I'm new to new comp plans. Trying to figure out if one would work for my current employer.

If we do a safe-harbor 401(k) (not sure if SHMAC or SHNEC, leaning to SHNEC if we do NC), does that mean any NC component of the plan will pass top-heavy (by virtue of the safe harbor)? And is that answer the same for any type of profit share component, not just new comp?

Thanks in advance for any clarification that can be provided.

If a standardized prototype plan has inidcated in the plan that for any discrtionary non-elec contribution that will be made on a year by year basis it will be integrated with social security,

1) Can the plan choose to integrate at a 0% level for a specific year

2) Could they choose to ti integrete at a .00001% level for a specific year

The reason I ask is that the plan administrator had given us incorrect compensation numbers for a prior years valuation and we reviewed the file and the original contribution was not integrated.

Any other ideas on how to fix without making an addtional contribution?

Thanks in advance.

Does anyone have any recent experience concerning how long it takes for the IRS to acknowledge receipt of letters to be mailed to missing participants? I have a client who mailed a package to the IRS in July containing letters to 5 missing participants in a terminated plan, and the IRS has not yet acknowledged receipt. When do I start to worry?

Hello!

A large company sponsors a self-insured medical plan. Company has promised (through various agreements) to provide certain retired employees and their dependents with medical insurance. The Company pays 50% of the premium the retirees pay 50% of the premium. For 2008, the Company is redesigning its medical plan to move post-age 65 retirees to a company-sponsored fully-insured plan. The benefits are similar (only minute differences) and the premium cost is lower.

My question is whether the company can wrap the fully-insured plan with the self-insured plan so that the health plan is one plan? So there is only one SPD, one Form 5500, etc.

Any help would be greatly appreciated. Thank you!!

Rec'd an e-mail recently asking if this user group is still alive and well. It'd been so long since there was any activity that I'd forgotten I was the leader so Dave Baker had to help me get back in the loop with a new password, etc. So, this site is now once again active for anyone using the Blaze system(s) who has questions or comments, etc.

Please comment on what you think about the following scenario. Employer has a 125 plan. Employer employs seasonal employees and employees are laid off for 3 months of the 12 month plan year (employees work 1st 6 months of plan year, are laid off for the next 3 months and work the last 3 months of the plan year). Employer wants to withhold, pre-tax, 150% of ee share of health insurance premiums for the first 6 months of the plan year while ees are working. Employees would then be laid off for 3 months and their portion of premium would already be prepaid. Employer will pay employer share of premium during lay off. When employees return for the last 3 months of the plan year, ees would pay 100% of their share of the premium. Questions/issues:

1) Is it okay to pre pay for an anticipated layoff?

2) If so, is it okay to not collect the prepayment pro rata over the entire plan year?

3) If an employee terminates during the first 6 months, can employer refund the extra 50% back to employee? (If so, refund would be taxable and employment taxes would be owed, right?)

4) Because of the front-loading, it seems that any deferred comp issue could be avoided. Do you see any issue?

5) Since this is health insurance premiums and not FSA contributions, is the use or lose rule avoided?

I apologize if this post is duplicative of prior posts, but I couldn't find anything directly on point when doing a search. Feel free to provide links to relevant info.

I currently have a traditional IRA, which is invested in equity mutual funds with one of the big mutual fund companies. A friend of mine is a real estate investor; his company creates separate LLCs for each new real estate investment.

I'm looking for guidance on the steps to get to making this investment. My guess is that I need to do the following and questions on these steps:

1. Have the mutual funds sold (still within the IRA).

2. Convert to a self-directed IRA.

Question: How do I do this? Can I just tell the mutual fund to send me a checkbook and I write a check off the IRA?

3. Have the IRA now purchase interests in the LLC

Question: Any tax issues I need to be concerned about?

If there's anything else I need to know, please feel free to mention it! For purposes of this post, assume that the investment is legitimate (so you don't need to warn me about investing in real estate partnerships).

Thanks!

Does 2000-14 cover the situation where the plan's actuarial cost method is changed to the PUC method (in particular, for frozen plans) under Approval 3.01 if (Assets - CB) exceed AL at time of change? Of course, I believe we would establish a charge base equal to the CB so the balance equation balanced (i.e., we would force UAL to $0) because ya can't have a negative unfunded.

It looks like you can but I added the $0 UAL part.

If a company, as part of a divestiture, is terminating employees who are just shy of vesting in their pension and/or 401(k) plans, can the buyer make a one-time contribution to the new employee's 401(k) accounts in the buyer's plan to make up for the present value of the forfeited benefits? What issues need to be considered?

I'm trying to assist a person who quit her company, Worrell Newspapers, Lynchberg, TN, back in 1986 on disability but the newspaper was either sold or closed in 1995. She's never received her vested balance from the plan and I'm trying to help her track down information on the termination of the plan.

I don't think Freeerisa probably has 5500 info going back that far. Does anyone know where there might be a database of information on old plan sponsors? The DOL wasn't much help to this lady but that may be her only resource.

Thanks

Our client is a utility district that maintains a 401k plan as well as a 457 plan. We don't do anything for the 457 plan so I'm really not familiar w/ all of the rules but I have read that rollovers can be made from a 457 plan into a 401k plan. The client would like to terminate the 457 plan and roll/merge those assets into the 401k plan. I'm reading the Regulations and see the requiremetns for plan-to-plan transfers but I'm not sure this will help me. The regs keep referring to transfers among eligible governmental plans. If i go to the 457 definitions i see that an eligible plan is another 457 plan, is this correct? My bottom line question is can the 457 terminate and have the assets merged into the 401k plan w/out offering participants a chance to take distributions? If so, is there a regulation that I'm missing that permits this?

The plan has elected the 5 year rule. Notice 2007-7 contradicts itself or isn't all that clear on this subject. In Q-17 (b) it states that if the 5 year rule applies then the non-spouse bene can roll the amount to an IRA within the first 4 years. After end of 4th year it would need to be distributed in full by end of 5th year. In item (2) within the same Q-17 it states there is a special rule wherein the non-spouse can elect the life expectancy rule if they elect the rollover by the end of the year following the year of death, and the IRA also must use the same beneficiary for life expectancy calculation.

Then in Q-19 it states that if a non-spouse bene rolls the proceeds, and if the 5 year rule was in effect under the Plan, then the the minimum distributions in the IRA are determined using the same 5 year method. So, following that language, the non-spouse would have to distribute the full amount from the IRA within 5 years, correct? And is that 5 years from death? Or 5 years from the rollover?

Looking at both of these Q & A sections it seems like if the 5 year rule is in effect then it is always in effect regardless if the non-spouse does the rollover in year 2 or year 4? Or am I missing something? Bottom line can the non-spouse elect the life expectancy method as long as they do the rollover by the end of the year following the year of death?

I have a calendar year DB plan. The assets were incorrectly reported from 2002 onward. This creates a funding deficiency in 2003 only. The statute of limitations is up 9/15/2007, correct? And, if this is correct, would I simply revise the schedule Bs beginning in 2002 and going forward, but not have the client pay the 10% excise tax?

There was a prior actuary until 2004, but since there was a deficiency as of 1/1/2004, I believe that I must revise the prior returns.

Any thoughts?

Plan year and fiscal year are calendar year. Client has not made required top heavy minimum contribution for 2006. His corporate taxes are due (on extension) on 9/17/2007 (since 9/15/07 is a Saturday). If the client does not make the contribution by 9/17/2007, our understanding is that the client has 30 additional days after the IRC 404(a)(6) period to make the contribution and the deduction will be taken on the 2007 return, but the contribution will still be attributable to 2006 (for 415 annual addition purposes). Furthermore, if he makes the contribution after the additional 30 days, he can still take the deduction for 2007, but the contribution will count as an annual addition in 2007.

Questions:

If a person terminated in early 2007 (January 2nd), earned $100 in 2007, and was to receive a 2006 T-H min contribution of $900, does he have a 2007 415 violation? If so, how is it resolved? Does it matter if he is a HCE or NHCE?

When does the required T-H minimum need to be made if it is after the 30 additional days? Is it by the filing date of the 2007 taxes? If not, when?

If possible, please provide a citation. Thank you in advance.

We have a case that is about to be bounced from Audit CAP on account of a position taken by the Service that is draconian. Please read over this fact summary and email us if you have ever negotiated a more favorable settlement in a case like this in either Audit CAP or VCP. We are trying to get a handle on whether cases like this can ever be processed reasonably. No names needed of course, but if you have a similar case that was settled more reasonably, please provide as much details as possible including the Service Rep who worked the case. Please email as soon as possible - we need ammunition.

Facts: Mid size company with 200 blue collar employees maintains a 401(k) plan with a match. Almost 20 years ago, the Company began providing small cash bonuses to NHCEs ($50 every two weeks) for meeting target goals. This "beer and pizza money" was of course not subject to deferrals. The problem is that the plan was a prototype plan and the definition of compensation did not exclude these bonuses. The compensation definition also inadvertently included some car allowances for several of the HCEs. The IRS audits the plan and determines that there should be deferrals on the bonus and car allowance money and wants the company to go back 20 years to make a qualified nonelective contribution in the amount that should have been deferred, plus the match, plus earnings for all years. Even though the bonus amounts are relatively small, when you go back that far and make the deferral, match and interest payment, the sum is over $100,000.

We have offered to either make the match (and interest) only, or to permit the employees to make the back deferrals and provide the match and interest to those who choose to defer. We do not want to make the back deferrals because it gives a windfall to the employees which doesn't seem right and will at a minimum cause the company to terminate the plan and at could cause them to go into bankruptcy. We can provide affidavits that none of the employees intended to defer on their bonuses, but the IRS is stuck on this correction method.

Assume Corp. X buys a long-term disability contract for its 401(k) plan, P, to provide disability benefits payable to the plan accounts of those participants becoming disabled, equal to the contributions that were made when the employees were actively employed. According to the new proposed regulations, the employer's payment of the premium would be treated as a plan distribution to the participant taxable under Code Section 402(a). If the benefits under the contract are payable to the plan and allocable to the participant's account, the proposed regs provide that the amounts are excludable from the participant's gross income under Code Section 104(a)(3) which is recontributed by the participant to the plan as an employee after-tax contribution. My question is, how is the distribution of the disability benefit portion of the participant's account balance treated for tax purposes: (1) is the portion excludable under Code Section 104(a)(3)? or (2) is the amount of the distribution subject to tax under Code Sections 72 and 402, with the amount of the deemed employee after-tax contributions treated as a nontaxable return of basis?

I have a relative who works 20-25 hours per week, exceeding 1,000 hours in a year and has been, up until now, excluded from participating in her company retirement plan.

She'd like to request an SPD or copy of the plan document but is nervous that it may negatively impact her employment.

Does anyone have a good suggestion on where to go next for this information? Should she get the DOL involved and have them ask for an SPD for her?

She may be in a classification that is excluded from participating but until she sees the SPD, she doesn't really know.

Any suggestions are welcome. Thanks

Does Rev. Ruling 2006-36 apply to section a self-insured medical reimbursement plan described in Treas. Reg. section 1.105-11?

The issue in the Rev. Ruling is whether amounts paid to an employee under a reimbursement plan are excludable from the employee's gross income under section 105(b) if the plan provides that amounts may be paid as section 213(d) medical benefits to designated beneficiaries (non-spouse, non-dependents, non-employee).

The answer is no, the amounts are not excludable, and in fact, none of the payments made to any person, including amounts paid to the employee, spouse, or dependents to reimburse medical expenses, are excludable from gross income.

The Rev. Ruling discusses the issue in the context of an HRA, but it seems like this could cover plans described in Treas. Reg. section 1.105-11 (self-insured medical reimbursement plan).

Can anyone shed some light on this?

Thanks!

In order to Pass the ADP Test, can you target 5% QNECs to terminated non-highly compensated employee who had very low gross earnings?

My friend is getting a divorce. She is filing a QDRO for her share of her husband's ESOP, it is a small company, her share will be about $ 200,000 worth of stock. She has heard through the grape vine that she "cannot" cash this in till her ex-husband is 55 years old. But one of their friends that worked at the company cashed his in. She can't ask him because he is friends with her ex. How does she find out about cashing this stock in? I guess the attorney for the company is stepping in and putting his two cents in. Her attorney that is doing her QDRO doesn't seem to understand ESOP's very well, she is paying her $ 2000.00 to file the QDRO but can't seem to answer any of these questions. Go figure. I have tried to read up on ESOP's and I have found that some people do cash them in or the "EX" buys the other out.