I have a client who wants a deferred comp payment date to be based on certain "liquidation of the company" events. Assuming this date can be objectively determined, should I be concerned about whether this satisfies the requirement that the payment is made as of a "specified time or pursuant to a fixed schedule"?

Employee's residence is in a big city. Employee travels each Monday to a temporary home near her employer, where she stays for the week. She returns home to the city each Friday.

Can her transit expenses traveling each Monday and Friday be reimbursed under a qualified transportation plan?

I have a calendar year plan that has a match allocation at 6/30 and at 12/31. The conditions are 500 hours and employed on 6/30 and then 500 hours and employed on 12/31. The match formula is the same. I ran coverage at 12/31 including all non-excludables that benefit during the year which includes a participant that receives a match at 6/30 then subsequently terminates in August and does not receive the 12/31 match. How do you account for the two sets of allocation conditions? Do you test under BRF's - current availablity? Or is coverage and ACP testing enough?

Anything interesting come out of the meetings that anyone wants to share?

Previously our Sec 125 TPA would keep our experience gains and roll them from year to year, to use for admin fees or to fund any new expenses that hit before there were enough contributions for the new plan year. This year we just got a letter from them saying they won't be doing that any more, due to IRS guidance regarding the use of a trust and some other rule changes, and they sent us a big check to cash out our account for the last plan year. So I am pondering how to deal with these funds, and I thought I would set us up a separate bank account, to keep them segregated (as they are plan funds which must be used exclusively for plan participants or admin fees), but then I started thinking of my tiny amount of ERISA training and things like funded and unfunded and plan assets started going through my head and now I am wondering if maybe that wouldn't be the best thing to do, because it will change our ERISA requirements? But I really don't know, it is all very confusing.

Can anyone help me determine the best place to keep those experience gains and what sort of ERISA obligations could occur with each method?

Also on the letter from the TPA, they said they could pay claim out of any bank account we set up if we provide them with the information, so I thought that sounded like an interesting idea, so then we could receive the interest of the money, but again, I was wondering if that would further complicate things...

Thank you!

A plan failed the ADP test for 1/1/06 to 12/31/06. After distributing the refund, it is found that part of the HCE's match must be forfeited.

The plan sponser realized that this should have been done for the 2005 plan year, but wasn't. One of the HCE's who received an ADP refund for the 2005 plan year should have had some of his match forfeited.

Since it has been over a year since the 2005 ADP refund was made, does anyone know the ramifications of not forfeiting the match would be? I don't see that there is a "deadline" to have to funds forfeited. And I don't see anything in the EPCRS about this.

Anyone have any thoughts on what the plan sponser should do?

The PBGC instructions for ACM filers say assets are market value as reported on line 2a of the 2006 Schedule B, which for our plans do not include receivables or payables. The current liability amounts, however, reported on the 2006 Schedule B are net of payables. Should payables be added back into the liabilities?? Is anyone else having issues with the new asset reporting method for PBGC purposes?? Any help is appreciated. Thanks.

My colleague and I are trying to determine which value should be used for trust accounting/asset purposes.

When accounting for the total plan assets, should the cash/contract value or surrender value be used?

Should the contract value be used until a distribution takes place and the difference between the contract value and surrender either be forfeited or in the Gain/Loss?

Dr. turning 70.5 in August, 2007

Dr. Works for teaching hospital... receives W-2 (assuming a 403b... not my client)

Also owns practice where he is a 50% owner.

As long as he is still employed by the hospital and receives a W-2 he does not have to take a RMD. The practice of which he is a 50% owner he does... correct?

Thanks

Example: Plan is calendar year. Employee hired 7/28/04. First year of service is 7/28/05 and while hours worked from 7/28/04 - 12/31/04 on the year end census show 980, we assume the participant is full time and by 7/28/05 will have worked 1000 hours and is credited with 1 year of service. Now for the second year of service, is it ok to switch to the plan year, meaning 1/1/05 - 12/31/05, to determine the second year of service, basically using nearly 8 months(1/1-7/28) of service twice, OR should the second year just be determined from 7/28 - 12/31/05 and years of service thereafter follows calendar year

An individual owns company A which has a 401(k) Plan and in December 2005, the same individual buys 85% of company. We have a controlled group, but the transition rule allows exlcusion of Company B's employees through 12/31/06. A plan amendment is done so that Company B's employees are excluded from the plan, but we know that they must be counted for testing, starting 1/1/07.

By the end of 2007, the owner of company A is expected to decrease his ownership in Company B, to less than 80%. There are no other common owners. Ownership is expected to stay below 80% thereafter.

Is it correct that starting 1/1/08, there is no longer a conrolled group and we can ignore Company B's employees for testing purposes of the Plan? Also, if Company B started its own 401(k) Plan on 1/1/08, there are no combined issues relating to both plans. That is, because there is no controlled group, the plans are tested separately, no reason to look at employees of the other company.

Thanks

I have a 3 group plan, 1) owner, 2) Son, 3) All others

So 1 & 2 are HCEs. If son does not get a Profit Sharing contribution is the HCE ratio percentage 50% or 100%. There would be an elective declaration of $0 to his group for this year. He is not terminated or denied money by anything other than employer election.

My thought was 50%, but this case has me wondering.

http://www.investmentnews.com/apps/pbcs.dl...E/70323019/1037

Maybe it is 50% and he is still an active participant? (a combination of the two issues)

Thanks

Earl

We have a client with a DB and DC plan. The th min is provided in the DC.

The plan is top-heavy. A non-key employee participates in both plans, and works over 1000 hours each year, but does not accrue a benefit in the DB (don't ask--- long story).

Does the aforementioned non-key ee get a TH min of 3% or 5% of comp?

Trying to figure out the application of IRC 404(a)(3) to a short taxable year, and having no luck. Facts: Employer is on a fiscal year taxable year ending 9/30, but profit sharing plan is on calendar year; employer paid contributions for plan year 2005 and deducted for taxable year ending 9/30/2006. Now employer is changing to calendar year taxable year and has a short year 10/1/06-12/31/06. How does employer deduct contributions for 2006 plan year? I thought it would be deductible in the short year, and if this were a DB plan I believe this would be correct, but 404(a)(3) limits the deduction to 25% of compensation paid to participants during the taxable year, and imposes an excise tax on the excess. Because of the short taxable year, the contribution is well over this 25% limit.

Certainly this is not a situation in which an excise tax is appropriate, and I feel that I am overlooking some fundamental aspect of this situation.

Has anybody had this issue?

My client wants to amend their existing SEP, which does not have an eligibility requirement, to a less than 1 year eligibilty requirement. The information that I have been able to find says amendment is okay up to the time of filing the corporate return with warnings about the possible discriminatory nature of such an amendment.

There are no HCEs in the plan so the discriminatory issue does not apply. My questions are:

1. Can they amend in 2007 for employees hired after the efffective date of the amendment? New employees in 2007 hired before the effective date would be immediately eligible.

2. What are the mechanics? The 5305 only allows a years of service option; can you enter a partial year?

Thanks for any and all help. I do not wade into the IRA world often.

Anybody out there "in the know" about when we might expect any information on the new rates for 2008? I am interested in particular about the relative increase in the 417(e) rate once phased in, and how that might compare to both the Treasury rate and the segmented yield curve rates. But I guess everybody else is also.

Brand new plan provides for immediate entry if employed by 8/1/2005. Only the two owners meet this requirement. The other participants were hired one month later and in this first year would not be eligible. Other than this "looks" funny, is this immediate entry a BRF that would fail coverage?

Would anyone be willing to share a crystal report that would prepare labels for participants with account balances? The savvy users will know the trick is not to get a label for every account, but just one per person. I talked to Relius who said it cannot be done, BUT at my last job we had reports that did this. At the risk of being picky, we use Avery 5160 labels.

Thanks!

I am getting more and more questions from employers who, for one reason or the other, would like to essentially provide each employee a health insurance "stipend" that could be used to pay for coverage under the employer's group plan or, alternatively, for premiums for other coverage if an employee elects not to participate in the employer's group health plan. In most cases, this seems to arise as a matter of "fairness" for the owners. The thinking is basically that they are willing to pay $X amount for group health insurance premiums for those employees participating in the employer's group plan so, therefore, they should be willing to pay the same amount to employees who forego coverage under the employer's plan when they have health insurance coverage elsewhere (e.g., spousal coverage, individual health insurance plans, etc.).

I have worked with employers who have established "opt-out" or "cash-out" programs under their cafeteria plans to make sure that those employees who actually elect coverage under their employer's plan are not subject to constructive receipt concerns by the IRS. One of the challenges of that approach, however, seems to be that the employees getting the stipend amount rather than coverage under the employer palnn must recognize the stipend in income and pay taxes on it while employees covered under the company's plan basically get the stipend on a pre-tax or "tax free" basis. The "fairness" rationale then leads the business owners to consider providing a tax "gross-up" or additional amounts to the non-electing employees in order to make up for the different tax treatment.

Also, as I understand it, having the employer contribute the stipend as an employer contribution or flex dollars to a health FSA for those employees not electing employer plan coverage poses big problems because the health FSA rules do not permit participants to use the account to pay for health insurance premiums.

All of this has me wondering if the better approach is not be to establish a simple medical reimbursement plan whereby the employer agrees to reimburse all eligible employees for amounts spent on health insurance premiums up to a maximum monthly stipend amount. For example, if an employee is willing to give each employee up to $300 per month to cover the cost of major health insurance premiums (whether under the employer's group health plan or through other coverage), as long as the employer requires proof that the amounts are essentially being paid in arrears to reimburse the employee for legitimate health insurance costs, shouldn't those payments be tax free?

Would this vary if the amounts being reimbursed were premiums paid by a spouse on a pre-tax basis under a cafeteria plan sponsored by a spouse's employer? Would this potentially be discriminatory if the reimbursement formula provided for payments of 50% of monthly health insurance premium costs up to a maximum of $300 per month? Perhaps that depends on which employees are getting the maximum reimbursement amounts and which are not.

Granted requiring a receipt / proof of premium payments would be a real pain but it seems to me it's preferrable to having the stipend treated as taxable income to those participants that do not elect coverage under the employer's plan. I don't see many folks with these sorts of reimbursement plans these days--at least not outside the very small company / nonprofit sector. Admittedly, I also don't see many employers who are willing to pay a stipend or otherwise make a contribution to the cost of health insurance coverage outside of the employer's own plan but the interest in such programs seems to be on the rise.

I would be grateful for any thoughts on the best or most tax-efficient way to make these sorts of programs work. Thanks.

I am a 2 person office and I am the owner or the S Corp. The other employee does not have dependents. Can I set up a 129 where I can have money taken from my paycheck each period and administer the plan myself? I've read different things about this plan and am not sure if I can participate.