A plan paid out a terminee 100% of his account balance (paperwork did not go through our office), but he was only vested 40% in the employer contributions. The difference comes to about $11,000. We instructed the trustee to request the excess from the terminee. They have done so, but did not pursue it. We have also told them that if he will not give the money back, the plan sponsor needs to reimburse the plan for that amount. Their response, "what if we don't?"

So, does anyone know the ramifications of not putting the forfeiture back into the account? Qualification issue?

thank you

RMD in year of death

IRA rules state that required minimum distributions not already distributed in year of death of IRA owner must be distributed by beneficiary in the same year as the deceased’s death before beneficiary rolls the account over to a new IRA account.

Is custodian of IRA obligated to distribute the funds requested by beneficiary upon receiving a valid death certificate?

Are distributed funds to be distributed to estate of deceased who would be obligated to pay income tax or to beneficiary who would pay tax?

PPA provides that the IRA income limits are adjusted for inflation beginning in 2007. Has anyone heard when these adjustments will be announced by the IRS? (CCH and others have already projected the new dollar amounts.)

thanks

card

We will be filing for a favorable determination letter on the termination of a previously frozen DB plan. When completing the applicable forms (e.g., Form 5300, attachments, NIP), must everything be filled out as if the plan were not frozen? For example, Form 5300 requests information regarding the plan's eligibility provisions and benefit accrual formula. As of the freeze date, no new participants and no additional benefit accruals. Do you include the pre-freeze information or just leave blank with a note that the plan has been frozen?

We are trying to determine if a client of ours needs to consider two individuals "employees" for purposes of his 401(k) plan. The client is a realtor who has 2 full-time administrative assistants. They are not being paid by the client, but they are being paid from the main Realty Company and the client reimburses the Realty Company. The Realty Company has stated that they are not employees of the Realty Company, and they just process their payroll as a courtesy to our client.

The work of these two individuals appears to be controlled by the client.

Our thought is that they are employees of the client and need to be considered in the 401(k) plan if they meet eligibility. Any thoughts on this would be appreciated.

We all know the "use it or lose it" rule with regards to employees and FSA's. The question that arose during a meeting with a potential client the other day is, what can the company do with the leftover funds?

Employer with several employment classifications has a safe harbor 401(k) plan (matching) which excludes non-resident aliens, etc.; however, they also exclude one classification of employees (otherwise common law employees of the employer) - let's call them traveling salespersons. Is this allowed - and can they retain safe harbor status by excluding the traveling salespersons?

I'm looking at IRS Notice 98-52 (especially example 4) and 1.401(k)-3(b) and © and I can't find out if this is permissible. I did notice that the fourth example in the Notice does speak of two divisions (D and E - which I assume means there are other divisions A, B and C); however, it also says that there are no other plans.

If they are not allowed to exclude these employees - doesn't it mean that either (1) they failed to follow the terms of the plan, (2) the plan loses the safe-harbor pass for ADP and ACP testing or (3) both?

Or would the question come down to whether they can pass 410(b) - and the safe harbor aspect of the plan has nothing to do with it at all (as long as you can pass the RPT, ABT, etc.).

Any thoughts would truly be appreciated!

Are Simple plans required to have a 12/31/year end ?

What implications are there then for a corporate client that has a March 31 year end ?

Are the company matching contributions deductible as paid each pay period thru the year?

Any other bogeys to watch out for ?

Many thanks.

I need to confirm that an addtional discretionary match made in a Safe Harbor plan ( that meets all the requirments for passin acp ) would then cause a plan to be top heavy.

In essence even though the plan satifies ADP / ACP from Safe Harbor Contributions does the act of making this addtional discretionary Safe Match cause the plan to now be top heavy tested?

Thanks ina advance.

We have 5,000 employees and 10 different pension and welfare benefit plans. Not each employee is a participant in all 10 different benefit plan. To ease distribution, can we send all 10 SARs in a single envelope, or even combine the SARs with a caveat they may not all be participant in all of the plans? We are not using electronic disclosure.

I have a client with plan year 10/1/06 to 9/30/06 and wants to max out profit sharing contribution. The TPA tells me that we are limited to 2005 max contribtion of $42K as opposed to 2006 max contribution of $44K.

Please advise? If 44K is ok, how do I prove to TPA?

Thanks

My co-workers and I are currently working on a new transfer plan. The document has the plan set up as a multiple employer (with adopting employers). Each adopting employer has a separate set of eligibility requirements..and 3 out of the 4 adopting are a brother sister controlled group. The TPA that this plan is transferring from has been running this plan as three separate plans and has submitted 3 separate Form 5500s and related schedules. Now my understanding is that a multiple employer has only 1 Form 5500 submitted and controlled groups are tested together. Is this correct?

Now if the employer decides to stick with the 3 separate plan setup... they will need to have 3 separate documents, one for multiple employer to cover the 4th company, correct?

Any advice would be greatly appreciated!!

-Rachael

IF a plan freezes accruals for participants whose age plus service are less than 50 and freezes accrual service for those whose age plus service is at least 50 (but recognizes compensastion increases), must that plan fully vest the under 50 group?? Thanks.

What about the distribution of a roth on the principal contribution: ex. 2 years ago I converted $5000 to a roth. I am sure it has earned on the capital. Will there be a penalty if I take a $1000 distribution from the principal amount? I am only 56 and the account is 2.5 years old. The money is to pay off the mortgage of rental property.

Has anyone seen a sample of the new law diversification notice to be given by 11/30/2006 for calender year ESOPs plans.

I have a ROTH IRA that has been set up since 2001 and am curious about what types of investments can be utilized as part of the ROTH program. I can't seem to find an IRS publication or information elsewhere on the internet. Can an investment in a private small business be used?

Does anyone have any experience in naming allocation groups for a new comparability plan something along the lines of "every participant" employed by the end of the plan year? The ultimate goal is for each employee of the company (less than ten total) to make up their own individual allocation group. I have done this once in the past, and named each employee into the plan document. Of course, the problem with this is that if one person leaves or joins the company, a brand new amendment must be passed.

It is my inclination that we wouldn't receive a determination letter for simply listing that every one employed is their own allocation group. If anyone has any experience in this, or even better, a cite to a reg or announcement regarding this issue would be much appreciate.

Thanks in advance to everyone!

Ok.So I know that I would be considered a fiduciary if I am an investment advice, and provide investment advice to the plan.

But what if I do not hold the assets, they are at another financial institution, and the plan hires me to provide investment advice to participants? I cannot be considered an interested party – right? If so, that would mean that the exceptions under the Pension protection act would not really apply to me, as it seems that it applies only when you want to sell the plan assets at your broker-dealer or owned by your broker-dealer – right?

An elementary question.

What's the difference between W-2 wages and Section 3401(a) wages?

Corbel prototype & volume submitter documents have 3 options to select from for defining "Compensation":

a) Wages, tips and other comp for Form W-2.

b) Section 3401(a) wages (wages for withholding purposes).

c) 415 Safe-harbor comp.

For the world me I cannot figure out the difference between option a & b!? Aren't the W-2 wages also the wages subject to withholding?

In designing a welfare plan I am trying to assess the level of benefits.

For example regarding pre-retirement death benefits, they can be funded by life insurance and of course require annual premiums.

However, any suggestions regarding a value for the level of benefits for post-retirement medical or long term care insurance.

For example say normal retirement is age 55 and I want to establish a reserve by the employee's normal retirement age. How can I determine a reasonable level of reserve to target for post-retirement medical costs (inclusive of an insurance policy), or long term care costs (inclusive of an insurance policy).

For example if post retirement medical costs consist of health insurance and other out of pocket costs, then there must be a target dollar reserve that would cover these expenses over the course of the retiree's life time. For example perhaps $300,000 might cover the life time expense. So an annual deduction to accumulate to $300,000 would be necessary. Likewise for long term care.

Any help or reference to statistical data resources would be appreciated.

Thank you.