Searching for a vendor for DB plan custodian. Looking for suggestions on questions to ask? We have everyone's prices but thats not everything...what funds can we use, if you require proprietary funds, how much needs to be invested in them, do you charge a termination fee, etc...

Would appreciate anything anyone else may suggest?

This isnt for recordkeeping..that is taken care of outside. Just custody of the money and check cutting.

appreciate your help

Plan fails ADP test . Instead of refunds, employer wants to use part of new comp PS allocation as 100% vested QNEC with remainder of New Comp allocation remaining as is. Is this within the guidelines?

Suppose a business owner (age 29) has 4 years of service by 12/31/2007 and starts a new DC plan (in this year, 2007). No other qualified plan.

Suppose one employee (age 28) has just been hired (March 2007). Assume we do not go with 2 YOS for entry, so this ee would enter sometime in 2008.

I would like to run the cross-testing for 2008 using a testing age equal to the normal retirment age, and I would like to use a normal retirement age equal to the later of age 30 or 5 years of service.

What do you think? Issues?

A while back I posted a question about different ways to credit service so I could get a good sense of my limitations, because the business I'm working with doesn't utilize a cut-and-dry hourly or salary wage situation.

After much consideration, I'd determined that I wanted to use an equivalency method where the total wages earned in a Plan Year are divided by the lowest hourly wage earned, thereby giving you total hours of service for the year.

Because of the transient nature of the company, I was hoping that it would be possible to calculate hours earned on an aggregate basis. For example, if we're using a 2-year cliff and are requiring 1000 hours of service per year, then after two years you need to earn at least 2000 hours to be fully vested. On an aggregate basis, that means an employee could earn 600 hours the first year and 1400 hours the second year and become 100% vested. Also, if an employee could only earn 200 hours a year (assuming the plan has a lenient break in service rule where an employee needs to earn at least 100 hours of service to avoid a break in service), then that employee would be fully vested after 5 years. If the aggregate rule wasn't used, an employee earning only 200 hours a year would never become 100% vested.

I was recently on a conference call with a vendor and they explained that counting hours earned on an aggregate basis was not allowed by the IRS. Plans can only count hours year by year, and they can never be combined. I could be wrong (and please tell me if I am), but I thought that even if there wasn't anything in the IRC specifically saying this was okay, the fact that the plan is more in favor of the employees in this particular situation would mean it could be used.

Is this aggregate rule okay? Are there any IRC references that anyone can give me that I can show these vendors to convince them otherwise?

Unfortunately, using this aggregate rule is quite important to the overall mechanics of the plan. I would very much like to find a way to do this if possible.

Any and all help would be greatly appreciated. Thanks so much guys.

My broker was holding an IRA for me in Account A. They transferred the money to Account B (not an IRA account due to some paperwork issues). They are sending me a 1099 for Account B but, no 1099 R for the distribution that they claim I have taken by transferring money from Account A to Account B. What should I do? Should I still declare the money as distribution in my 2006 taxes? Your help is very appreciated.

Thank you

Ria

Maybe I've missed the boat here, but I thought S Corps could sponsor ESOPs. I've reread 409(p) several times today and each time I do I understand it a bit less.

Let's assume a one owner S Corp. This S Corp has 9 other employees. The S Corp wants to start a leveraged ESOP. And, the owner's compensation represents 35% of total eligible payroll. (9 employees at $45,000 each plus him at $225,000)

Is the owner excluded from the Plan? Or, should the owner be excluded from the plan?

Is there a contribution rate that would allow him to be in a plan?

Thanks

Christopher

Hypothetical:

1) A company will be spinning off a subsidiary

2) The company has outstanding options

3) The company believes it's fair market value (it is publicly traded) will go down as a result of the spin-off

4) The company's option plans permit a repricing of options after corporate activity like a spin-off

5) The company wants to re-price the options so that optionholders aren't hurt by the spin-off, so: i) the company would like to reduce the exercise price if the FMV goes down, but not raise the exercise price if it goes up.

6) Assume the spread and ratio tests of 424(a) will be met

Any potential issues with this? Is it a modification, assuming the rules of Section 424(a) are met?

My client has 2 married employees. One is highly compensated and one is not. Neither are owners or officers. They want the dependent daycare benefit. No one else has elected daycare. If the nonhighly compensated spouse elects the daycare, do you have to consider that he is married to a highly compensated employee?

At the 2007 Enrolled Actuaries Meeting, some multiemployer plan items were discussed.

The new provisions for endangered and critical status plans under the PPA of 2006 were described. For the annual certification of a plan's status, describing the calculation methodology in the certification was recommended. For the extended rehabilitation period, the actuary's role is to calculate the figures for meeting the usual emergence criteria, and the trustees make decisions on what they believe are reasonable measures. Items for possible technical corrections were presented. Also, under section 1102 of the Act, for plan years beginning in 2007, a notice of the effect of deferring benefit commencement is to be provided.

One speaker described a managed mass withdrawal liability approach that has been used for troubled multiemployer plans.

For plans with a social security level income option, if a significant number of participants elect this option, then consider whether to reflect a subsidy in the conversion factors in calculating plan liabilities.

The IRS proposal to require service from all employers be combined for the maximum benefit limitations under IRC section 415 was discussed. Subsequent to the meeting, the IRS issued regulations with this rule.

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?