I am an attorney who has done quite a bit of work with cross-tested plans over the past 12 years or so. I have recently been marketing c-t plans to an industry segment that has proved to be pretty fruitful. I am looking to partner with a plan admininistration firm so as to be in a position to offer prospective clients an all inclusive package of services to these c-t clients.

If you are interested in discussing such a relationship, please contact me at innract@hotmail.com.

I hope I am not violating any rules of this board in posting this inquiry. If I am, please lock or delete this post and accept my apologies.

First time to post a question......

1. Curious how often you see a govermental DC plan which includes employee pick-up contributions; and

2. If the plan sponsor of a DC plan errors and does not withhold the pick-up contributions from the employee wages, what are the alternatives to correct the situation?

I have calculated the RMD for a participant for 2006. The participant died in February 2006. The client is telling me that the RMD for 2006 should only be for 2 months (prorated), since the participant died in February. I hadn't heard of this before...is this correct????

Thanks!

Is anyone changing how their retiree premium reimbursement plans work following PLR 200638027? In that case, a plan provided reimbursement of medical premiums and out of pocket medical expenses for retirees. The Service found that the plan did not qualify as a VEBA because it provide a non-permissible benefit (among other reasons). The non-permissible benefit was the refund of any remaining amounts in a participant's account after the participant's death (or the death of the participant and spouse if the participant was married) to the participant's (or spouse's) beneficiary. The Service said that this variable death benefit was not a life benefit because the amount was not fixed, there was no current protection and no insurance type protection. Has anyone encountered this?

When a welfare benefit plan purchases stop-loss coverage (the plan itself, and not the plan sponsor, pays the premiums):

1. The policy constitutes a plan asset

2. Schedule A is required

3. The premiums are reported on Schedule H, Part I, Line 2e(2) ("...To insurance carriers for provision of benefits")

But, how have you been completing Form 5500, Lines 9a and 9b? Do you check "Insurance" for plan funding arrangement, for plan benefit arrangement, or for both?

Perhaps I've got the sequence wrong, but I thought the issuance of a new mortality table for Current Liability purposes will automatically trigger changes in how we calculate the variable premium liability, and this change should be effective immediately. But I've seen nothing from the PBGC. Anyone?

Are multiple employer 401(k) plan documents usually drawn up by an attorney? Are there prototypes avialable (probably not, but I don't have much experience with these types of plans and I want to be sure)?

Any ideas about a price range for this document?

A company went out of business and the stock has been valued at $0. They have come to this decision to redeem all allocated shares of the stock in the ESOP for $500. I don't know why. Would there be a discrimination issue? Should that $500 instead be treated as a cash contribution. Those who were not eligible would get nothing for their shares.

A plan covers all eligible employees of two companies which are commonly owned. Previously, the companies had the same benefit design and shared the same stop-loss contract. Now Company A wants to have a different benefit design from Company B--higher individual medical deductible, add long term disability, supplemental life. This would only affect the employees of Company A. The stop loss carrier states that this would be fine since they are not changing the stop-loss deductible. We do not want to have two plans due to preferable stop loss rates by combining the two companies instead of underwriting them separately plus the risk is spread over more employees. It does not seem to fall under discrimination regulations since the benefit design is not in favor of key or highly compensated employees, the plan design and available benefits would just differ from Company B. Has anyone had experience with this scenario?

Hi,

I hope there is someone that has either had the same problem as me or similar situation in the past.

I did a Rollover last year from my Traditional IRA to my Roth.

I had a LONG stock position in the account valued at apprx 11,802

I had a SHORT option position in the account (covered call - in the money) valued at (-3340)

Cash of $2,030

The net value of my account was $10,492 but on my tax form from the brokerage, it is listed as 13,832. It seems like the short call position that was transferred over was not counted. Is this correct? Why?

Should I be reporting the 10,492 or the 13,832 to pay the Rollover tax on?

Thanks

2/5/07

Someone didn't like my answer to this question. So I am posting the question here to either validate my opinion or to be corrected. I am sure that similar questions have been asked here before. I will give the facts with out my opinion so as not to be accused of "leading the witness":

"Dan" is 75 year old non-owner who is an active employee in a company and has a 401K account balance in that company's 401k plan. Document allows non-owner active employees to be exempt from RMDs. Dan has never taken a RMD from this 401k plan.

Dan retires (terminates employment) in July 2006. Dan Rolls over his entire account balance to an IRA in August 2006.

Question: what is Dan's RMD situation???

A plan accepted a rollover that was later found to be impermissible to be rolled into the plan. The regulations permit the plan to distribute the impermissible rollover and earnings.

Does the plan tax report the corrective distribution? Generally, a distribution to an individual from a qualified plan must be reported on Form 1099-R. The Form 1099-R instructions do not address the distribution of an invalid rollover contribution. Also, the final regulations are also silent regarding any tax reporting requirement.

I don't think that silence means that in certain circumstances that the corrective distributions should not be tax reported. Especially since plan earnings are returned.

If the rollover came in as a direct rollover, I am recommending that the impermissible rollover and earnings thereon be returned to the issuing institution with no tax reporting. If the rollover came in as an indirect rollover, then I assume that the impermissible rollover and earnings thereon be tax reported on Form 1099-R.

Please let me know if there is anyone with experience with this. Thank you.

Question - two partners own an LLP - 51 & 49 % respectively. They are a law firm. Neither reported earned income from the LLP - but they both both have their own individual P.A. -

Should the 401(k) plan be set up under the LLP name but have each individual partner's P.A. adopt the plan? Would that qualify as an ASG?

Any help would be appreciated.

Client is considering adding an automatic enrollment provision. This provision will NOT include the automatic escalations defined in PPA. Those provisions are viewed to be administratively burdensome to apply with a large, turn-over prone workforce. Looking at this problem one can see why concern is appropriate for that type of population.

Another question is what happens if an eligible person does not return the "negative election" and the employer does not apply the "automatic deferral" (eg. 3% deferral) to the person's paycheck? Does the employer need to contribute a special contribution for this person to make up for the "automatic deferral" not applied to this person's paycheck?

Thanks for your input!

If a participant has a Simple IRA account from a previous employer and chooses to roll this account to their company's 401(k) Plan, is this Simple IRA rollover account eligible for a loan from the 401(k) Plan (assuming the 401(k) document allows loans from rollover accounts), or does a Simple IRA rollover account maintain it's classification as Simple IRA money and is therefore not eligible for a loan?

I am looking for someone to confirm that with the new vesting schedule maximums (3 year cliff & 2-6 graded) for all contribution types (elective and non-elective) that this effectively voided the accelerated vesting schedule for those qualified plans that are Top Heavy.

I have searched the internet and been unable to find anything speaking to this issue and as stated above, I am looking for someone to confirm that I am either understanding the PPA correctly or am I missing some piece of PPA that also spoke to a new accelerated vesting schedule for top heavy plans.

Thank you

My husband has recently become disabled, and lost his job. He was our only source of income, I don't work. Now his job wants him to take out his traditional 410K. Which is 14,400. So I quickly opened an online account and had the money transfered. Now I am wondering if I should Convert it to a Roth IRA? But am wondering how this would affect us tax wise. The IRA calculator says we would owe about 3800.00 in taxes on it. Now how does this all work? Does the 14,400 get added as income on our 2007 tax returns? Or does the 3800.00 tax have to be paid immediatly? And if it does get added as income on our 2007 returns, being that our only income for the year would be my husbands SSI Checks, which add up to about 10,000 for the year + the 14,400 for the IRA conversion, that would make our AGI 24,400. That said, The SSI would not be taxed because the AGI is less than 36,000, SSI says. So that would leave the taxable 14,400. Now last years returns gave us a standard deduction of 16,900, and if the same goes for 2007, that would wipe out any tax we would owe,Being that the standard deduction is more than our AGI, RIGHT? Not only that, but we should get a refund because I have 15% tax taken out of his SSI check. And we would get all that back. Am I right to think that this would be the perfect time to do this conversion, being we would not end up paying any tax on it? Or am I figuring this all wrong? HELP! I'd like to know BEFORE converting because right now we cannot afford $3800.00. We are married and file jointly every year, are homeowners, no children. and our only deductables being property taxes, medical, charities, no mortgage, no work expenses, are less than the standard deduction, so of course we take the standard. Just need to know if Im right, so I can take advantage of the Roth conversion tax free? Thanks, any info would be greatly appreciated!

My question is, and I think that I know what the answer is (except that I am at home today and don't have all of my resources available. I am reviewing the work of our plan admins. The plan doc excludes non-resident aliens (Canadians in this case). 2 employees fall into this catagory, except that they both have some US income (reported as taxable on their split W-2's) and some Canadian Income (reported as not taxable).

Am I correct in assuming that their US income is not excludable in the 401(k)/PS Plan, and that they would get a share (based on their US income) of the Cross-tested profit sharing contribution?

Please advise, thank you very much.

John Makarevich

Hi folks! This is my first posting here so forgive me if this topic has been covered.

Both my wife and I each have our own Roth IRAs (along with a couple of standard mutual funds), plus our 401K's. Retirement wise we'll be OK for cash, but I'd really like to convert our other mutual funds to Roths if possible. So...

Is it possible for 1 individual to own more than 1 Roth IRA (in the same name)?

I don't THINK its allowed, but I haven't been able to find a clear answer to this question.

Many Thanks!

Tyster

Can anyone tell me if there is point where it doesn't make sense to invest in a 401k

My plan charges 107 basis points to own the index funds within the plan. Am I better off investing in a taxable account with Vanguard, after I funded my Roth?

Thanks