We have a self-insured medical plan that includes 4 different medical options and a separate dental option. All options are contained in the same plan (1 plan document, 1 form 5500 filed for the plan), but the employee must make separate elections to be covered under both medical and dental. If an employee terminates and elects COBRA for medical coverage only -- he declined COBRA for dental even though he had dental coverage as an active employee -- must we allow the former employee to elect dental coverage at the next open enrollment period? I know he must be allowed to switch to a different medical option at OE if he desires, but if he doesn't have COBRA coverage for dental at the time of open enrollment, must he be allowed to elect dental at OE?

A 401(k) owns an interest in a business (e.g., LLC, LP, etc.).

The owners want to remove the business interests from the 401(k) by buying out the interests (at book value).

Would this be a PT?

I have found a vast amount of literature detailing the mechanics of how you use a 401(k) or IRA to invest in companies but nothing regarding how you get the business interests OUT of the 401(k) account or IRA. Is it as simple as buying out the interest?

There is not much information about grandfathered governmental 401(k) plans. A 457 governmental plan combines both the employee pre-tax and employer dollars for the 402(g) deferral limit. I assume that if the plan is a grandfathered governmental 401(k) plan that only the employee pre-tax dollars are counted towards the 402(g) limit. Does anyone have a cite or IRS procedure/Notice that states how these are treated.

Also, Form W-2 also does not mention how to treat grandfathered governmental 401(k) plans. I assume the employer would only report the employee pre-tax deferrals in Box 14 as Code D; employer contributions would not be reported at all. A 457 governmental plan would report both employee pre-tax and employer dollars as Code G.

I have a client who made $15K of Roth 401(k) deferrals in 2006 based upon his guaranteed payment income.

Now his accountants have finished his tax returns, and although he has the guaranteed payments, he has negative self-employed income.

I know in a regular 401(k) this would keep him from being able to make 401(k) deferrals. Do you also have to have s/e income to make Roth deferrals?

Thanks!

I'm currently on the fence regarding a future career in pension plan consulting and I'm trying to decide between going for an MBA (and potentially choosing a different career) or going through all the certifications required for a CPC designation from ASPPA.

I guess this is more or less just a general question, but as far as the ASPPA designations go, how useful are they in landing a job/preparing for a future career?

As always, I appreciate any and all feedback. Thanks guys.

A sponsor maintains a pension plan(plan number 001), several years later they are sold a 401(k). The seller, fully knowing the existence of the pension plan, assigns plan number 001 to the 401(k). Any suggestions on changing the pn for the 401(k)?

Hi! I'm looking for the language that states that when an employee terminates;

1. S/he is eligible for payment of the entire annual election as long as expenses were incurred during the plan year and while employed

2. The employer is not due repayment for any amounts over the contributions into the plan (i.e. annual election= $2000.00, terminates after only contributing $300.00 submits valid claim for $1500.00 - the employee does not have to pay back the employer the $1200.00 that was not contributed into the plan, but still paid out to the employee.)

If anyone can direct me to the IRS language that describes this, I'd be greatful!!! Thanks in advance.

Jeremy Davis

My employer made a contribution in March of 2007 for a profit share plan for the calender year 2006. For IRA deductibility purposes am I considered covered by a defined contribution plan for the year 2007 or 2006?

In 1.410(b)-7©(1), a "plan that consists of elective contributions under a section 401(k) plan, employee and matching contributions under a section 401(m) plan, and contributions OTHER THAN ELECTIVE, EMPLOYEE OR MATCHING CONTRIBUTIONS is treated as three separate plans for purposes of section 410(b)."

Does anyone have thoughts on what the capitalized lang has been interpreted to mean?

Facts: Company A and B are part of a controlled group that sponsors a single 401(k) plan. There are two separate lines of business, and the company qualifies for QSLOB status but has not yet declared as a QSLOB.

The Plan states in the section regarding the employer contribution formula that "For each Plan Year, the Employer shall contribute to the Plan ... on behalf of each Participant who is eligible to share in matching contributions for the Plan Year, a discretionary matching contribution equal to a uniform percentage of each such Participant's Deferred Compensation, the exact percentage, if any, to be determined each year by the Employer ..." A participant is eligible for a match if he has attained age 21. Companies A and B are both "Employers" under the plan.

Company A is doing well and wants to contribute a match for 2006. Company B cannot afford to. In order to contribute a match for one group and not the other, I believe the plan's match formula or match eligibility provision would have to be amended (otherwise, under the above formula, all participants would be entitled to the match once the percentage is declared).

Question: can a plan be amended retroactively to revise a matching formula -- i.e. to state that the match can be provided to employees of one Employer and not the other? Something tells me it's too late to amend to do so for 2006.

Thanks in advance for any thoughts.

I was reading commentary which indicated that Code Section 410(b)(4) provides a special tax rule for HCEs when the reason for a plan disqualification is a failure to satisfy coverage under 410(b) or the minimum participation test under 401(a)(26). Under the special rule, the HCE's entire vested benefit is taxed as if were distributed in the plan year of disqualification.

Why, when I look at 410(b)(4), do I not see this...what am I missing?

I have a single employer/employee money purchase plan in which the employer died last year. I'm assuming this becomes an orphaned plan. My question is would his beneficiary have to assume sponsorship of the plan as a successor employer in order to sign the final 5500? There is no one else beside his beneficiary who would have any vested interest in this plan. How is this accomplished? A board resolution assuming sponsorship? Thank you.

Linda Michals

I'm not seeing final regs for Roth 403(b) anywhere. Is it just implied that Roth 403(b) will mirror the Roth 401(k) regulations?

For 2006 and 2007, does the 150% of unf CL 404 limit apply to a one person plan?

Are IRA distributions subject to Generation Skipping Tax (GST)?

Sec. 26.2611-1 Generation-skipping transfer defined.

A generation-skipping transfer (GST) is an event that is either a

direct skip, a taxable distribution, or a taxable termination. See Sec.

26.2612-1 for the definition of these terms. The determination as to

whether an event is a GST is made by reference to the most recent

transfer subject to the estate or gift tax. See Sec. 26.2652-1(a)(2)

for determining whether a transfer is subject to Federal estate or gift

tax.

Just got in the best (worst) VCP problem I've ever handled. A governmental agency has maintained a "plan" since 1992 but has never had or cannot find a plan document. The mutual fund company that holds the assets says that each participant's contributions are held in two IRAs - one for the employer's contributions (sounds like a SEP) and one for the employee's contributions. The client says that the participant contributions are pre-tax (sounds like a SARSEP). The real problem (leaving aside the absence of a plan document) is that governmental agencies are not eligible to maintain a SARSEP. So, I look at 2006-27 and find "Employer Eligibility Failure" (see 5.01(2)(d)). The permitted correction of an EEF under 6.03 is pretty easy - stop making contributions to the plan. Unfortunately, an EEF is limited to employers not eligible to adopt a 401(k) plan. I can't find a similar provision for employers who can't adopt a SARSEP. Any ideas about how to approach the IRS about correcting a defect in a plan (some combination of non-amender/non-adopter) that the client wasn't even eligible to maintain? Thanks.

an adviser(age 59) deferred appx 19,000 in his financial company's 401. $14K was pre tax and $5k was pure after tax dollars, not Roth. could he defer the additional $6k pre tax into his own companies plan?

I know this has been asked plenty, but....

I'm 53, and started my roth in 2000 with a conversion from a traditional IRA. Made a $3000 contribution in 2002. I want to take out the contribution and original conversion amount this year, it comes out to app. $12000.

The way I understand it, the $3000 contribution is completely tax and penalty free. The original $9000 conversion is tax free, but subject to a 10% penalty and would show up on line 60 of the 1040 form.

In other words, I'd owe about $900 by taking this amount out in a distribution. Does that sound accurate?

I know there will be questions as to why I would take any out of the roth in this way, but I have my reasons.

Thanks folks!

Hello!

I have a Roth IRA, and I contribute the maximum to this account every year ($4000 this year). I am wondering whether I can try to augment the growth of this account by buying an additional $1000-$2000 worth of equities or mutual funds on margin. In other words, can I contribute $4000 and use this to buy $6000 of securities--$4000 with cash and $2000 on margin? I realize that this strategy could lose money if the extra investments did not outperform the interest + inflation on those margin purchases, I am just wondering whether such purchases would even be allowed.

Thanks!

-Mike

Also, can I own options in a Roth IRA account?

Anyone have any experience with a health plan (or any other welfare plan) with eligibility to particiapte based upon productivity criteria? Full time versus part time to be determined not by hours worked, but by amount of work produced.