include this employee in my 2006 ADP Test?

I am aware of the 2 1/2 month rule, and the commisions were paid 2 1/2 months after severace from employment.

I am correct to say they I should not include this employee in my 2006 ADP test?

In 2006, the Plan mistakenly allowed an ineligible employee to make elective deferrals to the plan.

This was caught in 2007. The employee terminated in 11/06.

The Plan Document allows for the deferrals and earnings to be distributed to the ineligible employee.

My question is what tax code I should use on the 1099 R? The ineligible partipant is 36 years old.

If a participant in a 401(k) plan receives investment commissions are they considered a "disqualified person" with regard to a prohibited transaction?

Does anyone know of or think there's a possibility that the IRS (or DOL?) will require a mandated restatement across the board because of the new proposed regs? I have never come across an instance of mandated restatements for 125 Plans but I guess there's a first for everything. We think the new proposed regs present a good opportunity to make sure all clients' (we're a mid-sized to small TPA) Documents are complete and include everything required by the new proposed regs. However, my boss would like to have some kind of mandate to fall back on to justify doing this so clients will cooperate. Any input is much appreciated!

Yankees Payroll, of course.

year payroll

2007 189,639,045

2006 194,663,079

2005 208,306,817

2004 184,193,950

2003 152,749,815

2002 125,928,583

2001 112,287,143

total 1,167,768,432

number of world series bought in the 21st century: 0

number of Yankees living on past laurels: too many

PRICLE$$

My employer currently offers two HSA account through two different custodians. I'd like to set up my own HSA through someone else because of the investment options. My employer contributes a % and also matches that same % dollar for dollar to employee contributions. Is my employer required to contribute and match the amount in my HSA if I chose to open it somewhere else, outside of their two sponsored HSA plans? Does the Comparable contributions clause in Pub 969 take effect here? The answer I have received so far from my benefits department is that I have to open an HSA at one of the two sponsored plans if I want an HSA at all, but from my research, I think they may be wrong. Can anyone point me in the right direction? Should I print out Pub 969 and show it to them? Is there any other documentation that I can use to present my case?

Thank you very much for your guidance.

100% owner intends to sell 30% of shares to the ESOP and elect 1042 treatment with respect to the sale. Owner's son is an officer of the Company and part of the "next generation" management team. Allocation to owner's son would be less than 5% of the 1042 shares held by the ESOP.

The owner's son is an individual described under IRC section 409(n)(1)(A) -- he is an individual related to the taxpayer under IRC section 267(b). My question is: Is the owner's son also a person under section 409(n)(1)(B)? Under the attribution rules of section 318(a), the son would be considered to own his father's shares, so he would be a "person who owns more than 25%" of the Company.

But, and maybe this is just semantics, IRC section 409(n)(1)(B) starts out by including "any other person", which I think pretty clearly is referring back to 409(n)(1)(A). In other words, the restriction under subparagraph (B) is picking up persons who are not described in (A). Because son is described under subparagraph (A), he is not included again under (B).

Anyone else read this the same way?

Thanks.

Greetings-

I have been looking into setting up a 403b Plan for the 501c3 Non Profit that I serve as CFO. However my Board of Directors like the flexibility of a SEP IRA.

I just spoke with my BofA Financial Servcies Rep and she claimed that because we were a 501c3 we must use a SIMPLE IRA not a SEP IRA.

Further investigation into the IRS Pub 560 and IRS Pub 5305 SEP did not give me a clear answer into whether a 501c3 NFP could contribute to an employees SEP IRA.

Do you have any insight you could provide me as to if my 501c3 can set up contributions to a SEP IRA?

I appreciate your time.

Nick Batch

info@libertytaxglendora.com

Hi,

The company that I work for offers a SIMPLE IRA plan and I participate in it. I don't need my contributions to be tax-deductible, and I like the benefits of a Roth IRA. My question is, would it be better for me in the long run if I just contribute to my SIMPLE IRA up to employee matching percentage, and then put the rest into a Roth IRA?? I don't know much about this at all. Thanks for your help!

The question came up today in our office, on how to track the 402(g) limit as well as the 415 limit in an off calendar plan. We currently have a client who has a plan year of October 1 to September 30.

What I've done with other employers, is track the limits during the plan year, not a calendar year. Both the 415 & 402(g) should be tracked based on the limitation year which is in this case the same as the plan year. My current employer feels that that the 402(g) limit is only a calendar year event, and wonders how would those limits be treated if the participant still has 3 months left in a calendar year to contribute.

Can anyone shed some light on this for us? How should the 402(g)limit and 415 limit be tracked in an Off-calendar year?

A client has a VEBA plan for which the following is applicable:

• At the end of year 2005, included $1M in assets
  
• the VEBA trust account was terminated 1/1/06 and all assets paid out by early Feb. 2006
  
• All participants covered by another plan beginning 1/1/06 (so only payments were for claims incurred in prior years)
  

Since the audit is of the plan and not the trust, would you need to audit the entire year of 2006 which includes claim payments for claims incurred in 2005 and the majority of claims, including all claims after Jan .2006, were paid from the general assets of the employer (making it an unfunded plan upon the trust account termination). Also, my assumption is you would include all plan activity whther from the trust account or from the employer's general funds?