Employer has collectively and non-collectively bargained employees in one 401(k) plan.

Company plan and corporate year is 12-31.

The plan contains a safe harbor non-elective contribuiton and new comp profit sharing provision.

The ER made a large employer contribuiton for the 2005 plan year - but did not make it until December 20, 2006 - well after the 415 deadline limit to count it as a 2005 annual addition.

Their CPA wants to know what they can contribute for 2006.

One HCE who is collectively bargained got a $28,000 2005 ER contribution on 12-20-2006 for the 2005 plan year. He then put in $15,000 in the 401(k) in 2006 - therefore, from what I've read in the ERISA outline book, he is already up to $43,000 for 2006 - $28,000 from 2005 plan year which counts as 2006 annual addition and $15,000 2006 401(k).

He is still owed a 3% SHNE for 2006 - which has not been made as of yet. I think he gets his 3% SHNE and then is going to end up getting a refund of a portion of his 401(k) for 2006 becuase he is going to be over the 415 limit of $44,000 - all due to the timing of the 2005 contribuiton not made until December 20, 2006.

My question - is my logic correct? Are there any special rules for collectively bargained employees within the 415 provisions? I have read most of chapter 5 of the ERISA outline book regarding 415 limits and don't see specifics on collectively bargained employees - therefore I assume there are no special rules for the CBA employees.

Thanks for any response.

A participant has quite a bit of $ in the plan. Straighe PS plan. Wants to take a good chunk out. He is older than 59.5. He is not terminating.. it is not a hardship... he is more than a 5% owner. Just wants to take $200K+ out to invest in a business with one of his children. Can he do it?

Thanks

Hello. I am planning to open a Roth soon, however, I need specific advice as to how to invest the money in it. There seems to be so many choices, and I have become overwhelmed. I am 36 years old and have no other retirement accounts as of yet. I would like to retire somewhere around 2031. I qualify for a Roth, and am able to contribute the maximum of $4,000. I would appreciate any advice, as most of the information I have read deals with the benefits and rules of the Roth, and not how to actually invest the money in it. Please be as specific as you can if you can offer some advice. The world of investing is very new to me. And also, do I actually make the investments at the same institution in which I open the account, such as my bank? Is this all done the same day I open the account? Thank-you to all those who may respond. I am grateful for any insight that would help me narrow down my choices. Gracey

Ok, here is my situation:

I contributed $1,950 to my HSA in 2006. My employer put in $1200. There were disbursements of $1065.10. Interest added was $21.75.

3,150.00

21.75

3,171.75 Total

1,065.10 in disbursements.

The balance at the end of 2006 was $2,106.65.

On Form 8889, Line 2 - Should this be zero? On my W-2 the amount is $1950 which is exactly what I put in.

I have read all the other threads regarding how to fill out this form and I am still confused!!!

I am currently contributing to a 403(b) plan through the school where I teach - Poinciana High School. I also work at Valencia Community College and they are contributing to a 403(b) for me as an alternative to social security since I am part time.

I was wondering how my employee contribution through one job and my employer contribution through the other job combine to affect my maximum allowable contribution.

I want to make sure that I don't accidentally contribute too much!!

Thanks a lot!!!

I had requested a closing of a former employers 403(b) account on December 18, 2006. The plan document required the plan administrator to verify my % vested in the employers account held in my name (despite my having terminated employment 8 years prior). A week after departing the position the employer participant account was reduced by the un vested % (40% in this case). However, a vesting schedule was always presented along with the quarterly statements stating I was 60% vested. I made sure to call the plan administrator reminding her of the 40% reduction 8+ years ago so to be sure to indicate I was 100% vested for distribution purposes. She stated that AIG Valic (the investment management entity the plan utilized) would know regardless.

I received two checks on Jan 8, 2007, both dated 12-28-2006. One representing the employee participant balances as of 12-28-06 and another representing similar values for the employer participant account. As I had feared, the employer account balance had been (once again) reduced by 40%. Called all involved parties stating the problem and had the check with the wrong figure voided and mailed back to AIG Valic on January 10, 2007. I called AIG Valic on January 15, 2007 and was informed the request had not been approved yet and once it was it would take 5-10 business days to process and mail another check. On January 26, 2007 I received the proper dollar amount check. The check was dated 12-28-2006. A week later I received 2 1099's reporting the distributions and taxes withheld to the IRS. The original (and wrong) dollar amount was stated on the 1099 representing the employer participant account. Approximately 2 weeks late, I received a corrected 1099 (voided the originally filed 1099)

All was good until March 23, 2007 when I received another 2006 1099 representing the corrected distribution check that I had received on Jan 25, 2007. Called AIG Valic and explained that technically they owed me additional money for the use of the funds for 1 month and that since I was a cash basis taxpayer the distribution should not be reportable to the IRS until 2007 (Also AIG Valic would not have been able to accrue the distribution (technically) at 12-31-06 because the distribution had not been calculated until sometime after Jan 15, 2007. I was told the transaction had been requested and originally processed in 2006 so there is nothing they can (or will) do because the error causing the delay in my receipt of distribution funds had not been their fault. Without even considering the time value of money, it doesn't seem proper to report the distribution in 2006 just because that was the year the transaction was requested.

Does anyone have any solutions to offer? Thank you in advance. I am sorry for the length of this Q.

Greetings,

In Sep 2006, my business partner passed away. He had been the one taking care of the 401k contributions. I was able to make the monthly contributions quite easily, via a web page. My questions are as follows:

1) We have 3 employees, and my partner and I. We have a Safe Harbor Plan, and we contributed 4% of the employees gross pay, and we maxed out (since 2004, the start of the plan) our contributions. On the worksheet the plan sent (DST systems) there are 3 different boxes to fill in.

Safe Harbor or Non-Safe Harbor Matching Percentage

Safe Harbor Nonelective Percentage

Profit Sharing Percentage

Where does the 4% get filled in?

2) My partner and I had made monthly contributions at the maximum up to the 15000 annual maximum. His amount contributed until death was 10,327. How much do I have to contribute to my partners plan for 2006 to enable me to max out on mine at 44,000?

Many thanks

Paul

if you want, please send replies to Paul.Benefits (-a-t-) CityGuySailing (-d-o-t-) com

(you know how to fill in the @ and the .

I have a Schedule C client who started a SEP in 1996. Contributions were made for a couple of years before the client took a job with W-2 wages. Now, in 2006, the client returned to the Schedule C world and wants to make a contribution to the SEP. Can this be done? Or does the plan terminate if contributions aren't made after a certain number of years? Will a new SEP need to be established?

Last year, I made my Roth IRA contribution in a new brokerage account at Fidelity, with the intention of contributing for 2005. The bank tells me that they believe the check was dated April 18, 2006, which I disagree with based on my handwriting, and also based on the fact that I was aware that the deadline was April 17, 2006 and would have done my contribution in person at my bank.

Nevertheless, they have characterized it as a 2006 contribution, which means I have no 2005 contribution, and they refuse to change the date even after I have appealed. Is there anything I can do to make a contribution for the year I have now skipped?

Can a sole proprietor wait until AFTER December 31 to make (deferral, as well as matching) contributions to a SIMPLE-IRA that was established prior to the October 1 deadline?

In Publication 560, the IRS defines self-employment income in terms of Schedule SE, but that number is not known until after year-end.

Have a new client with a $1 million life insurance policy in the DB Plan. However the max Death Benefit is about 200,000.

How do you calculate the excise tax on the 5330? Is the excise tax calculated on the premium amount that represents the excess death benefit?

Normally the excess contribution is not dedeuctible. However if the client pays the premium from the assets of the plan, do they still lose the tax deduction?

Notice 2007-7 provided detailed and controversial rules governing the ability of a nonspouse beneficiary to roll over benefits from an employer plan to an inherited IRA, where the 5 year RMD rule applies to the employer plan distributions.

While the Notice applies specifically to nonspouse beneficiaries, why wouldn't the IRS apply the same logic to a spouse beneficiary in the same situation?

For example, a spouse beneficiary might want to roll over 401(k) funds to an inherited IRA in order to get distributions free from the 10% early distribution tax. If the 401(k) plan requires use of the 5 year rule, what rule applies to the spouse beneficiary? why wouldn't he or she also be subject to the same rules the IRS sets out in Notice 2007-7? Ie, would the spouse beneficiary be required to complete the rollover by the end of the year following death in order to be able to take RMDs using the life expectancy method?

A plan offers the following distribution options: lump sum and installments.

The plan wants to get rid of the installment option.

Currently, there are no installment payments being made to any participants/beneficiaries.

Can the plan jettison the installment option pursuant to 411(d)(6)(E)?

Here's an interesting prospect:

Employer has 2 Profit Sharing Plans (no deferral provisions):

Plan 1: Covers only the 1 HCE of the Employer, the document is a vol sub cross-tested doc

Plan 2: Covers all NHCEs (7 or 8 ees), the doc is a NS prototype, allocation is uniform pct of pay

To pass 410 coverage, plan 1 must be aggregated with plan 2 in order to pass (obviously). Then, for plan 1 to pass 401(a)(4) nondiscrimination, the prior TPA ran a cross-tested 401(a)(4) test including the HCE and all NHCEs. The contribution that is then decided upon for Plan 2 is at least equal to either 5% of pay or 1/3 of the pct given to the HCE in plan 1.

1. Doesn't plan 2 need to have gateway language somewhere in order to be in compliance (in form) so the plan can actually support its position that it really gave a "gateway"?

or

2. Is the gateway language somehow not needed in plan 2's doc?

I have 2 companies that are now owned by the same group of people. I only administer Company A. Company B has a match provision and Company A does not. Company B failed it's 2005 ADP test and neglected to make the refunds. The TPA for company B would like to aggregate the plans for 401(k)/(m) testing for 2005 because together, A & B pass the tests (both (k) and (m) test) and no refunds would have been necessary.

My question is, can these plans be aggregated when Company A does not have a match feature?

Thanks.

I undertsand that that a church plan is not required to cover all employees. However, if the plan allows all employees to participate in deferrals but restricts employer contributions to a select group of individuals, could there be a coverage problem if the restricted group only covers 25% of the eligible participants (including the 1 HCE)? (In this case all of the eligible employees would fall under a typical non-excludable category under an ERISA plan.)

If this isn't a coverage problem does anyone have a citation I could refer to?

Thanks

How are we supposed to handle SSA reporting for plans that we takeover? It is rare (at least, in my experience) to get the 5500's going back far enough* to show that all my terminated participants have been previously reported on an SSA, so I'm wary of reporting them with the "D" code when they get paid out because I don't know if that will generate any correspondence from the Social Security Administration or the IRS.

I've sometimes used the approach of reporting all my old terminated participants with a code "B" on the first year's SSA that I do (and preparing to say "whoops, I meant A" for any that I get questioned on), but I don't have any real basis for that.

Is this really an issue that needs to be worried about? Or does someone at the SSA just note that a participant with a "D" this year was never reported before, mutter under their breath about stupid plan administrators, and forgets about it?

* of course, the SSA is not public information (since it contains the SSN)

has any one read the new 5330 instructions regarding 4972? do the instructions dovetail with 2007-28? They seem either circular or ingruent with the notice and I can't even tell which. who writes these things?

draper1

Does anyone know of any articles or commentary addressing the definition of "executive officer" under SEC rules for purposes of determining who the Named Executive Officers are? Of course, the definition of executive officer is helpful, but what do they look to determine what a "principal business unit, division or function" is?

In 2004, decision made to spin-off certain participants from a DB plan into a new plan, then terminate the new plan. New plan prepared for adoption effective 1/1/2005 (and frozen as of such date) with short plan year of 1/1 to 6/25 for the first plan year; however, due to a number of reasons, the spin-off did not actually occur until January of 2006, effective 12/31/2005. Assets and liabilities were transferred in January of 2006 based on 12/31/2005 valuations and benefit accruals. Notices of the termination were sent to participants in June of 2006.

I was just asked this morning whether a Form 5500 should have been filed before now, meaning for any time period before the assets and liabilities were transferred in January of 2006. Not being a Form 5500 expert, I came here.

It is clear that there were no assets in the plan for short plan year from 1/1 to 6/25/2006. In addition, the spin-off amount was based on what the participants had accrued in the original plan as of 12/31/2005. However, it appears that a 5500 might be required even if there are no assets. What I can't decide is if I can argue that there weren't even any participants until 12/31/2005 and, even if I could, whether a Form 5500 would still be required because the plan was effective 1/1/2005. Any thoughts?

I think that it is clear that a Form 5500 would be required for the 6/26/2005 to 6/24/2006 plan year, but I don't know what to do with the first short year....