I have read many of the post on this message board that talk about real estate in an IRA or qualified plan. I agree that in most cases, it's not a good idea. The specific question that I have is can a participant directly roll real estate held in their 401(k) plan to an IRA?

Assume for purposes of this question that the document allows for in-kind rollovers and that the participant has an IRA custodian that would accept/hold real estate in the IRA.

I know that former key employees are removed from the Top heavy test entirely.

However, do they get added back in after 5 years of not being a key ee anymore?

I have a plan that has a SHMAC. It also has a pro rata profit sharing formula with 1000 hr/last day rule. Is there any problem with respect to the safe harbor rules for amending the profit sharing formula before the end of the year? I can't find anything that says I can't do it but for some reason there is something in my head that tells me that this is not allowed due to the safe harbor rules.

hi everyone. just as a way of background, i work for a TPA that specializes in 457(e)(11) plans for volunteer firefighters. i have a math degree and have been mainly involved in the record keeping aspects but am getting more and more involved in the trust arrangements and the ideas of "trustee" and "custodian".

i don't have any formal schooling on these topics so i was wondering if i could be pointed to a site or information on what the technical/legal difference is between a custodian and trustee, as the terms seem to be used interchangeably but i'm sure they shouldn’t be.

thanks--hope i'm posting this in the right forum...........

Calendar year safe harbor 401k (3% qnec) to be terminated as of 12/31/06. Plan is a volume submitter doc relying on an opinion letter of the vol. sub. prac. Client plans to submit 5310 to IRS. As part of termination amendment, document to be amended at contributions section to 1) discontinue elective deferrals for all plan years beginning after 12/31/06 and 2) state that no safe harbor contirbution will be made by employer for plan years beginning after 12/31/06. Without such amendment the document clearly states that "For all plan years after ...2001, the Employer shall contribute a safe harbor contribution equal to 3%......." and would appear to be a continuing obligation under the plan doc. Since client is submitting 5310 the IRS will review the language of the amendment, there would be no issue here re document compliance. BUT if client were not going the 5310 route, then amendment of the plan doc. language would negate reliance on the opinion letter issued to the volume submitter practitioner. Thus, would it not almost always be a given that a 5310 would be submitted to get the IRS' blessing on the document's compliance?

(1) Grandfathered nonqualified plan provides for distributions upon a change of control. A change of control will likely occur next year, but participants do not want distribution.

Proposed regs indicate that reduction of an existing benefit, right or feature is not a material modification. The example given in the proposed regs is removal of a haircut provision. Also, the conference committee report provides: "As another example, amending a plan to remove a distribution provision (e.g., to remove a “haircut”) would not be considered a material modification."

Any thoughts on whether it would be a material modification to provide that no distribution due to that specific change of control? any change of control?

(2) For non-grandfathered plan, same issue. Any thoughts on whether participant could avoid distribution on the basis that transition relief permits a new distribution election for amounts payable in the next year?

It is clear that a retirement plan or combined plans cannot discriminate in favor of HCEs.

It is also clear that there is an objective numerical test to demonstrate that the plan accruals for a plan year are non discriminatory.

So let's say a company wants to implement a profit sharing plan or the company could perhaps implement a cash balance plan instead. Say the company wants to contribute 20% for some HCE owners and 5% for some other HCE owners. And consequently, the company might then need to provide 20% to a few NHCEs and perhaps 5% to the remainng NHCEs in order to pass the allocation rate ratio test (whether the plan uses the ABT or not).

It would thus seem that the plan would then have to provide some criteria or classification in order to provide one rate of pay to some employees and another rate of pay to others.

This seems a little bit subjective. With that said, I am curious to canvass what types of classifications practitioners use when designing such plans for small employers (i.e. less than 20 non excludable employees)?

Thanks.

Is there any kind of defined contribution plan in which a participant's annual addition (IRC 415) can be more than $46,000 for plan year 09/30/06 ?

I thought the max annual addition per individual participant (per plan) is $42000 + $4000 catchup = $46,000.

I recently had a guy who is both a notary pubic and termite inspector tell me that his employer's 401(k) plan allowed him to contribute slightly over $49,000 for plan year ended 09/30/06. Now I'm confused, I've always trusted his comments in the past. But now I have to believe that the TPA who calculated the contribution is off his rocker.

All I can do is to show him IRC 415 , as support for my belief that there is no way that his annual addition can be more than $46,000 (and that's only if he is over age 50).

Where do I find the newest list of required modifications for cross tested plan.

I know that this is a very basic question, but can anyone explain what coverage groups are typical for an insured group health plan?

We have always used a) EE only, b) EE and 1 dep., and c) EE and 2+ deps, but I understand that other employers have different categories that may work better. Does the insurance company dictate which one is used or it is all negotiable?

Any help would be appreciated. Thanks.

Up to last night, E-Mails that I sent from Microsoft Outlook and Outlook Express were delivered.

As of this morning, none of the many E-Mails I sent were delivered- yet they show up in my ‘Sent” folder.

Anyone ever experienced this?

I have a new client who used to have a SEP account. This owner, acting on wrong information, was withholding salary deferrals and contributing that on behalf and the participants into their SEP. (They were treating their SEP as a SARSEP.

Anyway, they have terminated their SEP and started a Safe Harbor 401(k) Plan.

In the meantime, the employer withheld one last time and sent on the contributions to the SEP. A couple of participants have already cashed out their accounts.

The investment company returned a check to the employer FBO the plan.

Since this is employee money, how should they return this contribution to the employee??

They have to deposit this check into the plan? (not the new plan)!

They need to give the money back to the participants via their paycheck to be taxable to them, but how?

Thank you for your input.

I understand that the spousal beneficiary of a participant (Defined Contribution plan) who died before his RMD (he turned 70 1/2 in 2006 and the RMD is 4/1/2007) has two options for distributions, the 5 year rule or life expectancy rule. At least, I think that's correct. Anyhow, if the beneficiary chooses the life expectancy rule her distributions must start by 12/31/2006. Can she take any of this account balance and roll it into her own IRA?

If she chooses the 5 year rule can she take the entire balance and roll into her personal IRA as long as it is all done within the 5 years?

Thank you

Is there legislation that covers when spouses work for the same company. My husband is under one classification and I am under another. My job has approved a HDHP with an HSA in which my employer is going to fund $3500 into the HSA the first year. I wanted to put me and one child on this and keep my husband and the other 3 children on his plan. My employer is now saying we can't both have coverage because it is double dipping, but that sounds like denying coverage to me.

We have run some component plans forr p/s allocations in the past. A tpa/broker/consultant told a client of ours that he could have their adp test pass every year by running component plans on the adp test. i never heard of that and couldn't find any authority for this postition. anyone heard of this? i know the answer from some will be to ask the tpa for the cite/reg--i am interested first in knowing if anyone has run adp tests like this or have heard of others running them like this. (i know it wouldn't mean it is allowable just b/c some yahoo runs a test like that)

The following excerpt is from IRS publication 794, regarding determination letters.

A "Final" Form 5500-EZ must be filed if the plan is terminated or if assets drop below $100,000 and you wish to stop filing Form 5500-EZ.

This is not what the 5500 or EZ instructions allow. Absent further guidance, we would continue to have our clients file if they drop below the $100,000 level. However, I wondered if any of you have seen this, discussed with anyone at IRS, etc...

A sole-participant sole-proprietor has a DB plan with a required contribution of $51,000 for PYE 12/31/2004. His net Schedule C income for 2004 is $0. Therefore, he cannot deduct the $51,000, and is exempt from the non-deductible contribution penalty.

For PYE 12/31/2005 his net Sch C income is also $0. His contribution requirement for 2005 is $0.

Can he ever deduct the $51,000 he made for PYE 12/31/2004?

Since his net Sch C for 2004 is $0, the $51,000 contribution came from after-tax income earned in a previous period. If he can neither deduct nor return the $51,000, must he pay taxes on this amount (again) when it is distributed to him as a benefit?

The employer is a closely held corporation. Can the employer fund the employer match contribution for the officer/shareholders before it funds the employer match contribution for the rank and file employees? There could be several months between the match contributions.

Client currently has a S-H 401(k) plan utilizing the standard match contribution. They want to change to the 3% SHNEC.

When does the plan have to be amended by? 12/01 or 12/31? Or another date?

I woulde think it is 12/31/2006 and the notice is independant.

Seller company is a financial services company and wants to sell its assets to Buyer. Buyer is a large company with an established ESOP in place. Seller is going to terminate its employees and they will go be hired by the Buyer. There are no roll over dollars, or continuation of any Plan that had been for the Seller's employees. But, Seller wants to look out for its employees and does not want its employees to start over with Buyer on a new vesting and participation schedule. Instead, Seller company wants its former employees to begin employment with Buyer and get immediate participation in the Buyer's ESOP and to be imediately and fully vested. Buyer had agreed to this, but now "says" it cannot do this.

I disagree. I think it is a little difficult for the Buyer, but that this can be done. It seems to me that Buyer can do this by merely amending its ESOP Plan to give the former employee's of Seller immediate participation and to fully credit them with past service with Seller so that each of the Seller's former employees can start out employemnt with the Buyer by fully participaitng and by being 100% vested in Buyer's Plan.

These employees are gonna be "rank and file" --- not hce's so there is no prohibited discrimination. Does anyone concur or differ with me???? Any bullet points of what is involved???