Hello,

I'm not sure if this is the right place to post; if not, perhaps someone can suggest a more appropriate board.

I own my business. I am the only employee, the biz is a C corp and is 12 years old. I have sought advice from my accountant and from Charles Schwab (who administers my retirement plans) but cannot seem to get a definitive answer. I'm also not the most savvy about this stuff.

I have two plans, a Profit Sharing and a Money Purchase at Schwab. They were implemented a few years back to allow me to make maximum (up to 25% I think) contributions to my retirement. I am not required to make a PSP contribution but remain required to make a MPP contribution.

Since the rules have changed, I would like to fold the MPP plan into profit sharing so I just have one plan and am not required to make an annual contribution. My company has had a couple of lean years and I need the cash to operate.

My company's fiscal year runs from Aug 1 to July 31.

I was told by Schwab that there are certain timing requirements for when I can liquidate and rollover the MPP distribution to the profit sharing account but they cannot be specific. I am trying to find info to figure out the following question:

If I eliminate (and merge) the MPP plan before the end of the fiscal year, do I still need to pay out a contribution for the fiscal year about to end? If it requires a board of directors vote, that is fine because I am all the directors.

If no one knows the answer to this, perhaps you can refer me to some area on the Web where I may find it?

Thank you so much! I appreciate any help you can provide.

I'm looking at a plan that covers bargaining unit and non-BU employees. The plan provides a general benefit of 1.5% x years of service x final average salary for all employees, but BU employees make mandatory contributions and get a 2% multiplier and an early retirement benefit. The plan was amended a few years back to provide that BU members who move into a non-BU position retain their eligibility for the better benefits, but they must continue to make the mandatory contributions. Thus, with respect to non-BU participants in the plan, some, but not all, individuals must make mandatory contributions (and receive the better benefits). This is not a voluntary arrangement -- all former BU employees must make the contributions, and the other non-BU employees may not contribute to receive better benefits. None of the employees are highly compensated.

Does anyone know of any reason this arrangement is not permissible? In particular, whether the employer can require contributions from a subset of employees.

Thanks!

If anyone has been doing projections beyond 2008, what are you using for estimated segment rates for Current Liability? At first, I was just using the RPA rate (5.78%) for all 3 segments, but I think that is a little low. An actuary at another firm recommended 5%, 5.6%, 6.1% for the 3 rates.

Anyone have any idea? What would the segments be based on current market conditions?

2 different car dealerships are part of 1 plan. It is a multipler employer plan. According to the regulations, each employer has to be tested separatley for ADP/ACP testing.

There is one participant of the plan who worked for both employers during the year. To make it easy, let's say he worked for Company A from 1/1 to 6/1 and he worked for Company B from 6/2 to 12/31.

While at Company A he deferred $5500 and made $44,000. While at Company B he deferred $6000 and made $55,000.

Correct me if I'm wrong, but on the ADP test for Company A, his deferral average will be 5.56% ($5500/$99,000) and his deferral average for Company B will be 6.06% ($6000/$99,000).

Or, would his deferral average for Company A be 12.50% ($5500/$44,000) and 10.91% for Company B ($6000/$55,000).

I think his deferral averages would be 5.56% and 6.06% - but I just can't seem to find any documentation supporting this. The ERISA Outline book says you must use Section 414(s) compensation to calculate deferral percentages. It also says "an employee's section 414(s) compensation includes his compensation for all related employers, regardless of whether the employers maintain a single plan or separate plan".

However, these are not related groups. If they were, then they'd be a controlled group and not a multiple employer.

Any thoughts?

If the PBGC premium is paid by the corporation, can it be counted as a contribution to the plan?

With the advent of the new PPA rule that allows a non-spouse to rollover a death benefit the question arises can that non-spouse beneficiary take a partial lump sum distribution and then rollover the remaining proceeds to an inherited IRA? Or does it need to be all or nothing? Would this have to be spelled out in the document?

A client sponsors a DB plan and a DC plan. Other than "cash out distributions", the DB does not presently permit any lump sum distributions. The client wants to terminate the DB plan. The client wants to amend the DB due to the termination as follows:

(1) Any participant who is not employed on the termination date may elect to take a lump sum distribution; and

(2) Any participant who is employed on the termination date may elect to take a lump sum distribution conditioned upon their agreement to make a rollover contribution of the lump sum distribution to the client's DC plan.

The rationale behind (2) is that the client doesn't want currently-employed participants to take the present value of their accrued benefit in the DB plan and blow it on the proverbial "new Mercedes".

Does anyone see a problem with (2)?

I ask because the TPA firm that administers the DC plan claims that (2) violates Treas. Reg. 1.401(a)(31)-1, Q&A-9, and, as result of the violation, the contributions would not technically qualify as "eligible rollover contributions" and cannot be accepted by the DC plan. Assuming (2) is problematic, as suggested, if the DC plan permits participants to request immediate distribution of rollover contributions, does that affect the conclusion (even though it would undercut the client's rationale)?

Thanks!

Participant balance is greater than $5,000.

Standardized Corbel 401(k) Document.

Plan has elected distribution option: QJSA 100%.

Spouse has signed non-spouse beneficiary designation form.

Who (if anyone) needs to consent to the loan?

I am attempting to establish the proper election under Section 125 for a Health Benefit Plan that is partially subsidized by the employer. For example, a single employee premium is $280 per month of which the employer contributes $200 and the employee will pay $80. The employer contributes the same $200 regardless of the coverage elected (single, ee + dependent, or full family). The employee does not have any latitude as to the $200 ER contribution; if he participates in the health plan, the $200 subsidy is contributed, if he chooses to waive the health plan coverage, the $200 is NOT available for any other purpose.

Under these circumstances and assuming the employee wishes to pay the premium with pre-tax dollars, is the proper election for $960 ($80 times 12 months) or is it for $3,360 ($280 times 12 months)? It seems like the employer contribution is not elective as it is not available in cash or benefits. Furthermore, under these same circumstances in the past, the gross earnings of the employee electing redirection of salary have never included the employer subsidy for any other purposes like 401(k) wages or in tests for highly compensated.

Any help is greatly appreciated.

Apologies if this has been asked and answered already...

I am going to avoid wading into the morass created by Mr. Holland and pose what I hope to be a simpler question about 404(a)(7), as amended by the PPA.

We know that the PPA modified the combined plan deductability limit to exclude from consideration employer contributions to DC plans that are less than 6% of compensation. The question is this: for purposes of determining the "25%-of-what" question, do you take into account only compensation earned by participants in the DB plan or can you take into account compensation earned by participants in the DC plan as well (to the extent they are not already picked up under the DB plan)? If the under-6% employer contribution was not excluded from consideration, I think the answer would be a fairly clear "yes" -- comp paid to beneficiaries under both "plans" would be taken into account. If a participant in the DC plan otherwise "benefits" during a particular year, it seems like the comp paid to him/her would still be picked up for purposes of the 25% limit, which could have the effect of juicing up the DB plan contribution.

I have heard that some IRS folks have informally agreed with the idea that you still count comp for participants benefiting under both the DB and DC plans even if the DC plan is excluded from consideration. Since I haven't heard this straight from the horse's mouth myself, I wondered if (1) anyone had a thought about this issue generally; and/or (2) anyone has heard one of the IRS folks expanding on this point at a conference, etc.

Thanks!

A doctor is switching jobs and will be working with more than at least 3 different organizations. He will have the ability to defer salary into a 401(k), 403(b), and 457 plan, all separate plans of different employers. Can he contribute $15,500 into each plan, or does the 402(g) limit apply cumulatively over all plans?

Thanks

One of my clients (a brokerage firm) has been receiving an influx of calls about Qualifying Recognized Overseas Pension Schemes (QROPS).

One website http://www.hmrc.gov.uk/PENSIONSCHEMES/qrops-list.htm

I figure something must have occurred recently – some change in UK plan provisions etc that has prompted these calls.

Apparently, they are being told by their plan administrators that they can rollover amounts from their UK Pension plans to a retirement plan in the United Stated, if the plan is part of the QROPS program.

From what I was able to gather –after reading some of the material on the website- this may be limited to some type of superannuation scheme.

As we know, these plans do not satisfy the definition of an eligible retirement plan for rollover/transfer purposes.

Also, the term ‘Pension” usually means something different in other countries. For instance, in Jamaica, pension means a superannuation fund.

Jevd, I figure you may be getting these calls as well?.

Has anyone else come across this?

I would like to confirm my understanding on temps that are hired as a common law employee.

The temp would need to meet the 414(n) requirements before they would be considered a leased employee for plan purposes.

1. If the temp did not meet the leased employee requirements (e.g., did not work on a substantially full-time basis in their first year), you would not count their temp service with the employer for plan purposes.

2. If the temp did meet the leased employee requirements, you would count the service while s/he was a temp.

3. If the plan excludes leased employees, will the same apply as in 1 and 2? I think yes, because in order to be excluded from the plan the temp would need to be considered a leased employee first and then they would be excluded as a classification of workers. Then you would count service as you would when someone transfers between excluded classification of workers, i.e., you would count all service for all plan purposes.

I have read many of the posts on the message boards dealing with stale checks and how to handle them. Needless to say, there are a several different schools of thought out there. Assume that a TPA is informed by the custodian/trustee that a plan has a stale dated, uncashed check. Further assume that they intend to redeposit to the trust. The TPA has to put the $$ back into the participants account until the participant can be found (or until they have made reasonable efforts to find them).

The question is, how would you include this deposit back to the plan on the Form 5500? Would this be offset against current distributions? What if that creates a net negative distribution on the schedule I/H? Also, is there any agreement out there as to how to handle the original tax reporting. One previous post mentions redepositing it as "after-tax" and leave the tax reporting stand. Does anyone agree/disagree with this?

I have a client that is requesting us to calculate earnings and losses on the AP's award. I have been provided with 2 different spreadsheets for use in doing this calculation. It is based on the average account balance vs. actually following shares from the allocation date to date of division. The difference in the 2 spreadsheets is one adds back a PT distribution after the allocation date, but prior to the date of division. When I use the exact same numbers other than adding back a PT distribution, the earnings allocated to the AP's award is decreased by a small percentage, therefore giving the PT the larger percentage of the earnings. While I understand the mathematical aspect of this, is this the correct way to do the calculation. Regardless of the reason or timing of the distribution, why should the PT benefit from this?

Thanks!

I am the only suvivor of my brother.

He was divorced three times and didn't have any children.

The company he worked for he had been with for almost 25 years.

In his divorce decree with the last two wives it states very clearly that they waived any rights to his 401K.

I am the administator of his estate and I live in a different state.

After I sent his company and Fidelity copies of his death certificate and my letter of adminstration I could not find out anything on is 401K.

After a couple of months Fidelity told me they could not find any beneificary and they were sending things back to the legal department where he worked.

I got a attorney to handle this. He found out that my brother never got wife number 2 off as beneficary.

It is very clear in there divorce decree and states the name of his plan and she waived any rights to it.

My attorney where I live says that the waiver would carry more weight than him not getting the second wife removed.

My attorney said I would need an attorney in GA and he would help me find one.

This has been going on for several months and I was not being pushey with our local attorney but now I would like to get this over with.

I cannot get him to return calls and he does not respond to emails. I made an appt with him and it was cancled and change twice.

Can anyone please just let me know if he is correct about the divorce decree with wife number 2 and her waiving it versus her still being named beneifcary the stronger case.

There has not been any claim to the funds.

The loss of my brother is so painful that my life will never be the same.

I just want to get this over with or get some straight answers.

I have inquired about different attorneys and then I am told they don't do this type of work and give me another attorney's number.

Please just the answer to that one question would be helpful.

Thanks so much for listening,

Dulan

Our client, a medical practice, has decided upon a $15000 profit sharing allocation for 2006. The plan document (volume submitter new comp) designates the two Doctor/Owners in their own group. The plan has made 3% SHNEC each payroll throughout the plan year, but, of course, some errors were made and a true-up is needed. Two employees entered at mid-year and the 3% SHNEC did not cover the TH Minimum due. Thus, the $15000 contribution less the SHNEC true-up and top heavy minimum leaves approx $10,000 left for allocation. Of course the doctors want as much of the $10k split amongst themselves.

On first glance it appears that we can allocate the 2.27% ($220000*2.27%=$5000) to each of the Dr's. Their total allocation adding in the 3% SHNEC is 5.27% (highest HCE alloc %) while all other eligible participants not in the Dr/Owner group (including a couple of other HCE's) get ONLY the 3% from the SHNEC. This covers the gateway. Ran the 401(a)(4) test and it passes.

However, the question has arisen of whether this is a legitimate allocation. When considering 410(b) coverage test, are the NON-Dr/Owners considered benefitting in the profit sharing (non-elective) because they received the SHNEC? If the SHNEC is not considered, the profit sharing allocation obviously fails the ratio percentage test and the average benefits test on its own.

Thanks in advance for any input!

Company maintains Cafeteria Plan Y, which among other options provides employees with the right to elect a preferred provider organization offered by Provider M, a point of service arrangement also offered by Provider M, a preferred provider organization offered by Provider N and a point of service arrangement also offered by Provider N. The PPOs offered by Providers M and N have the same deductibles, copays, coinsurance amounts and out-of-pocket limits and have the same net employee cost. The POS options offered by Providers M and N have the same deductibles, copays, coinsurance amounts and out-of-pocket limits and have the same net employee cost. There may be some geographic areas where physicians on the network of one provider are not participating in the network of the other provider. The plan document for Plan Y has a definition of change of status does not specifically permit an employee in Provider M's PPO to elect Provider N'a PPO unless there is some other change in status event. Operationally, if, say an employee elected the POS by Provider M and learned that her/his favorite physicians no longer participate in its network, the employee may contact HR and would be permitted to switch to Provider Y. Although there is no change in the employee's net cost on a "pre-tax basis," does anyone have concerns about this not following the plan document and not being made as a result of a change in status as well as not being communicated to participants?

Facts:

401(k) Plan 1 has been in existence for many years. Key employees participated in Plan 1 however they were excluded from participation 12/31/2005 and their account balances were transferred to Plan 2 during 2006.

401(k) Plan 2 is effective 1/1/2005. The first contributions made to Plan 2 were made 9/15/2006.

CB Plan is effective 1/1/2005. The first contributions made to the CB plan were made 9/15/2006.

For 2005 and 2006 there were key employees with an account balance in Plan 1.

Plan 1 for 2006 contains HCE employees only and passes 410(b) without Plans 2 or the CB Plan. Plan 2 and the CB plan are tested together for 410(b) and 401(a)(4) purposes.

For the 2005 plan year the top heavy test is determined as of 12/31/2004. The first year rule is intended to be used only when there are no other plans in existence or required to be taken into account for purposes of top heavy.

The account balances as of 12/31/2005 for key employees are as follows:

Plan 1 market value $240K/$420K = 57%

Plan 2 market value $0/$0 = 0%; accrual $0/75K = 0$

CB Plan market value $0/$0 = 0%; accrual $403K/$446K = 90%.

Question:

For determining if the Plan is top heavy during 2006 for the Plan 2 and CB plan which are aggregated for testing purposes would you aggregate the market value of Plans 2 & the CB plan together or would you aggregate the accrual values of Plan 2 & CB plan together? Ie. $0/$0 = 0% not top heavy or $403/$521 = 77% top heavy

For determining if the Plan is top heavy during 2006 for Plan 1 which is not aggregated with any other plan of the employer for testing purposes would you use the market value of Plan 1 only? $240K/$420K = 57% not top heavy.

Thanks

Can you borrow from from a D.R.O.p. plan