Has anyone ever had the problem where a Trust EIN is rejected on a 1099-R? This does not make one bit of sense. The employer gets a qualified plan, a ein is issued for the trust, a participant terminates and is paid out, the trust issues a 1099-R, the participant files his/her tax return and the 1099-R gets rejected. Is this due to inactivity with trust. This seems to happen from time to time especially with small employers who have few and far between distributions. Makes absolutely no sense :angry:

What next? Apply for a new EIN? Use employer EIN on 1099R?

A non-qualified stock option granted in 2007 is exercisable in the 12 month period after January 1, 2010. If optionee terminates employment before 1/1/2010, option expires. If optionee dies before 1/1/2010, executor has the 12 months to exercise. Will this design pass muster as "not having any element of deferal" and therefore 409A exempt? What say you all?

we have a client that told us they want to make a PS for 2006 plan year. When I spoke with her today I told her that it had to be funded by the time they file corp income taxes. She thinks it has already been file. Can they still fund the PS contribution until the filing deadline of 3/15/07 or did they have to fund by the time they filed the return? Thanks for any input.

Do either of the following allocation group structures violate the definitely determinable rule for a profit sharing allocation or any other provision for that matter?

Group 1: physicians receiving 10% profit sharing allocation

Group 2: physicians receiving 6% profit sharing allocation

Group 3: physicians receiving 4% profit sharing allocation

Group 4: all other employees

OR

Group 1: owners electing to receive the maximum allocation under section 415

Group 2: owners electing to receive $0 profit sharing allocation

Group 3: owners electing to determine their contributions each year and allocate on a pro-rata basis

Group 4: all other employees

Employer A has a 401(k) Plan that includes a 2/20 graded vesting schedule for PS contributions. Some of the owners of Employer A are planning on leaving the company, and starting Employer B. Employer B plans on having its own 401k plan, but wants to count service from Employer A for those employees who leave Employer A to join Employer B. This appears to be an amicable separation, so far so good. Employer B's document can be drafted to count this service with Employer A.

But it is expected that some of the employees who switch from A to B will not be fully vested in their account balance in Employer A's 401(k) Plan. What both employers would like is for none of the employees who are transferring to have a forfeiture. Rather, they can move their entire account balance over to Employer B's plan, and continue to vest in it. So if an employee has a $10,000 account balance in Employer A's plan, but is only 60% vested, the entire $10,000 can be moved to Employer B's plan, and the employee would still be 60% vested. Can this be done?

I suspect the answer is No, because if for example that same employee terminated employment with Employer B, still at 60% vesting, it doesn't seem right that the non-vested portion would now go to Employer B's participant, when it should go to Employer A people. Would you agree?

Finally, if the above ownership was slightly different and the owners of Employer A also had common ownership control of Employer B. Would the above transfer of the non-vested amounts now be acceptable?

Thanks

Question - if they set up a profit sharing plan, then terminate it after two years (which is what it will take them to use up the excess assets) is this likely to create a problem? I know with a PS plan you have the "substantial and recurring" contribution issue. While I wouldn't expect a challenge from the IRS on a subsequent termination, I just wondered if anyone had thoughts on this. Would it be better to simple set up a money purchase plan instead?

I appreciate any thoughts on this. Thanks.

I've got a basic age weighted plan that has a 1,000 hour/last day requirement. There are 5 NHCE's. One terminated with more than 501 hours . One worked less than 1,000 hours, but gets the top heavy minimum. The other 3 get an allocation, but out of those 3, 2 of them are bumped up more to meet top heavy minimums.

I want to avoid the gateway. Age-weighted plans are generally exempt from the gateway, but are the top-heavy minimums nullifying that exception?

Thanks in advance for any guidance.

So... I'm going in circles on figuring out the 415 maximum to figure out the level I should be trying to hit for the owner in a new Cash Balance Plan.

I've got a 45 year old owner that I'm trying to max out (I'll worry about the NHCE percentages later). The owner makes well over the $225,000 comp limit. Calendar year 2007, NRA 65 with no early retirement provisions. Actuarial Equivalence will be equal to GATT

Can anyone tell me what the owner's limit would be (*hopefully* with calculations)? I mean, what is the max the owner can put in, moreover what the limit that I should be trying to hit?

Any and all assistance will be greatly appreciated.

Here is the situation. One of the owners took no compensation in this plan year. If I pull him into the ADP test, they will pass. Without him, they fail. I don't want to take a chance and do the wrong thing. How is a participant who was eligible in prior years but has no comp in this year treated?

The acceptable percentage of employer securities in a DB plan is 10% - if the plan reaches 20% and you advise them of the 15% excise tax, are your consulting duties complete ? in other words is there any requirement under the minimum funding rules that would compel you to remove the excess from plan assets ?

One of my new plans is an LLC with a 50% owner who is not collecting a salary. Income from the LLC is $130,000 for this owner. He has made a deferral contribution of $7,692 to the safe harbor plan.

My question is this, is this allowable? Is the income from the LLC a wage? Can they receive a safe harbor contribution?

The inquiry is coming from their accountant.

Is there an exception for temporary employees to providing benefits? We're small (under 20 employees) and have a clerk who wants to work until he goes back to school in the Fall. He'd be working on a specific project mostly at a client's warehouse but also filling in at our office as needed. He'd be working more than 25 hours per week (our plan's definition of threshhold for coverage). Can we classify him as a temporary employee and not provide benefits? If so, is there a state or federal reference you can provide me as support?

Thanks in advance.

Have a client who has a 90 day service requirement to become eligible for the 401(k) and then entry on the 1st day of the month after the service requirement is met. Plan also states immediate vesting.

Once in the plan, the client offers a 10% employer PS contribution....question.... since the plan reads immediate vesting, should the PS contribution be calculated taking in account the 90 days that the participant was not in the plan? Or, should the PS amount only given for the time the Participant was actually in the plan? Appreciate the assitance...

I've read a few different things online, and I just wanted to double check something.

As far as the determination letter process is concerned, if you're initiating a new retirement plan for your company and you have fewer than 100 participants, the user fee is waived for the first 5 plan years? So all you would pay would be a filing fee (is it $125?)?

And as far as the employer tax credit goes, is it up to $500 for the first 3 years of the plan or is it now up to $1000?

Thanks so much.

ok - I'm sure there was a thread on this but as usual I can't find it...

Owner defers $15999.88 for 2006 (is over age 50). There are other HCEs, and ulitmately owner has to take refund to correct ADP of $3,035.26 (includes gains).

Owner is getting $93.86 in ps forfeiture reallocation. New comp formula, profit share has not yet been declared for 2006. Originally, I was allocating a profit share of $28,916.14 to bring owner to total allocations of $44,999.88.

So....can I give the owner $31,941.40 in ps allocation to "make up" for the refund he will be taking? His actual total allocation in 2006 would then be $48,035.14 which is still under the $49,000 (if you consider catchups), but he didn't make the full $5,000 catchup; I'm thinking he is limited to an overall allocation of the $44,999.88.

Any input appreciated.

At the next investment committee meeting, my boss would like to present a

solution that would include freezing a subisidairy's current 403(b) plan for current

enrollees and starting a 401(k) plan for new employees / enrollees;

allowing a voluntary migration from the (b) to the (k) as individually

desired. This all assumes that there are no major pitfalls along the way.

What pitfalls could we potentially encounter?

We have both DB & DC plans together, and are cross-testing to prove compliance.

The VP document for the DC plan provides a Gateway language with a 5% rate built-in.

But we need something more. When a DB is involved, the amount may go to 7.5%.

Or we may find that some employees need a higher contribution than others, possibly because

some are not covered in the DB plan.

For the participants with no DB benefits, I would like to have one gateway amount.

When the participants also have DB, I would like to use a different amount, based on the average

DB contribution rate for all NHCEs.

Does Corbel's document have this option?

Does anyone else have any suggestions?

Situation where a plan was in the process of transitioning from one carrier to another in Feb. 2006 and the employer sent the broker the 2005 PS contribution rather than to either the old or new carrier. Contribution was made by the employer before their 2005 tax filing date (3-15-06 no extensions) and was claimed as a deduction for the 2005 year. Contribution was held at the brokerage in the name of the plan.

The problem (one of them any way) is that that 2005 PS contributions still hasn't been allocated.

1. Can it be allocated for the 2006 year or does it have to be allocated for the 2007 year?

2.It would be considered an annual addition for the year allocated?

This would present another problem because there may be some employees who would have ordinarily received an allocation of the 2005 contribution if allocated by 4-14-06 (1.415-6(b)(7)(ii)). But if they terminated before 2006 (or 2007) and have no compensation for the year allocated they exceed 415. Is this correct?

Is there any way to get those employees who may have terminated employment before the year of allocation any part of that 2005 contribution? Is outside the plan the only recourse for those affected former employees.

We are terminating a DB plan. The annuity provider won't issue an annuity without the participant's signature (the provider claims that the annuity is too small). The participant won't sign. I believe you are permitted to treat unresponsive participants as missing participants for purposes of terminating a defined contribution plan. Is there a corresponding rule for DBs? I couldn't find one.

Assume a company aquires a subsidiary and the contracts with the employees of that subsidiary promise to amend the parent's plan to include service with that subsidiary prior to acquistion. Does an employee who terminates nine months later, before the amendment is actually made, become a participant in the plan (assuming their pre-acquistion service with the subsidiary would have been sufficient)? Any citations would be appreciated - Thanks!