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.

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