Are benefits accrued under a govermental pension required to be aggreated with pension benefits under a private sponsored DB?

It would be great if anyone had a site on this.

During 2006, we (as TPA) sent a distribution request for a former participant of the plan to the custodian/investment company of the plan with instruction on the payout, requesting 20% federal tax be withheld. The investment company withheld 20% ftw and mailed the check to the plan sponsor instructing them to send to the IRS. Instead, the plan sponsor gave it to the former participant who in turn cashed it. We were not aware of this until the plan sponsor received notification from the IRS regarding the Form 945 that was filed showing the ftw amount for the participant. Any quidance on how this should be handled at this point? Thanks in advance.

I made a 2007 contribution to Roth IRA's for my spouse and myself in early January. Since then, I have recieved an inheritance (annuity beneficiary taking a lump sum distribution) that has moved my 2007 income over the allowable contribution limits. What steps are involved in rescinding our contributions? Should this be done sooner or later?

Any advice would be appreciated

Rev. Rul. 2006-38 explains how the "first tier penalty tax" is computed and provides an example. It then says that the revenue ruling only applies to the first tier tax. While it does have some explanation of the second tier tax, I am not understanding the "when and how" of the second tier. Could someone explan when the second tier applies, and how much it is, using the example in Rev. Rul. 2006-38? Thanks!

I've heard that California doesn't allow the emailing of information with employee social security numbers in the email.

Are there other states that don't allow that?

If so, does a password protected zip file allow for the transmission of that information?

Thanks

Christopher

I am researching if it is customary for ALL insurance companies writing voluntary group life policies to include an "Actively At Work" provision. A TPA recently changed insurance companies for a Voluntary Group Life policy and provided an open enrollment period. During the open enrollment period an employee who was on medical leave for a terminal illiness increased the limits of his coverage during the open enrollment period. He died before he returned to work and met the "Actively At Work" requirement. His estate is now suing the TPA and argues that the TPA should have selected an insurance company that did not have this provision. I am trying to determine if there is ANY insurance company that provides voluntary group life coverage that does NOT have this provision. If there is one... I have not been able to find it. Thank you - Jim

a stubborn doctor who lost his self employed practice to Katrina currently works for another doctors group. His practice, not his new employer, has a profit sharing and a money purchase plan. His new financial advisor is trying to get him to term the plans and rollover the assets into a IRA. The doctor contends that he wants to maintain the plans in the case he wants to take out a loan and invest in some real estate. When coaxed to move the funds to an IRA, he states the funds would be subject to creditors. Outside the fact of annual admin fees associated with maintaining the plans, making loan payments, having annual appraisals on land, what other reasons are there that he should really consider terminating these plans? His practice does not exist, so I would think the plans are frozen.

12/31/2006 valuation for a 1 man plan. Contributions were made in Feb of 2006.

Does interest HAVE to be applied to those prepaids?

Could you please state the regs on whether or not interst must be applied?

Any and all assistance you are able to give is much appreciated.

Here is the situation. Company A sponsors Plan A. Company A filed for bankruptcy, we as the TPA were notified after everything was complete. Company B had one of their related entities we'll call Company C acquire the equity, but not the debt of company A. Meaning this was a stock acquisition, Company C is now the new plan sponsor.

Company B refuses to provide any information about company C. Their position is that they did not purchase the retirement plan, and they are not responsible for it. Meanwhile we have received no participant information from company B as to which ees were retained (we know a large group of them were) and we cannot perform anything other than recordkeeping. Meanwhile our fees add up.

The trustee of Plan A was the former owner of Company A and wants us to pay everyone out, which is illegal.

Does anyone have any thoughts about this? Can we call this an orphan plan? Can we just quit the plan?

We are a small business that is closing our doors (possible bankrutpcy in near future). The owner is shutting the existing company and beginning a new company with new tax id number, new name, new address, etc..

We do not want to pierce the corporate veil of the existing company or show any linkage between the two companies due to possible lawsuit down the road.

The old company has a 401k plan and our plan was to shut the existing plan under the old company down and send out distribution/roll over forms to everyone. The new company was going to create a new 401k plan for the new company and that would be an option for the employees who were going to the new company. Is this possible to do? Is is violating any laws, successor law, ect?????

We thought it would be okay because the two companies are totally separate from each other and the old company will no longer be in business.

Please let me know what you think.

Does anyone have a Crystal report that pulls inception to date deferrals for calculating hardships?

Does "Safe Harbor Non-Elective" mean that the Employer's contribution is automatically 100% vested or is that still plan specific?

This may be a basic SH match question, but I will ask it anyway. SH 401(k) plan currently uses the basic formula for the SH Match (100% of first 3% and 50% of next 2%). Company wants to add a discretionary match that will be a tiered match that will exceed the 6% deferral limit. Here is my question. I know that the additional discretionary match does not meet the ACP safe harbor. However, when I do the ACP test, do I only use the discretionary match, or do I use both the basic match and the discretionary match. Said another way, does the basic match automatically meet ACP regardless of the additional discretionary match? Thanks.

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Client's current TPA claims that the 2006 ADP test failed. They returned money to the HCEs. In review of the test, it appears that some of the NHCEs over 50 had part of their contributions randomly classified as a catch up. In one case the NHCE had a $5,000 deferral with $2,000 of the 5,000 classified as a catch up. The TPA did not use the entire 5,000 in the ADP test, only 3,000 was used for testing.

If after re-doing the test the proper way the plan passes, is it the trustees duty to recover the ADP distributions plus interest? Would the interest calculation be the same as if the contributions were late? What about the taxes the HCE had to pay on the money?

Thanks

Say a 1 HCE participant plan is a 412i plan with 50% of total premium for annuity policy and 50% for life policy.

Say the participant has average compensation at the 415 limit of 180k and NRA is 62 and he will have 10 years of part at NRA.

Therefore his 415 limit benefit is 180k.

Lets say that the 415 lump sum at 62 based on benefit of 180k is $2,000,000.

Now let's say the cash values reach $2 million by age 60.

Even if the plan is frozen and no further premiums are made and the plan is converted to a traditional 412 plan, the cash values will still continue to increase by age 62, thus causing a surplus and excise taxes.

So the point and question is: Once the 415 lump sum is reached, how can you avoid a surplus situation?

Terminating the plan and distributing $2 million at age 60 would likely be in excess of the 415 lump sum limit (or at least let's assume that it is for this question).

Thanks.

Did anybody notice that our good friends at EP:EO seem so have won the day. Pub 560 for 2006 has language that is startlingly clear and completely consistent with the Kyle Brown letter, but totally inconsistent with prior years' Pub. 560's (and, of course, the law). Here is the language from 2006 (for preparing 2006 tax returns):

"For the preceding year, received compensation from you of more than $95,000 (if the preceding year is 2005, $100,000 if the preceding year is 2006 or 2007) and, if you so choose, was in the top 20% of employees when ranked by compensation."

To remind everybody, this is what the 2005 version stated (for preparing 2005 tax returns):

"For the preceding year, received compensation from you of more than $95,000 and, if you so choose, was in the top 20% of employees when ranked by compensation. This $95,000 amount increases to $100,000 in 2006."

Now isn't that just peachy?

Since I missed Mike Preston's message from March 26th concerning the wording change in the 2006 version of Publication 560 (probably due to the fact that it was buried at the bottom of eight pages of prior messages), I thought that I would reprint it in a new topic in order to make it a little more obvious. I was getting ready to post a similar message when I discovered that Mike had, of course, beat me to the punch by six weeks.

Is there such thing as a de facto plan termination? If so, how does it work?

I understand Sec. 2550.404(a)-2(a)(1) approves an automatic rollover only of a mandatory distribution described in Sec. 401(a)(31)(B) (distributions in excess of 1K but less than or equal to 5K)

What can happen in the case of a participant who terminates employment and leaves his or her account balance in the plan and then reaches the "latest commencement date" under the plan (and under ERISA Sec 206(a) and Code Sec. 401(a)(14).

If the plan sends out distribution election forms and the participant makes an election (distribution or direct rollover) then, ok.

What happens if the participant fails to make an election? My thinking is that there can be no involuntary distribution of accounts in excess of 5K even under the latest commencement date rules. The plan just maintains the account and researches the applicable state law unclaimed property statute.

Any thoughts?

Thanks.

We have a plan sponsored by a nursing home that excludes "on call" employees, classified as "PRN". The 410(b) testing passes, however there are concerns that we are not in compliance with 401(a)(4).

Opinions, please!