Controlled Group of Companies (2) each with an identical plan. Record keeping is done separately for each plan. Participant moves from Company A to Company B within controlled group and wants to transfer account from Company A Plan to Company B Plan.

For the transferred account, would the sources of EE, Match, PS and Rollover with their respective balances remain the same after transfer or would they be consolidated into a rollover account after transfer.

The difference would is significant as rollover accounts allow inservice withdrawals of rollover amounts at any time.

If the sources remained the same before and after transfer then withdrawal options would be limited to hardship, or loan or inservice at age 591/2.

Can medical, dental and vision premiums be part of the Cafeteria Plan? Can a Cafeteria Plan work in this manner . . . Employee signs up for pre-tax benefits, Medical $50/Month, Dental $25/Month, Vision $15/Month, Out-of-Pocket Medical Reimbursement $415/Month, Child Care $415/Month. Company deducts total monthly cost from check before taxes, which comes to $920 and then gives the money back $920 in their net pay? Employees do thruout the year turn in receipts for medical and child care. None of this is broken out. Child care is not reported on W2. It's my understanding that premiums cannot be part of the health care reimbursement and should be kept separate from dependent care and should be reimbursed as receipts are submitted.

A prototype document did not have multiple entry dates or a number of months of service for eligiblity so a sponsor used 1.5 years. I haven't seen that - fractional years - and although it seems workable, does anyone see anything inherently wrong with it?

Are the correction methods outlined in EPCRS the only correction methods available for those given failures? For instance, if a plan fails ADP testing are the only approved correction methods the QNEC or one-to-one method? Or, can the plan sponsor propose, in its VCP application, to do something different, given its own unique facts and circumstances?

Thoughts?

Thank you!

Company maintains PS/401(k) plan which was at least partially invested in a group annuity contract. Received demutualization shares and some cash in late 2001. It is my understanding that the shares and cash were added to the trust for the Plan and appear to have been reported as assets of the Plan on the Schedule H for its 2001 Form 5500. However, the shares were never sold and have never been allocated to participant accounts. Now, in 2007, the employer wants to sell the shares; current document allows participant directed investments (still trying to get 2001 document).

My question is how to correct this and is there a program I can use?

The DOL guidance (looked at Adv Op 2001-02A, 2003-05A & 2005-08, PLRs 200214031 & 200317049, & FAB 2006-1) is practically dead silent on how to allocate, but it appears that we could allocate to the "affected" particpants based on accounts in 2001 or to all participants based on accounts in 2001. Assuming turn-over, either could be fun; but do not see real support for simply dividing among current plan participants or using to offset employer contributions.

As for the correction program, I am not sure that I have a qualification issue. These aren't deferrals, employer contributions, forfeitures, TH contributions, etc. They seem to be more like investment earnings or just a flat-out windfall to the Plan. If this isn't a qualification issue and all of the guidance is basically from the DOL, will the IRS even accept a VCP request? Hate to go to the expense to just get denied....

As for the DOL, the Voluntary Fiduciary Correction Program only applies to a small number of issues. Would I use Delinquent Participant Contributions and just give all of the affected participants their percentage share of the 2007 sale proceeds? For terminated participants, would Payment of Benefits w/o Properly Valuing Plan Assets work if the term'd participant gets their share of the sale proceeds?

I have also seen some discussion of simply filing a Form 5330, but not sure if that would be appropriate for a PS/401(k) Plan....

Any insight or war stories appreciated!

Does an employer who filed for a determination letter for a converted cash balance plan that got stuck in the moratorium have to do anything now that the moratorium has been lifted, or does the employer just wait for the IRS to contact it to resume the process?

For 2006, the maximum HSA contribution still had to be prorated if a participant was not eligible under an HDHP for the full year. Does anyonw know if the age 55 catch up contribution has to be prorated as well?

A profit sharing plan may allow in service distributions after a stated age, among a few other things.

Is there any guidance as to what is the minimum allowable age for in service distributions?

Is there a rule of thumb as to how much fiduciary liability insurance a plan should carry? For example, a plan should carry insurance equal to a certain percentage of total plan assets.

Doctor is 100% owner of a small office, of which only he and his wife are employees and his compensation is around 120,000. They maintain a 401k plan. The doctor is also a minority owner (25%) in another office of doctors. This office also has a 401k plan. The doctors compensation is around $175,000 from this practice.

For 415 purposes, can the doctor achieve $45,000 in allocations from each business or does the $45,000 apply to him in total, combined from both plans?

Thanks

My governmental employer, who maintains a 457(b) DCP, asked if a deferral taken from one of our participant's pay on December 28th but not contributed to the DCP until January 5th should be considered a 2006 deferral or 2007 deferral for purposes of determining excess contributions for 2006.

Does anyone have any thoughts on whether the December 28th payroll deduction is an annual deferral when taken from the employee's pay or when actually contributed to the plan? Any citations would also be very appreciated.

Say a one participant DB plan has $500,000 in plan assets, where $150,000 is the value of a piece of real estate.

Say the one participant terminates and is to receive his lump sum which is computed to be $500,000.

Of course if the property is sold, deposited into the plan and then distributed, it is straight forward.

However, say he rolls over the $350,000 of stocks, bonds and does nothing w/r/t the property. The rollover thus not being subject to immediate taxation.

It would appear to me that the appraised value of the property would be considered a taxable distribution to the participant and would alos be subject to the 20% withholding rules.

Does that make sense or are there other procedures in this situation? I didn't find anything on the distribution of real estate and it is conceivable that the real estate must be sold and distributed in cash.

Thanks.

Assume a DB plan allows new participants to elect to be in a DC plan instead of a DB plan, would the group of people in the DB plan still meet the reasonable classification requirements of the Average Benefits Percentage Test?

Opinions or experiences?

Different answer for a "soft freeze"?

Seen any new guidance on the proper interpretation of Section 803 of PPA?

The IRS has a three tiered penalty structure for failure to file a correct information return by the required due date: $15 per return if within 30 days of due date; $30 per return if more than 30 days but before August 1; and $50 if after August 1 or if you fail to file.

Does anyone know how often the IRS assesses this penalty if the custodian is submitting a corrected return to address a prior year error? For example, if a contribution was originally received as a 2006 contribution (and not reported yet), and it was subsequently discovered that the contribution was clearly designated by the participant to be a 2005 contribution (custodian receiving error), is the custodian generally assessed a penalty when the corrected 5498 for 2005 is submitted?

Does anyone have experience with being assessed this penalty as custodian for making this type of correction? If so, how are you notified of the penalty? Is it lumped in with other penalties (such as 945 filings etc.) or are you notified separately? If you were assessed a penalty, what were the circumstances? Failure to file? Correction? A few accounts or a lot?

A RMD was processed in late December 2006 and the check was mailed out by the carrier, but the check has not been cashed since the address that the client had is incorrect. The client does not have any updated information for this former employee since they terminated over 5 years ago.

Since the participant hasn't received their check, is there any deadline when it needs to be cashed by? I can suggest to the client to use the IRS forwarding service or a private service. Any suggestions on how to handle and what issues there might be for the participant and/or client.

Thanks.

We received a hardship withdraw from a participant in a case we are working on. The adoption agreement permits w/d from all sources. Salary deferrals we understand that only contributions can be withdrawn. We have Employer Match, Profit Sharing & Prevailing Wage sources are also available. The participant is 100% vested in all sources. For the aforementioned sources, is it permissible to disburse 100% of these sources. The adoption agreement & trust document do not provide specific direction in regards to this withdraw.

It is my understanding that OTCs are not reimbursable under a limited use health fsa - however, the document that I am reviewing states that OTCs for dental, vision and preventative care are reimbursable.

Any thoughts?

Thanks.

Hi,

I have put about 4k pretax into my 401k in 2006. My federal taxes are about 8k. I don't have an IRA - can I further reduce my taxes by opening one? If so, how much should I put in, and are there significant differences between general IRAs that are available in the market?

Any advice is appreciated.

Tx!

Joe

"A&B Dental Group" owned 50% each by Drs. A and B. For whatever reason, each Dr is now going to own 100% of his own practice, with each practice owning 50% of the former A&B Dental Group, which will now be comprised of just the staff (most "shared"), office equipment, etc. - i.e., going from 1 entity to 3.

"A&B Dental Group" currently sponsors a "New Comparability" PS Plan.

Not sure where to begin with the new "arrangement" from a qualified plan standpoint. Am I dealing with an affiliated service group? Can each entity sponsor its own Plan? Should they consider a multiple employer plan? ???

Mostly just looking for "considerations" and "possibilities" from the more learned and experienced pension folk.

Thanks for any and all input!