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I would expect it to be very soon since the Form 5500 and instructions for 2006 were released earlier than in years past.

Company A has an ESOP and is being bought out by Company B. Company B is paying cash and all ESOP stock in company A will be paid out in cash to the employees for transfer/rollover to an IRA. The offer is for 2x the value of the ESOP stock. The ESOP will terminate when the deal is closed.

Questions:

1. Are former employees who terminated in the last two years with partial vesting and have not been paid out entitled to become automatically 100% vested?

2. Are those same former employees entitled to the offer price (2x value of ESOP stock) for their shares or can they be cashed out at the pre-sale stock price?

3. Can the company "claim" that the former employee have been paid out prior to the announced sale even if the employee has not received any notification or received any payout funds?

4. Related to #3 above - What constitutes pay out that would "close the books" on a former employee. Is it receipt of the funds by the former employee or is it an accounting entry at the company saying that the employee has been paid out even if the funds have not been disbursed.

Thanks for any help.

I recently left my employment of 13 years and my employer (President, CEO) had the accountant write off the profit sharing plan that was in place from 1995-2001 when we started a 401(k) plan. He was advised to transfert he monies to the 401(k), but he decided to just get rid of it so he doesn't have to file taxes on it anymore. The accountant was filing the 5500 tax form yearly. Is there any recourse in me recovering my portion of the profit sharing plan?

Can an employer make nonelective contributions to a 457(b) plan for 2006 in early 2007, or must these amounts be credited before the end of 2006?

In other words, is there something similar in the 457(b) world akin to 404(a)(6) (which allows payments to be deemed made for deduction purposes in the prior year if made by the time the prior year's tax return is due)?

Or, because there is no concern about the year of deduction, can a 457(b) plan be credited for 2006 in 2007 so long as the applicable dollar amount for 2006 is not exceeded?

We received a nonamender compliance statement in 79 days. No determination letter application, but that timing even included one supplement requested by the IRS. We were shocked at how quickly it was processed.

Anyone think this is what we can begin to expect now, or was it unusual?

My daughter ( <18 yo) has $850 of earned income.

I would like her to invest this in a Roth IRA. I assume this is possible, but am running into problems.

Problem is, Vanguard (where I have all my accounts) has very high minimum investments, and Fidelity has high minimums, and won't issue any Roth accounts to persons under 18 years old (yo).

Assuming persons <18 yo are allowed to establish Roth IRAs (which I don't know if it is true or not), then what we are looking for is:

Goal: Establish a ROTH IRA for a person <18 yo with $850 earned income

Requirements:

1) fund company allows ROTH IRA for persons <18 yo

2) minimum ROTH IRA investment must be under $850

3) money market fund AND/OR passive (not managed) total stock market index fund that tracks Wilshire 5000 or similar index (i.e. not just large caps)

As long as we're asking, we'd prefer:

1) low expense ratio (under 1% preferred)

2) low or no management fees + other advertising fees

Any ideas?

I have been tearing my hair out (there is not much left) because I recall that the calculation of the most valuable benefit (the conversion from the normal form - assumed to be a life annuity for this discussion) uses spousal ages equal to the participants (I thought it was actually in the regulations but can not find it).

Is it permissible to use the actual age of the participant's spouse??

Thanks in advance for any commentary.

Here's the situation:

New 401(k) Plan with deferrals beginning July 1, 2006. Owner makes $30,000 per pay period and deferred $1,250 per pay period. The Plan is a safe harbor plan with a basic matching contribution (100% up to 3% and 50% of deferrals on the next 2%). How do you determine his match?

Do you say that he put in 4.1% of pay each pay period and, therefore, gets a match on that amount for the rest of the year until his match for the year is equal to 4% of $220,000? That would mean that you would match him up to the annual limit on the match. Or do you have to stop his match when his pay for purposes of determining the match exceeds $200,000?

Thanks!

Plan provides for a pre-retirement death benefit equal to the PV of the participants vested benefit.

Payment can be made in a LS or installments.

Owner dies, plan is underfunded, early termination benefit restrictions apply, so the LS payment is not an option. Benefits would therefore have to be paid as installment payments - based on the restricted benefit rules over the life expectancy of the participant.

The plan is then terminated. It is not subject to PGBC coverage, but plan provisions require an allocation of assets based on benefits that would be insured by the PBGC.

MY QUESTION IS -

Would the balance of the (restricted) death benefit be considered a 'pension benefit' for PBGC insurance purposes - and a portion of it guaranteed after adjustment for the dollar limit and substantial owner phase in? Or would the entire balance be excluded because it would not meet the criteria to be a 'pension benefit'?

PBGC Opinion 78-24 deals with a similar question, and seems to imply that the remaining death benefit may not be insured since it was not designed/intended to provide a maintenance income to survivors. If the benefit had not been restricted, I believe Opinion 78-24 would lead me to easily conclude that the benefit is a pre-termination obligation and would/could be paid in full from pre-termination assets. Or if the benefit was defined under the plan as a survivor annuity with a LS option, 78-24 seems pretty clear that the remaining installment payments would be guaranteed. But since the plan provides for a benefit equal to the PV the vested benefit (implied LS normal form), they seem to say that the even if the benefit is converted to installments payable over a lifetime, it is still not a 'pension benefit'.

If none of the benefit is insured, other participants get their full vested benefits and the remaining death benefit falls entirely into the next priority category along with the non-vested/non-insured benefits of all other participants. Given the dollar limit and 30 year phase-in that would apply even if the death benefit is an eligible benefit for PBGC purposes, the difference in the end result may not be very different. But I would still like to get this right......

I have a s/h 401(k) plan that uses the 3% non-elective contribution allocated to all participants.

The plan also has a discretionary profit sharing contribution, integrated, allocated only to participants that are employed at the end of the plan year and work 1000 hours.

I have five non-highly compensated employees that were eligible only for the s/h non-elective.

If I am reading the ERISA outline book correctly, it looks like I can re-structure into component plans to pass coverage? Does that mean that I put the 5 participants in one plan, since no hces benefit, it passes coverage? Then put all the other participants in another plan, all ees benefit..passes coverage?

Is is this even necessary? My concern is the discussion about the design based safe harbor status of the plan.....The allocation rates are not uniform in this situation. If I'm reading it right, it's okay as long as the plan passes coverage....is that correct?

Thanks.

If a small plan holds just cash no money market or goverment bond that is greater than 20% of Assets does it need to be reported on 4i? I can't find anything in any book about holding more than 20% in cash. The main point of this question is to assess prudence of investments practices so to reduce large losses. Yes you won't lose any money holding cash but you wont make any gains, so my thinking is that it se be reported because holding large amounts of cash is not very diversify. Any thoughts? Experiance?

Ok, I just received confirmation from the plan sponsor/trustee/owner that his dad died in 1994. We became the TPA of this plan back in 2003, but we were never given any info that this partiicpant was dec'd - he is just listed as retired and we have no death cert on file. The estate atty of the trustee has told him that the bene (the dec'd's spouse) can roll the account into her account in the plan (she used to work there too). I don't have a problem doing this - my concern is that he has been dead for 12 years - I thought this needed to be done within 5 years? Would there be any repercussions if the plan was ever audited? The plan is a P/S plan that is valued annually and is pooled. So techincally, it would have earned the same interest or losses whether is was listed as the account of "M" as it would have as listed as the rollover of "A," the spouse.

Am I worring over nothing?

I am trying to decide where to open my Rollover IRA and Roth IRA accounts.

I have searched and read many articles and discussions on this topic. However, I have not found a clear answer so far. Perhaps it is a matter of spending more time on this. I figure it is worth a shot to ask this question here.

Basically, I am trying to decide between using a mutual fund company such as Vanguard vs. a discount broker such as Scottrade.

At first glance, it seems that a discount brokerage would be preferable. It would afford wider selection of mutual funds and other investment instruments to choose from. As far as I can tell, there is no cost penalty when buying mutual fund shared through a discount broker vs. buying the same shares of the same fund through the mutual company direct. Except, there is a flat fee charged for every transaction (buy, sell or exchange). And this is the cause of my indecision.

I currently have a regular brokerage account with Scottrade. If I open my IRA accounts with them, I will have access to a variety of mutual funds. If I want to buy Vanguard index funds with very low expense ratios, I can buy them and pay the $17 fee Scottrade charges per transaction. That would prevent me from buying additional shares of the same fund on regular basis because $17 would be a significant percentage. So I would have to limit myself to perhaps annual contributions to my Roth IRA fund(s).

Instead of using Scottrade, I can open an account with Vanguard directly. I would have to pay account maintenance fees, IRA custodial fees and (higher) brokerage commissions on any non-Vanguard funds that I decide to invest in.

After having examined fee structures, I think it would be more cost-effective to open these two accounts with a mutual fund company directly, especially if I would be primarily interested in buying their own mutual funds. This way I can avoid spending $17 on commission whenever I want to add money or make changes. Am I missing something here?

A client who is the 100% owner of a medical practice has historically also owned 100% of a real estate partnership with no employees and no W-2s. The medical practice has a cross-tested profit sharing plan in place in which the owner maxes out his contribution each year. In 2006 a new, full-time employee was hired by the real estate partnership. The owner still does not recieve a W-2 or any salary fro the real estate partnership, only K-1 income.

I believe this is now a brother-sister type of controlled group situation and the employee of the real estate partnership needs to be included in the testing for the profit sharing plan sponsored by the medical practice, is this correct?

Can the real estate partnership adopt the same plan sponsored by the medical practice as a related employer and the new employee be covered or does a separate plan for this one employee need to be created, sponsored solely by the real estate partnership?

What other consequences are there to the hire of this new employee?

Assume a 457(f) pays an annual benefit over a 10-year period. The participant is taxed on the full amount upon vesting, even though they won't receive the entire benefit for 10 years. Since the participant already recognized the entire benefit as income and paid the tax, it does not appear as though it would matter if payments were "accelerated" after vesting. Anyone comments?

Does anyone happen to have a chart of what states require withholding for state income taxes for 401(k) deferrals, and what states don't?

Thanks in advance.

When does an employer have to decide whether it will make a discretionary matching contribution? I know when the match has to be made to get the deduction, but does the employer have to adopt an amendment or have a board resolution that provides for the match by the end of the plan year to which the match applies?

If a client has a Profit Sharing Plan and a Cash Balance Plan, do they need to file two separate 5500's?

I am looking for benchmark data for total benefits as a percentage of payroll. Can someone suggest where to look or a survey that we can participate in for this information. Historically we have used data from Hay but we are looking for a new or additional source. Thanks.