For 2006 testing, would the 5% QNEC cap for testing be determined by multiplying 5% times the participants' compensation from plan entry date or for the full plan year? A plan has two entry dates and defines compensation as compensation from plan entry. If we look at using a flat dollar QNEC of about $200 one employee's rate based on date of participation compensation exceeds 5%, but is less than 5% based on full plan year compensation.

I know there are restrictions on sponsoring a SEP and a qualified plan. What about a 403(b)? Can you sponsor a SEP and a 403(b) that is purely a salary deferral arrangement?

Is there any restriction on a business owner over 70 1/2 making salary deferrals to his 401k plan? Like IRA contributions are not permitted after 70 1/2

DC/401(k) Plan has rule that if p dies and there is no spouse, then remaining account balance must be paid to designated beneficiary ASAP as a lump sum. The plan text does not specify for purposes of RMDs whether the 5-yr or lifetime payout rule applies b/c it is moot.

Plan wants to permit nonspouse rollovers under PPA/N 2007-7. The inherited IRA rules generally state that the RMD rules of the plan govern the recipient IRA. The RMD regs (1.401(a)(9)-3, Q&A-4) state that if a plan does not states which rule (ie, 5 yr or lifetime) applies, then lifetime is the default.

Could the plan be said to have implicitly chosen the 5-yr rule based on its ASAP lump sum requirement or does the default kick in?

Under the NYSE's listing standards (as approved by the SEC), issuers are required to obtain shareholder approval of material revisions to equity compensation plans. If a issuer wants to remove a minimum five year vesting schedule in a restricted stock plan to make no minimum vesting period required (so that "restricted" stock can be awarded that is immediately vested), is that a material revision requiring shareholder approval because the plan is now authorized to make a new form of award? Thanks.

An employee has been off work for 3 months for Workers Comp. and has not paid any of the monthly medical insurance premiums. Can we terminate the employees medical insurance?

Can anyone explain the benefit, rights and features test? When a plan would need to run this test? What follow up is required on a plan level to correct a failure of the test.

I am an attorney who has done quite a bit of work with cross-tested plans over the past 12 years or so. I have recently been marketing c-t plans to an industry segment that has proved to be pretty fruitful. I am looking to partner with a plan admininistration firm so as to be in a position to offer prospective clients an all inclusive package of services to these c-t clients.

If you are interested in discussing such a relationship, please contact me at innract@hotmail.com.

I hope I am not violating any rules of this board in posting this inquiry. If I am, please lock or delete this post and accept my apologies.

First time to post a question......

1. Curious how often you see a govermental DC plan which includes employee pick-up contributions; and

2. If the plan sponsor of a DC plan errors and does not withhold the pick-up contributions from the employee wages, what are the alternatives to correct the situation?

I have calculated the RMD for a participant for 2006. The participant died in February 2006. The client is telling me that the RMD for 2006 should only be for 2 months (prorated), since the participant died in February. I hadn't heard of this before...is this correct????

Thanks!

Is anyone changing how their retiree premium reimbursement plans work following PLR 200638027? In that case, a plan provided reimbursement of medical premiums and out of pocket medical expenses for retirees. The Service found that the plan did not qualify as a VEBA because it provide a non-permissible benefit (among other reasons). The non-permissible benefit was the refund of any remaining amounts in a participant's account after the participant's death (or the death of the participant and spouse if the participant was married) to the participant's (or spouse's) beneficiary. The Service said that this variable death benefit was not a life benefit because the amount was not fixed, there was no current protection and no insurance type protection. Has anyone encountered this?

When a welfare benefit plan purchases stop-loss coverage (the plan itself, and not the plan sponsor, pays the premiums):

1. The policy constitutes a plan asset

2. Schedule A is required

3. The premiums are reported on Schedule H, Part I, Line 2e(2) ("...To insurance carriers for provision of benefits")

But, how have you been completing Form 5500, Lines 9a and 9b? Do you check "Insurance" for plan funding arrangement, for plan benefit arrangement, or for both?

Perhaps I've got the sequence wrong, but I thought the issuance of a new mortality table for Current Liability purposes will automatically trigger changes in how we calculate the variable premium liability, and this change should be effective immediately. But I've seen nothing from the PBGC. Anyone?

Are multiple employer 401(k) plan documents usually drawn up by an attorney? Are there prototypes avialable (probably not, but I don't have much experience with these types of plans and I want to be sure)?

Any ideas about a price range for this document?

A company went out of business and the stock has been valued at $0. They have come to this decision to redeem all allocated shares of the stock in the ESOP for $500. I don't know why. Would there be a discrimination issue? Should that $500 instead be treated as a cash contribution. Those who were not eligible would get nothing for their shares.

A plan covers all eligible employees of two companies which are commonly owned. Previously, the companies had the same benefit design and shared the same stop-loss contract. Now Company A wants to have a different benefit design from Company B--higher individual medical deductible, add long term disability, supplemental life. This would only affect the employees of Company A. The stop loss carrier states that this would be fine since they are not changing the stop-loss deductible. We do not want to have two plans due to preferable stop loss rates by combining the two companies instead of underwriting them separately plus the risk is spread over more employees. It does not seem to fall under discrimination regulations since the benefit design is not in favor of key or highly compensated employees, the plan design and available benefits would just differ from Company B. Has anyone had experience with this scenario?

Hi,

I hope there is someone that has either had the same problem as me or similar situation in the past.

I did a Rollover last year from my Traditional IRA to my Roth.

I had a LONG stock position in the account valued at apprx 11,802

I had a SHORT option position in the account (covered call - in the money) valued at (-3340)

Cash of $2,030

The net value of my account was $10,492 but on my tax form from the brokerage, it is listed as 13,832. It seems like the short call position that was transferred over was not counted. Is this correct? Why?

Should I be reporting the 10,492 or the 13,832 to pay the Rollover tax on?

Thanks

2/5/07

Someone didn't like my answer to this question. So I am posting the question here to either validate my opinion or to be corrected. I am sure that similar questions have been asked here before. I will give the facts with out my opinion so as not to be accused of "leading the witness":

"Dan" is 75 year old non-owner who is an active employee in a company and has a 401K account balance in that company's 401k plan. Document allows non-owner active employees to be exempt from RMDs. Dan has never taken a RMD from this 401k plan.

Dan retires (terminates employment) in July 2006. Dan Rolls over his entire account balance to an IRA in August 2006.

Question: what is Dan's RMD situation???

A plan accepted a rollover that was later found to be impermissible to be rolled into the plan. The regulations permit the plan to distribute the impermissible rollover and earnings.

Does the plan tax report the corrective distribution? Generally, a distribution to an individual from a qualified plan must be reported on Form 1099-R. The Form 1099-R instructions do not address the distribution of an invalid rollover contribution. Also, the final regulations are also silent regarding any tax reporting requirement.

I don't think that silence means that in certain circumstances that the corrective distributions should not be tax reported. Especially since plan earnings are returned.

If the rollover came in as a direct rollover, I am recommending that the impermissible rollover and earnings thereon be returned to the issuing institution with no tax reporting. If the rollover came in as an indirect rollover, then I assume that the impermissible rollover and earnings thereon be tax reported on Form 1099-R.

Please let me know if there is anyone with experience with this. Thank you.

Question - two partners own an LLP - 51 & 49 % respectively. They are a law firm. Neither reported earned income from the LLP - but they both both have their own individual P.A. -

Should the 401(k) plan be set up under the LLP name but have each individual partner's P.A. adopt the plan? Would that qualify as an ASG?

Any help would be appreciated.