We are taking over a plan of an Employer has a volume submitter profit sharing plan. The prior TPA did not have the ER sign Form 8905 and the EIN ends in 6. My first reaction was panic, but maybe I overreacted. Am I correct that this Employer will still be eligible for the 6-year cycle provided he meets the requirements outlined at Section 17 of Rev Proc 2007-44? Just because the ER did not sign Form 8905 by 1/31/2007 (Cycle A deadline) does not mean that the plan was not timely amended for EGTRRA?

Thank you

A self-employed individual makes a required DB contribution that exceeds his Schedule C. The individual intends to take the nondeductible portion against future Schedule C. However, the individual quits working altogether so there is no future Schedule C. The Plan is terminated.

In looking at this, it appears you consider the individual as employer and also as an employee. As an employer, he has made a nondeductible contribution so tough. As an employee, he receives a totally tax deferred distribution.

Question 1: Is anyone aware of an exception that would deem the portion of the distribution attributable to the nondeductible contribution as nontaxable, so the individual would not be taxed twice on the same monies? I.e., he would roll part to an IRA and take part in nontaxable cash.

Question 2: How should the contribution in excess of Schedule C income be reported on 1040? Do you report a contribution to the extent of Schedule C (less 1/2 ss) or do you report the entire contribution?

If a client is considering the new automated enrollment PPA Safe Harbor (enroll at 3%, increase up to 6% cap) to eliminate nondiscrimination testing requirements. Their current match is 100% up to 7.5% of compensation (eligible for match after one year, 100% vested, same distribution reqs. as pretax, etc.). Do they have to change the current match formula in order to meet the new PPA Safe Harbor?

Is a loan trust agreement for 403(b) clients is required? Or can one use a 401(k) loan trust?

Hello all,

I have an IRA that was rolled over from an old 401K plan. It has around $24 k in it and it's mostly cash right now because I had to liquidate in order to move it to my new brokerage account. I want to open a Roth IRA and I'm trying to decide if I should convert this traditional IRA into a Roth. I am an MBA student so my only income this year will be a couple thousand from my internship- putting me in what I think is the 10% tax bracket (plus I am taking TONS of loans for grad school so I'm thinking I should not owe taxes for this year)

Here are my questions:

1. What kind of taxes will I owe if I convert to a Roth- also- some of the money in my IRA right now is after tax already, so will I get hit with taxes again on it? I mean, how do they determine on conversion what money is before tax and what money is after tax?

2. Is it worth it to convert or should I just open a Roth seperately now with whatever other money I can scrounge together (or just roll over some of my traditional- not all of it) and continue investing with my traditional IRA as well?

3. Will I even owe taxes this year if I convert to a Roth? My income for the year will literally be like $7500 and I have taken out tons of student loans in order to attend a top MBA program.

4. Is this the best year to do this since its the lowest tax bracket I'll ever be in (I will being working full time again in the fall of 2008)

5. Do I have to liquidate everything in my traditional IRA into cash in order to convert it to a Roth?

thanks in advance for all your advice!!

A small employer maintained a profit sharing plan, and of course, complied with ERISA's bonding requirements. By the end of the 2005 plan year, all employees were terminated. A contribution was made to the plan in March 2006 (for the 2005 plan year). The owner and his wife were the only employees in 2006. Contributions for 2006 were made only to the owner and wife's account. Again, in 2007, the owner and the spouse are the only employees. The ultimate question is:

Does ERISA's bonding requirement continue to apply if the only employees are the owner and the spouse? What if a former employee still has an account balances in the plan?

Any guidance is very much appreciated!! Thank you.

We have a client that just discovered that for the 2006 calendar year that two employees enrolled for dependent care, were reimbursed for dependent care expenses (the employer "fronts' the money for dependent care), but they never withheld money from the salary of these two individuals (this is a large employer and they do not distribute pay stubs - employees go online to see deferrals).

Any ideas on what can be done to rectify this situation - the employer wants to take missed deferrals during the remainder of 2007.

We need to retrieve a 2003 filing for a new client. Old TPA can't/won't provide it, client claims no knowledge of ever filing, but the EFAST system (I think that's who operates that database) says it was filed. Anyone know how to get copies from either IRS or DOL? How long it takes?

Did the PPA change how distributions must be made for an inherited IRA where the only beneficiary is a non-spouse beneficiary? I keep hearing that it did, but I can't find it.

from my research i can see these are subject to 415 limits. does anyone know how they are tested. it looks to me like you perform the adp 401(m) test.

An employer (company A) sponsors a 401(k) plan that has always been top heavy. They have always made the 3% top heavy minimum. Their last plan year end was 6/30/2006. 100% of the company was purchased on 8/31/2006 by another larger company (company B) that also sponsors a 401(k) plan. The company B 401(k) plan is not close to being top heavy.

Company B now sponsors two 401(k) plans, the former company A plan and the company B plan. Both plans are required to be aggregated for 416 purposes since both plans are now sponsored by one company. If they are aggregated they are not close to being top heavy.

Question: is a top heavy minimum contribution required in the (former company A plan)? We think yes because the top heavy determination date would be 6/30/2006 and the company was not purchased until 8/31/2006.

Does anyone disagree with this?

Thanks much.

Hello All:

An S-Corporation adopted a defined benefit pension plan ("DBPP") on December 28, 2006, that was effective January 1, 2006. DBPP was drafted by client's new law firm/CPA firm. As he was set to be terminated, the client's existing CPA, who did not know of the DBPP's existence, prepared the 2006 Form 1120S and sent it to the client on March 8, 2007. Client filed said return without realizing that no DBPP contribution was included on the 2006 Form 1120. As the Form 1120S was filed prior to March 15, 2007, no extension to file the corporate return was filed. Any arguments that client can make and deduct a DBPP contribution for 2006?

I had to try.

Thanks in advance for your comments.

Ed

Does anyone know of guidance on the issue of whether a defined benefit pension plan may permissibly condition the receipt of optional forms of benefits (i.e, forms of benefits other than the QJSA) on the good health of the participant at the time of election? The good health requirement is enforced by subjecting the participant to a medical examination.

Here's an example- what if the plan was to say something like this:

"In addition to the QJSA form of pension, there are other options available to you. Your spouse's consent is required for any of these options. In the case of each of the following, you must be in good health at the time of your application or have chosen the options at least 12 months before the effective date of your normal pension. If you do not elect one of the following optional ways to receive your pension at least one year before the effective date of your pension, you will most likely be asked to take a medical examination. The optional forms of payments are....."

Lets assume the participant has the ability to choose an effective date.

Any thoughts are appreciated.

Workers Compensation laws vary from state to state. Does anyone know if a New York employer can terminate an individual who is out on workers compensation, and have this qualify as a COBRA triggering event? Individual has been out for extended period of time with no indication of returning to work.

a builder,who is the sole employee, wants to establish a 401(k) and add a DB or possibly a 412(i) plan, but has already put in the max into his SEP for 2007. What is to prevent him from requesting those funds back, paying the penalty and setting up the aforementioned plans? It would benefit him despite the penalty.

Employer has inquired if following match structure would pass nondiscrimination testing:

For participants under age 35, 100% on contributions up to 1st 6% of Comp

For participants age 35 to 49, 150% on contributions up to 6% of Comp

For participants age 50 and above, 200% on contributions up to 6% of Comp.

Would this structure be subject to the gateway test (lesser of 5% of 415 comp or 1/3 of the highest HCE)?rate?

If I take over a plan in 2007, I must reasonably replicate 2006 FSA entries to obtain automatic approval of a cost menthod change.

After PPA, apart from determination of age and redistribution of decrements, all plans effectively have the same cost method, so assuming prior and current work are mechanically sound, what is there to approve?

401k/PSP has terminated but a participant is under court order not to touch 401k( a qdro is anticipated). Does the plan sponsor have to hold off on distributing and delay the final distribution of assets?. The delay will cause a new plan year and the associated administration costs.

The plan made a miscalculation and distributed benefits in excess of amount owed. In furtherance of its fiduciary duty to make the plan whole, the plan asked IRA custodian of rollover to adjust the balance and return the excess to the plan. Custodian refuses. What should be done?

Does anyone know of guidance on the issue of whether a defined benefit pension plan may permissibly condition the receipt of optional forms of benefits (i.e, forms of benefits other than the QJSA) on the good health of the participant at the time of election? The good health requirement is enforced by subjecting the participant to a medical examination.

Any thoughts are appreciated. thanks