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.

If an employer provides an non-elective safe harbor contribution (no contingent notice) can they discontinue it during the year? I see topics regarding discontinuting safe harbor matching contributions, but not the non-elective.

Also if did give the contingent notice and started contributing the non-elective during the year, could they stop during the year?

Is a qualified plan required to offer an annuity form of payment anytime a lump sum if offered (other than a mandatory cashout)?

Plan offers an immediate lump sum at termination, regardless of age, and the earliest retirement age under the plan is 55 - does an annuity also have to offered at termination?

Please cite any Code/Reg sections - trying to figure out with respect to a church plan.

Thanks.

Hi All,

I have two clients which plan on merging within the next couple of months. Company A does not have a retirement plan and Company B has a 401(k) plan.

Upon merging, they wish to maintain one safe harbor plan. I don't think that Company B can convert to a safe harbor plan mid-year because it was a straight 401(k) and not profit sharing plan. Does this make sense?

If that can not be done, Company A would like to start up it's own safe harbor plan mid-year and then merge merge the two plans. Can this be done?

Thanks

Over the last 8 months I've been slowly putting together a 401k for my company. I have not outsourced to any of the seemingly endless companies out there in order cut costs and get a great sense of what my company might actually need instead of just picking up a prototype and running with it.

Are there any books or resources on the web (other than this incredible message board) that you would recommend for walking somebody through all of the steps required to construct a 401k plan from scratch?

I've looked everywhere and seen almost nothing but links to companies who would simply like to set one up for me.

And I've said it so many times already, but this message board is priceless. I hope it never goes away.

Does anyone know where I could find more information on exactly which states do and do not include state income tax in the Section 125 tax exemption? I have a client who has employees in several different states. I live in TX (obviously) and we don't have a state income tax so it hasn't been an issue for us much. I've only been able to find that New Jersey doesn't. Any help is appreciated! Thanks

I've just read IRS Notice 2007-22 on this topic and still have a question on this.

Under the special transitional relief rules, if we want to allow the rollover of 2006 FSA balances, we need to amend our FSA Plan by 3/15/07. The examples given all assume that the FSA has a grace period - which ours does not. Does the FSA have to have a grace period in order for the participants to be allowed to do the one-time rollover ?

On the SAR, there is mention of the cost for additional copies of the report, both per page and per report. Is there a maximum dollar amount that cannot be exceeded for both of these costs (e.g., $0.25/page, $5.00/report)?

Thanks

I have a client who has a calendar year 401(K) Plan. My understanding was that they could not change mid-year to a safe harbor 401(k).

I am getting confused because when I research the issue, I am finding information that states that you can adopt a safe harbor 401(k) late as long as you:

1. have the current year testing method;

2. give an annual notice to employees that you MAY amend the plan to provide safe harbor non-elect contrib;

3. Amend 30 days before the end of the plan year;

4. Give a supplemental notice not later than 30 days prior to the end of the plan year that you have amended to a safe harbor.

1.401(k)-3(f)

Based on everything I've learned, I think I must be misinterpreting something and that you cannot change a 401(k) plan mid-year. Can someone please help me understand.

Thank you!

If an employer all ready had a 401(k) Plan & TPA and a separate FSA Plan & TPA, why would an employer want to go to the trouble of combining them? What are the advantages?

those that have not met the minimum age requirements, while including those that have not met the minimum service requirements?

Thanks.

We have a plan in which only the HCE's deferred, even though NHCE's were eligible. Therefore, all of the HCE (and, thus, key EE's) contribs will be returned. The plan is also top heavy.

My question is: When is the rate of the key EE's determined? Before the refunds are taken? Or after?

if it's after, I'm guessing no TH contrib is necessary, since the key EE allocation will be zero.

(I know this is just the tip of the problem; we're tackling this first.)

A multiemployer pension plan has a cash benefit contribution account add-on and the payment provisions of the cash benefit portion allow for the payout of an individual's account, if that individual has no reported hours worked for a period of 2 years. The plan seeks to amend this provision and reduce the 2 years to 3 months After 3 months of no reported hours worked, the individual can apply for distribution of their cash benefit account. Does anyone see a problem with this?

We have a self insured Medical plan and only allow mid years changes within 31 days of a status change. Recently one of our employees wanted to drop the medical coverage because they just didn't want it anymore. As expected they were told no because they needed to have a status change in order to do so.

Well the employee found in your SPD there is a paragraph that states "an employee can drop medical insurance at anything during the year per their request"

Question: Can we allow this employee to drop coverage without a status change or does it violate IRS regulations?

Please advise, as I have looked all over the hard to understand irs.gov website and have found nothing. Thanks.

- Ant

I know that a controlled group of businesses must comply with coverage and participation rules for retirement plans. Is there a similar rule for health and welfare plans?

Has anyone ever submitted a VCP application proposing to correct a failure relating to nondiscrimination (e.g. failed ADP testing) where the plan sponsor did not propose to make a corrective contribution to the nonhighly compensated employees?

Two quick questions.

Is it possible for a participant to receive distributions from a Voluntary Contribution's Account or a Rollover Contribution Account at any time? (meaning, is there a penalty if a distribution is made before the participant is 59 1/2 years old)

And as far as plan fiduciaries go (trustee's, plan administrators, etc), is there insurance out there to protect against lawsuits? I know in the Health and Life insurance fields there's "errors and omissions" insurance. Is there something similar out there?

Thanks so much.

An individual is proposing to set up a C Corporation that will meet the definition of an operating company. The company will then sponsor a 401(k) plan, technically an Eligible Individual Account Plan. This owner will roll over an IRA into the plan and put it into an individually directed account. These assets will be invested into the Corporation and will comprise 95% of the ownership of the Corporation. The other 5% is owned directly by this individual. The Corporation then acquires an existing manufacturing business through an asset purchase.

Is this legal? Is there a prohibited transaction in there somewhere or is there one looming in the future in some way? Is this dangerous or on the Abusive Transaction list of the IRS?

Could the plan incur UBTI from the activities of the Corporation?