The participant passed away in 2005. He was over 70½ and receiving RMD's. He has no spouse. He has many beneficiaries listed. Some of the beneficiaries want to receive the lump sum, some would like to receive installments, and one would like to receive an annuity.

The document states that lump sum, installments and annuities are allowed methods of distribution.

Lump Sum: easy enough

Installments -

adoption agreement states;

"over a period of years certain selected by the participant that is less than the life of the participant payable on an annual, quarterly or monthly basis."

doc states;

In substantially equal annual, quarterly or monthly installments over a period of more than one year but which does not exceed the period designated in the Adoption Agreement, as selected by the Participant (provided that such period is not greater than the Participant's life expectancy or the Participant's and the Participant's designated Beneficiaries' joint life expectancy as of the Annuity Starting Date), plus accrued net income.

Annuities -

adoption agreement states;

"for the life of the participant"

doc states;

By the purchase and delivery of a single premium, nontransferable, fully refundable, annuity policy issued by a legal reserve life insurance company payable in equal installments for the life of the participant that terminates upon the participant's death, or providing for payments over such period as may be designated in the Adoption Agreement as selected by the Participant; provided, however, unless the Employer has designated a life annuity distribution option in the Adoption Agreement, in the event of distribution of such an annuity policy to a Participant, such duration shall be for a fixed duration which is less than the Participant's life expectancy as of the Annuity Starting Date. The refund feature under such annuity policy following the death of the Participant shall inure to the benefit of the person or persons designated by the Participant as his Beneficiary.

The client is asking what "life of the participant" means. Does it mean "life expectancy"? Or are these not methods not an option due to the participant being deceased?

Thanks for all your help!

Just starting to get requests in for 1/1/2007 beginning of year valuations. Have the following questions:

1) 2006 valuations used the 1983 GAM and GAF tables for current liability. Are these tables still in effect for 2007 valuations or do we switch to more recent tables (ala the 417 table switch from 95-6 to 2001-62).

2) Similar question on mortality table to use for PBGC variable rate premiums for 2007.

Any other things we should note for 2007 valuations?

Have you seen any guidance as to how the exclusion is reported. Does the Governmental Plan reduce the amount of the taxable income by the amount of the qualifying payment for health and long-term care insurance, or does the Governmental Plan report the entire distribution, and the public safety officer deduct it on his/her federal income tax return. I have not seen how the IRS wants this reported.

I started a TPA group within a bank 6 years ago and now the bank is looking to sell or close the division. I want to buy it and am in the final stages of the contract negotiation awaiting SBA approval and have hit a glich. I am only purchasing the service agreements, no assets. They are trying to value the business on the past financials not a multiple of the revenue. I am getting it for .5X annual revenue and the SBA wants me to qualify this price! Does anyone know of a valuation firm experienced in working with TPAs that can help me quick!

Where can one find the 30 year Treasury Rate soon after a month ends.

I am looking for the December '06 rate and have been searching the IRS website since Monday 01/08 but found nothing.

Datair's website has the various interest rates and even they don't the December's 30 year rate as of today.

Is it permissible to make an election in the prior year to have any ADP/ACP refunds deferred to a Non-Qualified Plan? (I.E in 2006 elect to defer any refund that may be required for the Plan year 2007 to the Deferred Compensation Plan as a method to correct the ADP failure). I have not found anything for or against.

Thanks

A client has a PS plan. The Plan is top heavy. Jane's been in the PS plan the last several years and has gotten at least the top heavy minumum contribution all those years. Effective 1/1/05, the client starts a DB plan. For 2005, Jane was given a 0% PS contribution in the PS plan, and got the top heavy minimum accrual in the DB Plan. Jane terminated in early 2006 with under 1000 hours. Since the DB plan excludes vesting service prior to the 1/1/05 effective date, Jane is 0% vested in the DB plan. Jnae will get no payout from the DB plan.

Jane is 100% vested in the PS plan. If she had gotten a top heavy minimum in the PS plan in 2005 she would have ended up with it, but she ends up with nothing for 2005 because she got it in a plan where she was 0% vested.

Unless, there's a rule I'm forgetting....

Is there any rule that says something like if you have two plans, you must apply the better of the two vesting schedules to top heavy contributions???

I'm not sure this question was seen at the bottom of my last chat string. I've been told by more than one insitution that they cannot accept the Merrill prototype document establishing a SIMPLE IRA plan to open a SIMPLE IRA account with their firm, even though Merrill is clearly not agreeing to act as a designated financial institution. These insitutiuons say that a model 5304 would need to be completed and signed by the employer to open the account with them. One even inserts specific language concerning their instution in Article VI of the form. I think you (Appleby) have clearly established that an additional 5304 is not neccessary where their is already a prototype document establishing the plan. But in theory should another 5304 even be done if there is already a protytpe document establishing the plan? These institutions say that the 5304 for them is simply in addition to the original document establishing the plan. But this doesn't make a lot of sense to me. If the employer signs a new 5304 that is dated after the original document establishing the plan was signed and dated isn't the employer replacing the original plan document with the new 5304 for the whole plan and not simply creating an additional document for the specific insitution that will open the account?

Employer currently has a MP plan and a 403(b). Broker called and asked that we amend/restate MP to a 401(k) so all participants could control their own investments. Employer will now contribute the MP formula (6% of comp) to new 401(k) as a Profit Sharing contribution and, if participants choose, may contribute to the 401(k). Broker never mentioned Employer also has an active 403(b) plan - the controller happened to mention it to me today and said he felt no one would defer salary to the 401(k) as all seem happy with their 403(b) account. My knowledge of 403(b) plans is zip. Can Employer offer both plans? If so, does having both plans affect the testing for the 401(k) or is the 401(k) simply handled on its own merit? Am I making this more complicated than it really is?? Thanks in advance for any help given!

Here's why I'm asking: My husband just started a new job and will be able, starting in mid-summer, to contribute to his company's 401K plan. He intends to get the maximum match, and in fact, possibly contribute the $15,500 that is allowed (as a tax shelter.)

That is a lot of money for six months' worth of pay, and additionally, we should have another source of funds from which we can draw other than pay. Could an employee just make a lump payment of the entire amount before the end of the year and still have that reflected in the W-2?

I realize that it makes most sense to just have it withheld from pay each pay period, and I'm sure that's what he'll do in future years, but this year is different since he just started and since we do have access to the funds at this point to just fund the account all at once. Thanks in advance.

Participant age 63 died within past week or two, possibly 2006. Designated beneficiary is son age 34. With PPA son can have benefits transferred to Inherited IRA. When must distributions and at what duration must distributions be made. The son's broker has said that it must all be paid out in five(5) years. I somehow do not believe that the broker is correct.

Options available

Commence by 12/31/07 and be based on son's life expectancy (probably the single life table)

Commence by 12/31/07 and be paid out in five(5) years. Brokers suggestion.

Wait till son is 70 1/2 about 2043.

Wait till participant would have been 70 1/2 about 2013

Any other options suggested.

Does anyone know if you should include the cost of health insurance premiums to 2% s-corp shareholders as wages for determining SIMPLE salary deferral elections/employer match? Thanks.

If you give an HCE a match on their catch up contribution, is the match included on the ACP test?

I can't seem to find the answer in the regs on this.

S-corp. client deposits 55,000 into account in 2006. Initially thought $30,000 was 2005 deduction. Discover no W-2 wages were paid.

Fix - Client took $60,000 in W-2 for 2006 - $15,000 applied toward deferral & $15,000 toward PS. $14,000 must stay in as nondeductible contribution and apply excise and deduct in 2007. $11,000 must be refunded for exceeding the limit.

Any other suggestions or ways around the excise tax (broker wants to know, he's in a pickle)?

A new client of ours let us know that they have been doing administration on their plan based on an SPD. No one can locate a copy of the actual document. We want to go through VCP to submit a GUST document. Will we also have to provide a pre-GUST document or all copies of plans from the effective date? Has anyone ever done this and had success?

Thank you!

Can anyone help me with the timeframe (specific date) in which deductions taken from an employees check must be credited to the Employees Dependent Care Account for reimbursement to the employee? Is there a law under Erisa or other IRS regulation?

Example: Employee has a $200.00 paycheck deduction for Dependent Daycare. Employer must credit the Flex Account with the $200.00 to allow for reimbursement of the funds back to the employee.

The problem I'm having is an employer isn't consistently forwarding the deductions to the accounts for reimbursement. In any given week the employer may take 1-2 weeks before sending the check to the carrier for posting to the employee flex account.

What is the timeframe for these payments to be posted in the employee account.

Thank you very much!

Sandra

I have an employee who was given wrong information by the TPA and based her annual election on the wrong information. I know that employees can only change their election with a change in family status. No change has occurred and the TPA will not process the claim how they told the employee they would. Here's the example and if you can provide suggestions, I would appreciate it. She was told that orthodontia could be submitted as a one time lump billing and then reimbursed accordingly. Now the TPA says it can only be reimbursed over the entire time period of the braces being on ie 24 months. Is the taxpayer liable if the TPA would process anyway? Thank you for your guidance.

I was asked.... if a client missed a RMD back in 2005 and the 50% penalty tax was paid.... does he still have to take the 2005 RMD in 2006 in addition to the 2006 RMD? it was suggested to me that... "hey, he missed it, he paid the penalty so the only RMD needed to be withdrawn in 2006 would be the 2006 RMD.

Thoughts?

Thanks

We are starting to see alot more plans with prevailing wage contributions. In doing some research, we are finding some areas where these contributions can be used (offsets, QNEC's, etc.), but they have a few complexities that we aren't familiar with. Can anyone suggest a good resource on Prevailing Wage plans and how they can be incorporated into 401(k)s, things like that?

Thanks,

Tim

A new client for us has prior valuations prepared by another TPA for his Target Benefit plan using assumptions I have never seen. The interest rate used to compute the benefit is 5.5%. I know that the 401(a)(4) regs provide standard interest rates of no less than 7.5% nor greater than 8.5 percent. The regs provide that the Commissioner may change the defition of standard interest rate. Has this rate been changed to allow for 5.5 and I just missed it?