Hi, my brain's not working and I'm going around in circles, so I'm wondering if someone could verify my #'s before I call my attorney client and get myself in trouble:

Plan is 5/1/06 - 4/30/07

Comp limit = $220,000

402g limit = 15,500 (or $20,500 for aged 50+)

Annual Addition max = $45,000 (or $50,000 for aged 50+)

HCE = comp > 95K 5/1/05 - 4/30/06 (doc does not use calendar year comp)

thanks!

Annie

I'm getting ready to terminate my 401K single payer plan and just discovered I should have been filing Form 5500EZ since 2002 and haven't been. My plan doesn't qualify for the delinquent filer voluntary compliance program since the only employees are myself and my spouse.Can you give me some guidance on how the IRS treats the penalties? If they follow their rules, it would be $15,000 for each of 4 years. Does it make a difference that I'm terminating the plan? Any help most welcome. Shirah

409A has made it clear that you can move money to the 401k from the NQDC plan after testing.

What about the reverse? Is it possible to defer/rollover the returned excess contributions from the 401k directly to the NQDC Plan? (staying pre-tax)

I've been researching and can only find that the sponsor must make a taxable distribution to the participant.

I would appreciate any regulation references that would help.

Districts routinely offer retiring teachers a "severance" payment based on accumulated sick leave. A teacher with no accumulated sick leave would be entitled to no severance. Both 409A and 457 contained exceptions for bona-fide sick leave payments. My understanding is that this exception means districts will not need to be concerned about the final 409A regs. Agree?

There doesn't appear to be an EPCRS correction method for this problem. Do you apply the general correction principle of putting the participants in the positions they would have been in had the failure not occurred? If this is the case, should their elective deferrals made during the 6 months after the hardship distribution be taken out of their plan accounts and taxed? Thanks in advance.

An employee has exhausted all flex dollars for the plan year ended 6/30/07. She has a $900 OB Care bill that started in June. She will be seen for the next several months and is making payments as time goes on. What is sufficient documentation for reimbursement for this claim? The bill turned in today states a prior balance of $835, todays charges of $225 and payment of $325. She requests a full reimbursement of her payment. Can we do that or does 'todays charges' have to be at least the $325? Thank you!

Rec'd new question today - participant is filing bankruptcy and requested a hardship withdrawal from her employer for overdue association fees as well as attorney fees. My gut response was that bankruptcy was not a qualifying event and if participant got an eviction notice due to late assoc. fees and/or mortgage payments, those would qualify. Employer told me she thought one's home is protected under bankruptcy. I have no experience or knowledge in this area (whew!). So - is the bottom line that the participant is unable to use the hardship provision due to non-qualifying event? Thanks in advance to anyone that responds!

The owner gives everyone the required 3% safe harbor non-elective, however he decides he does not want one for himself for only the 2006 plan year....can he do that? Being the owner, can he elect on a year to year basis, when he himself, would recieve the 3% if in fact all NHCE's got their correct allocation?

A Financial Advisor was told today, that in the next 2 years all 401k plan must allow for In-Service Distributions, is that true? What can I read about this if it?

Thanks

We represent a plan that has a few participants, some with significant account balances, who cannot be located. These participants are approaching their required beginning dates and the administrator is getting nervous. He would like to distribute these accounts in accordance with the EBSA guidelines for terminating dc plans with missing pparticipants. Is this possible/advisable? It seems that the EBSA gidelines only apply to terminating plans. If we don't distribute these accounts, is the plan in any potentially difficulty under the RMD requirements? Can we just hold these accounts indefinitely? Any thoughts would be appreciated.

A Financial Advisor was told today, that in the next 2 years all 401k plan must allow for In-Service Distributions, is that true? What can I read about this if it?

Thanks

My spouse and I are in a high income bracket ($120K AGI), but we have hardley any deductions, making our taxes really high ($15K). We are planning on buying a new house in the next 1-3 years.

We are also planning on contributing the max to Roth IRA's until we are ready to buy a house, which will lower our taxes approx $2200 a year. We will then take out the contributions we make and use these funds as part of a down payment. It is my understanding that this money will not be subjected to the early withdrawl penalty or earnings taxes (withdrawing contributions only). I do realize that I will have to report the withdrawl as income, but this will be offset by the reductions in taxes from closing costs, property taxes, mortgage interest, etc. And, while we are waiting to buy the new house, this money grows tax free. We already contribute more than enough to our 401k's so saving this money for retirement is not an issue. We are simpling looking for the best way to lower our taxes and save for a large down payment.

Can anyone give me any reason as to why this is not a good plan?

Thanks for any advice!

I Had a call from a CPA on one of his clients. His client has a 3% matching SIMPLE IRA plan.

An employee who became eligible 3 years ago never got into the plan because the investment company sales rep left the bsuiness. Nothing ever happened since. Now the employee is leaving and the employer wants to make her "whole". She is also expecting the last matching contributions also.

Any ideas on who is at fault here ?? Can he just give her a check as a bonus for her forgone matching contributions and have her sign a hold harmless agreement ?

Any thoughts would be appreciated !

Bob

In a 401(k) plan that is currently participant directed, can you switch to a pooled account that would be trustee directed? All of the participants leave their money in money market and have expressed interest in having the employer handle the investing for them. Would this take anything more than an amendment?

Thanks for the help in advance.

Does anyone have any type of breast feeding policy in place at your employer? We are working on putting one together and I am looking for someplace to start. Any help would be wonderful!

It looks to me that under the final 409A regulations, a noncompete condition will work to delay taxation under 457(f) and can be structured so it won't violate 409A.

For example, if an executive will be paid in 5 annual installments following separation from service provided he meets a noncompete provision that is a SRF under 457(f), he won't be taxed until each payment that coincides with the lapse of the SRF. The SRF delays taxation until lapse, and it meets 409A because the payments are fixed dates. The timing of taxation is determined under 457(f), and it meets the payment timing rules of 409A.

But it doesn't look like rolling vesting works unless the election to change the vesting date coicides with the 12 month/5 year change of election rules. So the executive who was to be vested in 2012 at the end of his employment contract can change the vesting date only if the new agreement is made by 2011 (12 months before vesting) and if the payment date is no earlier than 2017. [This assumes that rolling vesting is a valid concept under 457(f).] If the change is made under the 12 mon/5 year rule, it meets the payment timing rules of 409A. If it doesn't meet those rules, it violates 409A and taxation occurs under 409A even if it wouldn't have been taxed under 457(f).

Do you think this is the way that noncompetes and rolling vesting will work in an ineligible plan post-final 409A regulations?

I'm aware that the old "Exlusion Allowances" are no longer available to Participants of an ERISA 403(b) Plan. But, what about the Special Tax-Sheltered Annuity Elections for Church Employees still available? For example, there was a special catch up of up to $7,000.

Thanks

can a sponsor allocate forfeitures from nonelective source to reduce safe harbor matching contributions assuming nonelective contribution has been satisfied or they are not making one?

Do we need to amend our DB plan to reflect Sec. 303 of the PPA's changes to the interest rates used in equivalency calculations this year? Section 303 amended Code Sec. 415(b)(2)(E)(ii) to change the rates used for converting certain forms of benefits to an equivalent straight life annuity. Sec. 303 of the PPA also is reflected in the final 415 regs, but the final 415 regs provide that if an amendment is made pursuant to the PPA, the plan can be amended as late as Dec. 31, 2009 (in the case of a calendar year plan), to reflect the change.

It has been suggested to me that we need to amend the plan now to reflect Sec. 303 of the PPA, but I would like confirmation that we don't have to amend. Thanks in advance for any responses!

In May, the IRS issued final regulations that define a "reasonable normal retirement age" that pension plans may use. If a plan's NRA is below age 62, it must be an age that is representative of the typical NRA for the industry. The regulations gave no help in defining what's typical for an industry. I can't find any stats that would help me determine what's typical. What are others using? Are there published stats or benchmarks somewhere?