As a 3rd party actuary to a TPA, on a takeover case for 2006 work I noticed that someone had forged (bad forgery) my signature on the 2005 Sch B with my EA # and the rest of my information on page 1 of Sch B.

This is a classical case of the "dumb criminal" - the TPA or someone for him forged my signature and he expects me not to notice it! If I worked on the case last year then I wouldn't need last year Sch B or plan doc which he sent me!

Where does one report a case like this? I don't know if the local police or the DA's office cares about this kind of fraud!?

I started working with this TPA late last year and worked on only handful of his cases for 2005. So, I won't know on how many Sch Bs he has forged my signature unless I go through the 2006 cycle on his cases. But I have no intention of working with him anymore.

Company A aquires the assets of Company B ( both sponsor 401k plans). 2/3 of the company B ees will

be re-employed by Company A. Can a direct transfer from B's plan to A be required by company A for the reemployed participants? Isn't this a severance of employment?. Any assistance appreciated

A plan excludes HCEs from a safe harbor match formula and the plan is top-heavy - one of the HCEs is NOT a key employee - is it ok for the Company to continue to exclude him from the safe harbor allocation or must they give him a safe harbor match allocation to cover top-heavy?

Hello..

Please forgive me if this is posted in the wrong thread..BUT

My sister has worked for a LARGE THREE LETTER computer company since 1989.

She went out on a medical leave of absence in March of 2004 after a troublesome pregnancy, and resigned from the company last month.

She just received a letter which states that she owes over $10,000 by the end of March due to excessive benefits into her qualified pension plan. Essentially it states that both she and the company owe FICA and Medicare tax due to "recent changes in regulations, require that both you and XXX are required to pay FICA tax on excess pension benefits that you accrue each year".

My questions are

1) Why had this suddenly occurred..? She has not withdrawn any pension monies, nor was she a highly paid employee ie, less than $100K per annum

2) Are there any offsets to this payment ie, if she pays the $10K, is it deductible against regular earnings on her 2006 Federal return

3) What can be done to avoid this surprise in the future?

Your response(s) are very welcome and not construed as OFFICIAL professional advice for which there would be any liability. Recommended reading would be a welcome alternative to any other feedback.

Thank you

ED

Can an employer charge employees different amounts for the same level of health insurance?

Meaning two exempt employees both single:

Employer pays 100% for one and charges the other 50% of the premium

Does anyone know whether it's permissible to specify alternate forms of benefit payout that are based on the PV of the benefit at commencement? I'm familiar with the exception to the anti-acceleration rule for de minimis amounts, but my concern deals with the ability to design a plan so that the form of payment, though specified in the plan before amounts are earned, is driven by the PV at the time of commencement. For example, if PV is $25k or less, lump sum; if not, then default annuity.

I'm not finding an answer to this in the prop regs, but I easily could have missed something.

N is a wholly owned subsidiary of M on every day in 2005. Both M and N sponsor 401(k) plans--these are two separate plans. Henry works for N and draws $115,000 in pay from N in 2005 (Henry does not work for M).

In 2006, M and N constitute a controlled group of corps until November 2006 when M sells N to V (an unrelated corporation). Coincident with the sale of N to V, M hires Henry. From November 2006 through December 31, 2006 Henry is paid $10,000 by M. Henry is eligible to participate in M's 401(k) plan now that he works for M and does so, contributing $5,000.

As of November 1, 2006, M and N cease to be members of a controlled group of corporations. M still needs to perform an ADP test on its plan.

Is Henry an HCE with respect to M's plan for the 2006 plan year? Henry has never been an owner of M or N. Did Henry have pay in excess of the HCE pay limit in 2005 (the lookback year)? If, for this purpose, the "employer" is the M/N controlled group, then the answer is "yes". If, instead, the "employer" is only M, then the answer is "no".

I need help quick!!! Thanks so much.

I am completing the testing on a brand new plan - 2006 was it's first year. On 8/2006 two employees signed up for deferrals but never had it withheld. There is a payroll to payroll match.

What happens here? Does the company have to make a match because they missed the deferral? What if the amount is too big for a one time contribution for the participant and they don't want to make up the deferral, does a match still need to be made?

ok... let me know if any of what i believe is correct

I've got a 401(k) safe harbor plan with a new comp that is top heavy...

a) Since the plan is TH, i must give a top heavy minimum to plan participants who did not work 1000 hours, but are there on the last day of the plan year... (the contribution allocations provision says 1000 hours and last day of plan year)

b) since the plan is safe harbor, i must give either a match or a nonelective contribution to all participants whether they are active at the end of the plan year.

c) in order to pass the gateway for the NC, i must give the minimum of 1/3 of highest HCE rate or 5% to all active NHCE participants and all NHCE participants in category a or b

am I close at all?

Also, a plan document can't classify the safe harbor match or nonelective contribution as an elective contribution can it?

Do i have to use either a or b in the nondiscr testing?

ok... let me know if any of what i believe is correct

I've got a 401(k) safe harbor plan with a new comp that is top heavy...

a) Since the plan is TH, i must give a top heavy minimum to plan participants who did not work 1000 hours, but are there on the last day of the plan year... (the contribution allocations provision says 1000 hours and last day of plan year)

b) since the plan is safe harbor, i must give either a match or a nonelective contribution to all participants whether they are active at the end of the plan year.

c) in order to pass the gateway for the NC, i must give the minimum of 1/3 of highest HCE rate or 5% to all active NHCE participants and all NHCE participants in category a or b

am I close at all?

Also, a plan document can't classify the safe harbor match or nonelective contribution as an elective contribution can it?

I haven't filed one of these in a long time...PS Plan had limited partnership investment which was sold in 2006.

Schedule K-1 shows net short-term capital gain of about $5K, net long-term capital gain of about $1K. Ordinary business loss was $125, and other income $994. Do we exclude the capital gains, and therefore have less than $1k to report?

Thanks,

There is a big, HUGE, prize (i.e., my everlasting gratitude) for any one on here who can come up with a reason why participation in a multiple employer 401(k) plan is better than a single employer plan, not including economies of scale, vesting credit, and one Form 5500. Thanks, THANKS, T-H-A-N-K-S!!!

Employer fails ADP test.

Employer issues excess contribution refunds to HCE's.

Refund checks have been cashed.

The employer now wants to use the QNEC provision in their plan document to raise the NHCE average to pass the test. They use the current year testing method. Is this an option if refund checks have already been cashed? Can the HCE's send that money back to the plan?

Due to growth (ie now over 25 employees), the client is no longer able to allow contributions to their SARSEP. They are working towards establishing a 401(k).

Q1 - Can deferral elections for the SARSEP be automatically carried over to the 401(k) or must the client get each employee to make a new election?

Q2 - If the 401(k) is retroactively established (say in April) back to January 1st, can amounts already withheld from 2007 payrolls (ie Jan & Feb) be treated as contributions to the 401(k)? Does the answer change if Jan contribs have been funded to the SARSEP but Feb contribs have not?

Q3 - Can amounts already withheld (and funded) from 2007 payrolls be treated by the employees as contributions to a traditional IRA (treating them similar to "disallowed deferrals" (see form 5305A-SEP pg 4)), subject to the limits on traditional IRA contributions?

I have a plan that we took over from another TPA. It looks like the PS plan was merged into the MP plan, although I see no documentation to support this (and there should be, right?). However, there is a "profit sharing rollover" source with a vesting schedule attached to it (not 100% vested). Participant with 20% vested PS rollover $ has 5 yr BIS and so the non-vested $ is forfeited. The document states that forfeitures are used to reduce ER contribution, but there are no PS contributions to reduce. The ER is only making MP contributions. Can the PS forfeiture be used to reduce the MP contribution?

An employer maintains an ESOP plan as well as a 401(k) plan. Deferrals are made to the 401(k) plan and the ADP test passes. However, the contributions made to the ESOP fail the ACP test. Both plans have the same plan year and they both use the current year testing method.

Can deferrals to the 401(k) plan be shifted to the ACP portion of the ESOP plan? I read through the ERISA Outline book and it didn't describe the situation of 2 separate plans. And there doesn't seem to be any mention of this in the regulations.

Any idea's if this is permissible?

An employer has a Cafeteria Plan that allows them to salary reduce an employees pay on a pretax basis their cost of the health insurance. The employer realizes that they had been salary reducing the incorrect amount for 2006, and now want to charge the participants the difference. What type of issues will this present? Can it be done through the Cafeteria Plan? Any assistance would be appreciated. Thanks.

I want to buy a 2006 DC-1 Book from someone please email me at lray@vanfin.com

1) Particpant dies in 2005

2) Plan provides for life expectancy rule.

3) Non-spouse beneficary takes distribuiton purusant to life expectancy rule in 2006.

Do you agree that the non-spouse beneficiary can rollover the remaining amounts in 2007 (after taking the 2007 life expectancy distribution)? It seems to me that there is no need for any "transition relief" in this case (which based on an article today in BenefitsLink it doesn't appear the IRS is going to provide):

3/14/2007: No Transitional Relief for Rollover to Nonspouse, IRS Official Says (The Bureau of National Affairs, Inc.)

Excerpt: "The Internal Revenue Service made the decision not to provide transitional relief under Section 829 of the Pension Protection Act for years prior to 2006 regarding nonspouse beneficiary rollovers, an Internal Revenue Service official said March 9."

I know the plan will need to be amended to provide for non-spouse rollovers, but what is the amendment deadline. Is it 2009 with other PPA amendments with just operational compliance until then?

TPA failed to pay 77 year-old participant any of her RMDs.

As I understand, the correction method would be to pay her the amount owed plus interest and then get her current for 2007.

Would I be correct in thinking that she would not get relief for reasonable cause when she has to file Form 5329? And would any liability attach to the TPA (I am sure the participant will be upset when she learns she has to pay a 50% excise tax for the past 5 1/2 years).

How have any of you handled this?