Company A purchases Company B in early 2006. Company B becomes a wholly owned subsidiary of Company A. It is a stock sale. Company B adopts Company A plan and employees are given credit for prior service and allowed to participate in the Company A plan right away.

Are the employees of Company B who earned more than $95,000 in 2005 HCE's in Company A's plan for 2006? If so, can they be placed in the "otherwise excludable" group?

Sal's Book (2005 edition) addresses this issue with a caveat that future guidance could change his "reasonable" interpretation. I don't have the 2006 edition and the 2007 will not be available until March.

Two employees own 50% each of the company. One of them dies on 12/1/05. His stock is immediately purchased by the other owner. So the surviving partner owns 100% of the stock on 12/31/05. The deceased partner's son is employed by the company. Is the son an HCE in 2006?

Hi, wondering if anyone has any advice for me. I have around 120 shares of stock in Pfizer, given to me from my grandmother when I was born (I'm 27). Not a lot of money, but considering it started as only a few shares in 1979, it has gone up quite a bit without doing anything to it.

More recently I have seen the stock continually fall, where my Roth IRA that i started last year has done rather nicely. My thought right now is to sell my stock and place it all in my Roth IRA, since the stocks have not done well recently, and I have not been able to add that much to my roth, (well, because i am 27, a teacher with a stay-at-home wife, a 1.5 year old, and one more on the way!).

First off, would this be a wise decision, and secondly, what sort of penalties would I have for selling my stock?

Thank you!

A public company that provides stock options (non-qualified) to its employees shows the gain on these options on the W-2 for the year that the employee exercises the options. They have a 401k plan that has a W-2 compensation as their definition of comp. The question is does the W-2 comp exclude the option gain for terms of census reporting and testing? These are 'wages' that are not technically eligible to defer money from nor are they wages that benefits should be based off of since the dollar amount is only reported for tax purposes and is not technically tangible wages that are received by the employee.

Company A acquires the assets of Company B. Company B's plan has not been terminated, but the majority of it's employees were hired by Company A. Company A has a 90 day waiting period and wants to amend to waive eligibility for those employees being brought over. Despite this being only an asset acquisition, doesn't it still make sense to review Company B's plan to ensure that they are in full compliance?

Company A has already deferred money out of their pay and can not provide us with any of the required amendments from the Company B plan. Am I making too much out of this if no rollovers are being made at this time?

Thanks

Scenario: A Health and Welfare Fund provides for a death benefit. The Fund has been contacted by the son of a deceased participant inquiring as to whether a death benefit was paid out after his father passed away. Normally, this question would be a no brainer. In this case, the son's father passed away in 1982 and the Fund does not have any records on file to answer the son's question. What is the Fund's obligation to the son considering that nearly 25 years have passed since his father passed away?

Can a wife make contributions to her retirement plan at work and then both she and her hubby contribute to a ROTH as well? (This is assuming they fall into the income guidelines)

Assume ER (for whatever reason) has 2 money purchase pension plans covering different portions of its workforce (A & B ). ER wants to terminate A and permit participants in A to roll their accounts into B prior to termination. A covers terminated vested participants who are not covered by B. Can those vested terms roll their accounts from A into B without violating the exclusive benefit rule of 401(a) (or other rules) even though they aren't employees anymore and otherwise have no nexus to B? Or is an elective transfer needed under the 411(d)-4 regs?

I am embarrassed to ask this questions, because I should know. Are age 59 1/2 inservice distributions driven by the plan document or by govt. regulations?

Here's one to ponder.

No Apparent Guidance on this.

A qp or 403(b) plan has a deceased participant who has a non-spouse beneficiary. The participant died 1998. Non-spouse beneficiary has been taking annuity style distributions from the plan in accordance with the one year rule.

The latest newsletter from the IRS says that a direct rollover from the qp or 403(b) must be accomplished before the end of the year following the year of death to be eligible for the annuity method.

However, what if those distributions were already being done from the qp? Can a direct rollover be accomplished and still retain the annuity rule? Also

what if the death was after RBD?

An ESOP with an outstanding loan is being terminated.Does the outstanding loan amount go against the stock valuation? Or more simply put , the company pays out the value of the stock less any outstanding loan obligations. Is this correct?

We have an EE who no longer faces the threat of forfeiture with respect to his SERP benefits.

I read the Regs for 3121 re FICA taxes and understand that section but i am wondering if we don't also need employer federal income tax withholding on the SERP benefits.

can anyone help?

MPP with plan year of 11-1 to 10-31. No restrictions (LD or hours) on receiving the employer contribution (5% of comp.). Employer wants to amend to PS/401(k) effective 5-1-07.

1. Can the employer amend effective 5-1-07 and fund the plan based on compensation earned up to 5-1-07 (204(h) notices, etc. to be done)? Or

2. Does the employer have to continue to fund through the end of the plan year (10-31-07) based on compensation through that date (204(h) notices etc.)?

Have received a couple of different opinions that #1 is acceptable based on 1.412(b)4© which basically states no contribution due after the date of plan termination. But those supporting #2 state that if there are no restrictions on receiving the contribution, once a participant accrues a right the full contribution is due for the entire plan year.

Now I suppose you could amend the plan year to end 4-30-07 which would make this all moot but absent the plan year change any thoughts?

Hi: I'm wondering whether the annual practice or membership fees some doctors charge to give a person the right to be a patient of that doctor/office can be reimbursed by a health FSA. I've sometimes seen these fees called physician access retainer fees or boutique practice fees.

It seems to me that these would be more in the nature of an insurance premium, rather than a fee for service, and so would not be reimbursable by a health FSA but I'm hoping that someone else has a more definitive answer.

Thanks.

Participant takes a hardship. The TPA charges a $60 fee to process the hardship.

Is the fee taxable to the participant?

I would think the gross amount withdrawn is taxable, some of it goes to pay a fee, some goes to the participant directly...but all of it is taxable and goes on the 1099.

But then others think perhaps the fee is a "loss" in the account, and is not part of the gross distribution.

??

The employer added an ESOP plan effective 1/1/06 in addition to their existing 4k plan. The ESOP plan contains all the same employees as the 4k plan - including HCE's and key employees.

The profit sharing contribution for PYE 12/31/06 is being funded into the ESOP plan in the form of employer stock. When running the top heavy test at 12/31/06 - do I aggregate the plans?

I assume yes since key employees participated and benefitted in both - but am kind of confused by the regs.

Any thoughts would be appreciated.

A plan was drafted with 100% immediate vesting.

They now want to amend the plan to be 100% 5 (or three) year cliff vesting.

For employees with less than threee years of service (i.e. not eligible for the election of old schedule) would this be allowed? Or does it fall under the 411d6 rules?

My interpretation is that it would be a 411d6 violation, but curious if anyone knows of any exceptions.

It is a plan with five participants who all qualify as 5% owners, so all key EEs and HCEs.

One employee is over 70 at hire. The employee has 1 year of service, participation.

Obviously the goal here is to enable employee to defer receiving an RMD.

We have a DB plan established in 2005. It is crosstested with a DC plan, so it was set up so that enough employees participated to satisfy 401(a)(26).

In 2006, a few of the DB participants terminated. The two I will refer to here worked the necessary 1000 hours to receive a 2006 accrual, but are 40 and 60 percent vested respectively.

The plan was set up to basically give them enough benefits to be considered meaningful accoding to the IRS field memo issues by Paul Schultz. Basically, it gives them 0.5% of pay accruals.

My question is whether the two terminated participants referred to are receiving meaningful benefits in 2006. (We're going to have to bring in at least one new person anyway, because another guy terminated and the participant count is up. It just comes down to how many we need.)

I deal with a surety company that will only write a NQ bond for a max of 5 mil. My client needs to get one backdated bond for approx 10 milliion dollars to cover his NQ assets and one current one for the same amount. Does anyone know of a company that will write bonds for these amounts?

anyone ever get a letter on the 408 waiver of 60 day rollover rule due to error of the financial institution. i have two cases from a couple of years ago where the "rollovers" were not treated as such due to errors. now i must decide wether to throw myself at the mercy of the IRS and get letter or let sleeping dogs lie and raise the issue if they ever get audited. any opinions out there would be helpful.