Safe Harbor 401(k) employer match meets the requirements to avoid the ADP and ACP tests. Does the Plan still need to pass the Average Benefit Percentage test? Wondering if we can bonus the spouses (who do work in the business) to allow maximum deferral and share in the additional 11% profit sharing contribution. If we do bonus the spouses, the Plan wouldn't pass the ABP test... This is probably a very common issue. Thanks.

Taxpayer would like to lend from IRA to 50% owned partnership. All requirements of 4975(d)(1) would be met. Does 4975(f)(6) make 4975(d)(1) null? My initial thoughts:

4975(f)(6)(A)(i), along with the flush language kills loans to owner-employee, certain family members or certain corporations. Partnerships are not mentioned in these attribution rules and no other attribution should apply for purposes of 4975(f)(6), so on its face loan to 50% owned partnership works. Two concerns:

a) Am I missing a larger provision that would apply attribution via partnership?

b) Entity-Agrregate principles - if partnership is aggregate for purposes of 4975(f)(6), then may pass through "owner-employee" nature of the transaction....in short, indirect attribution.

Thoughts?

John Hyre

If a Participant of a pension plan enters into a QDRO with his ex-spouse and she is receiving 50% of his benefit, pursuant to the QDRO, as of a certain date, is the Participant's new spouse entitled to 50% of the Participant's benefit upon his death?

A Participant in a multiemployer pension plan gets a divorce and enters into a QDRO. The determination date used for the Participant's accrued vested benefit calculation is June 15, 2005. The percentage awarded to the Alternate Payee is 50%. The Alternate Payee began receiving benefit payments shortly after the determination date stated above. The Participant, however, continued to work. In that the Participant continued to work he became eligible to receive a benefit enhancement that was instituted after the Alternate Payee began to receive her benefit payments. Is the Plan require to apply this benefit enhancement to the Alternate Payee's payments in that the Participant will be receiving the same upon his imminent retirement? If you can cite to any authority on the matter that would be great, as well.

Thank you.

If 401(k) plan permits partial distribution, it's clear that there must be spousal waiver of QJSA right on first partial distribution. Must there be a waiver on all subsequent partial distributions, or has the spouse already waived all rights with first distribution waiver? Thanks

I cannot seem to find a definitive answer on whether the increase from 90 days to 180 days under the PPA for participant notice/spousal consent requirements applies to notices distributed after December 31, 2006 or annuity starting dates commencing after December 31, 2006. Obviously, if it applies to the latter, notices will have to be revised now to apply to distributions made after December 31, 2006. Thoughts?

Have an entertainer who is 100% owner of her corporation. She is also a member of the Screen Actors Guild. The Guild has a multiemployer defined benefit pension plan.

Our understanding is that if her corporation sponsors a single employer DB:

1) The single is not aggregated with the multi for the 100% of pay limit.

2) The single is aggregated with the multi for the 415 dollar limit.

If, for example, she had participated in the guild plan for 10 years and acrued a monthly benefit of $2,000, would the proposed single employer plan sponsored by her corporation be in violation the first year (max dollar limit = $14,583 / 10 = $1,458). Or, when aggregating plans, do we get to consider participation under BOTH plans for the 415 dollar limit in either plan?

Thanks much.

Our company has a Cafeteria Plan with benefits of Insurance Premiums (Medical and Dental company sponsored), Medical Flexible Spending and Dependent Care.

My question - if an employee has an individual outside insurance plan (such as Cancer policy) can he/she have the annual premiums withheld via payroll ded. as pre-taxed.

If so, would he/she turn the premium notice in to the administrator for the administrator to pay directly to

the insurance provider or could he/she pay premium and turn in premium notice to administrator for reimbursement to him/her?

I have searched many places and cannot find a definative answer for this question of outside insurance premiums. Any help or guidance anyone can provide will be most appreciated.

Thanks,

SueR.

Profit Sharing plan has partcipant directed accounts. 1 participant owns land. He pays the insurance premiums for the land from his assets, should he also pay real estate taxes from his assets?

Thanks.

Has anyone found a really good write up of the quarterly benefit statement requirements for part. directed dc plans? The most I can find is a paragraph.

We're an unbundled provider trying to tackle the vesting disclosure requirements/investment blurb.

DOL just issued this today, but it didn't seem to answer my questions. I'm looking more for a "what does this mean for unbundled providers" type of context.

http://www.dol.gov/ebsa/regs/fab_2006-3.html

I have a DB plan with a participant that has reached normal retirement age of 62, has accrued his full benefit, and who will continue to work for the corporation. He also has an existing roll over account, form a plan with his previous employer, in the plan. For legal reasons, he can not roll over his accrued benefit into an IRA.

Can he roll over his accrued benefit in the plan directly to a new roll over account in the plan (without first distributing it "outside" the plan and then rolling it over back into the plan)?

Since he already has a roll over account in the plan, can he roll over the distribution of his accrued benefit into the existing account?

I have a DB plan, with a favorable determination letter, that includes a 414k provision.

One employee has reached normal retirement age of 62 and wants to "transfer" his accrued benefit to the 414k account in the plan. The employee intends to continue working for the corporation. For various legal reasons he does not want to roll over his accrued benefit to an IRA.

I am aware that the IRS has granted many favorable determination letters for 414k plan provisions, but other wise has concluded a 414k account is not "compatible" with a DB plan. Also, there is a specific question on Form 5500, concerning a plan with a 414k feature.

Questions about 414k

1. Is anyone aware of any new information on the current IRS position on 414k (e.g., court cases, rulings, announcements, etc.)?

2. Does the new pension law in any way authorize or support the use of 414k?

3. Does anyone have a personal audit experience with 414k?

4. If the employee's accrued benefit is transferred to the 414k account, what is the economic risk upon audit? That is, what might be the IRS proposed method of correction on audit (Ignore the transfer, Distribute the balance to the participant, Disqualify the plan, Etc.)?

5. Is the use of a 414k provision a plan disqualification issue?

Hello,

What I want to do....

I would like to move IRA money from an AG Edwards account that my wife and I have. We each have a Roth Ira and a Traditional Ira.

I would like to move the money to the Vanguard, specifically the Vanguard Target Retirement 2040 fund.

What I'd like to know from you....

Will AG Edwards charge me a fee for the money leaving them?

Does it make sense for us to open four(4) Vanguard Target Retirement 2040 funds?(A Roth and Traditional for me and a Roth and Traditional for my wife). That doesnt seem very diversified!!

I would eventually like to convert the traditionals to Roth's but haven't pulled the trigger due to the taxable gain I'll have to pay.

Any insight would be greatly appreciated.

Merry Christmas!

Can someone provide me a cite that will convince a new client that he can deduct the contribution for 2006 eventhouugh the contribution is paid in 2007?

Confession up front -- I have not done any research on this yet, so I apologize if the answer is obvious!

We have a cafeteria plan that includes health, dental, FSA and dependant care. An employee recently asked to drop her family health coverage for a reason that is not a qualifying status change (e.g. marriage/divorce/job change etc.). The coverage was started in July, so there are approximately 6 months to go before the end of the 12 month commitment. Our TPA has advised us that allowing this employee to drop health coverage prior to the conclusion of the 12 month period would jeopardize the qualified status of the entire cafeteria plan, and if it was caught, all of the pre-tax contributions ever made to the plan, by any employee would become taxable.

I understand that if the plan loses its qualified status, it affects the entire plan and all participants. And I know that an employee cannot get into the plan, absent a qualifying status change, in the middle of the year. But is it correct that allowing an employee to discontinue health ins. coverage in the middle of the year would throw the entire plan out of compliance?

Thanks!

I HAVE A CLIENT WHO HAS CONTRIBUTED 12% AS A PROFIT SHARING AND 3% AS A SAFE HARBOR FOR THE HCES WHICH TOTAL $33,000.00 FOR EACH. THE HCES HAVE ALSO DEFERRED $16,000. AT THIS P0INT THEY ARE AT THE 415 MAX. IS IT POSSIBLE TO RECLASSIFY $5,000 OF THE DEFERRAL AS CATCH UP EVEN THOUGH ONLY $1000 IS CATCHUP ELIGIBLE?

I thought the IRS said that all adopting employers had to sign the 401(k) amendments, but it looks like some prototype sponsors are just adopting them for all adopting employers automatically if there are no special effective dates or election of optional provision.

Can anyone clear this up?

A partner in my firm came to me yesterday with the following concern:

Owner employee turned age 70 1/2 in 2005. 1st distribution was made in March 2006. As he was preparing the 2006 distribution to be made by December 31, the owner employee informed him of a TEFRA 242(b) election that he signed back in 1982.

Question: If the owner puts back in the 2005 distribution that he took in March, could the 242(b) election be considered "not broken"? The owner is even of the mind to consider the distribution as a "prohibited transaction" between the plan and the corporation, which will be corrected before December 31, with the appropriate Form 5330 to be filed reporting the PT and paying the excise tax.

Any replies would be appreciated.

It has been my understanding that in doing accrued to date testing one should factor in the ebar associated with the dc account balance if one exists. Is there a correct technique when a dc plan has been previously terminated and cashed out? Moreover, if such balance should be included, would it be brought forward with or without interest? If with interest, then what rate;a 401(a)(4) standard rate or perhaps the experience rate under a replacement dc plan if one exists?

Divorced in Feb of 2004. Briefly, after close to three years, my ex-wife, impatient with her last two attorney's failed attempts to get a domestic relations order qualified against my 401K, decided to take matters in her own hands. She personally drafted a DRO using Fidelity's website, but instead of specifying the valuation of ~ $4,000 agreed upon in our divorce decree, she specified a valuation of ~ $18,000. Subsequently, without consulting with her attorney or informing my attorney - she went before a judge (asleep at the wheel with judicial immunity) and had him sign this draft order - under the pretense that the order had been drafted and approved by both party's respective counsel. She then send the order to Fidelity - who qualified it, segregated the accounts and executed a complete disbursement in less than two weeks...

Since no one knew what she was doing, I didn't become aware of this until I saw the account segregation. (Mail notification from Fidelity lagged behind a few days after this.) Within days, my attorney had the judge issue a TRO against Fidelity disputing the QDRO and barring any further processing; however, Fidelity advised that the disbursement had already occured and any relief would have to be obtained from my ex spouse.

Although another TRO has been served on her - barring her from spending the funds, this is a grim situation. I suspect that I have been deprived of about half of my 401K without any due process or recourse - unless one considers an un-enforceable civil judgement a remedy. My ex wife already has $17,000 worth of unsatisfied civil judgements - she will never comply with an order from the court - contempt or not.

Any thought about how this might be salvaged would be welcome.

Regards,

Bjorn