What form is California's state equivalent to the federal form 945?

I don't have all details yet, so I'm just asking a question in general, since I know practically nothing about ESOPs.

We have a PS plan, sponsored by an S-corp that has been around for many years. They just sent us data to do the 12-31-06 valuation, and informed us that they "established an ESOP as of 1-1-2006." Based upon verbal communication to one of our analysts, which may not be accurate, they assert that they made no contributions to the ESOP in or for 2006, yet the ESOP owns 100% of the S-corporation. We're attempting to get some clarification.

In the meantime, I have two questions.

1. Is the above situation even possible? I mean, how can 100% of the ownership be transferred to the ESOP without this being considered a contribution?

2. I know there has been a lot of press about "abusive" ESOP/S-Corp situations, which I honestly haven't folowed much becasue we don't administer ESOPs. In general, I understand that this deals with not allowing an allocation to "disqualified persons" during a "nonallocation year" and that this becomes effective in, I think, 2005. Although the ESOP isn't our responsibility, I wondered if there was a specific red flag that I should be aware of to instruct the client to double check wth their legal counsel? Presumably they have already done this, but I'm often amazed at the crazy schemes that cleints buy into because some "advisor" convinced them it was a good idea, and they didn't seek competent counsel before digging their grave.

Thanks for any input!

Individual A owns 100% of Company A. He also owns 50% in LLC B. The other 50% of LLC B is owned by an unrelated individual. LLC B employs 20 indviduals. Company A is interested in establishing a defined benefit plan covering the only two employees of Company A .... A and A's spouse

I know that I have certain affiliated service group rules based on my understanding of the relationship between Company A and LLC B. However, I want to be sure that I do not have any controlled group issues.

I believe that a controlled group does not exist.

Thanks in advance for your comments.

Ed

Client failed their ADP test for 2006. I will refund the necessary HCE's and give them 1099's, but when do they need to be completed by? I thought it was 3 months after the plan year ended. Also, what year do I issued the 1099 for, if I'm correcting the 2006 ADP test, but refunding them in 2007?

Thanks

At the May 2006 Multiemployer Audit program sponsored by the IFEBP, Diane Bloom of the IRS stated that stamp programs (and the crediting of service) are high on the IRS's radar for audits.

Is anyone out there currently on the receiving end of such an audit? Any dire predictions for stamp programs in general? Some of us think this is the beginning of the end for stamp programs. Curious to hear what others have heard/seen/know etc.

Would anyone happen to have it or help me find it?

I am self-employed and had a prototype Profit Sharing plan with a popular investment company. The plan began in 1992. In the fall of last year, I made the decision to terminate the plan by the end of 2006, after making a final contribution for '06. I made the final contribution on 12/1/06 . On 12/06/06, I mailed my broker the transfer instructions to rollover to an IRA with the reason being termination of the plan. On 12/11/06 the assets were transfered out of the PS plan's account and directly rolled over to an existing IRA. My PS account balance was zero at the end of that day. Yesterday I received an end-of-year statement, and I was frustrated to discover that a money market fund made a $29 interest payment to the PS account on Friday, 12/29/06 (even though all the assets had been rolled over into the IRA). This resulted in an end of year balance of $29 in the PS account. I checked online, and the investement company directly rolled the $29 into the IRA on 1/2/07 which was the first business day of 07.

Is 2006 still my final plan year for the PS plan, and on what day did my plan offically terminate (or does an exact date not matter)?

If 2006 is still my final plan year, then how does the end of year $29 balance affect my filing a 5500-EZ for the final play year. Do I report 2006 as the final plan year, with $29 as an end of year balance or can I report a zero balance? If I do need to report the $29 as end of year balance for a final plan year of 2006, will the IRS, or anyone else, try to claim my plan did not end in 2006 as a result of the $29 balance?

Thanks,

J.

Thanks

For a non-public company's ESOP, the stock price is not determined until well beyond June 30. What is the general approach for diversifying:

1. Process diversification transaction by 6/30/07 using 12/31/05 share value and allocation.

2. Process diversification transaction after 6/30/07 using 12/31/06 share value and allocation.

3. Do step 1 and then do a final transaction after 6/30/07 if the allowable shares has increased? This would also mean making the difference up in the share price. For this client the company buys back the shares.

Can I convert my regular IRA to a ROTH IRA before Apr 17, 2007 and have

this conversion be for tax year 2006?????????

Understand conversion will create taxable income but would like such taxable income

to be 2006 and not 2007.

Does an employer have to fill out a new 5305 each time the form is updated by the IRS or can the employer continue to use the original form assuming nothing has changed with regard to eligibity?

A participant takes a plan loan, makes two payments, and then goes on an approved, unpaid leave. The plan allows for suspension of payments during the leave, up to 12 months.

After six months of leave the participant terminates their service and requests a distribution. Will the loan offset include the six months accrued interest during the leave? In otherwords, is the participant taxed on the accrued interest amount?

Thanks.

Is there anything that would prohibit an employer from, in the middle of the year, freezing their 401(k) plan, starting up a new safe harbor 401(k) plan and then merging the assets from the first plan into the safe harbor plan? Does this violate the alternative DC plan rule if I am not paying distributions from the first plan?

Plan loan program permits the fees associated with loan application and maintenance to be charged to the participant's account. Shouldn't the fee come directly out of the account as a "fee"/"expense" rather than including it in the loan principal?

Example: participant requests $12,000 loan. Custodian charges $150 fee. Net check to participant is $11,850. Shouldn't $11,850 be the amount amortized?

Or can it be done either way? Thanks.

I have a client that wants a total compensation statement to give to his staff. He's doing it for all the wrong reasons, wants it tomorrow, and doesn't want to pay a lot for it....typical isn't it?

This is the only client I have that wants this so I don't want to re-invent the wheel. Can anyone provide me with a sample statement that I can change to fit this guys needs. I'm sure it will be a one-off thing but still need to provide a quality product.

Anyone out there willing to provide me with a .pdf that I can use as a template?

I submitted this posting under Securities Law Aspects of Benefit Plans but there has been no response so I thought I'd try here.....

Is there a violation in submitting trade requests for a client to a Bank that holds a plan's assets?

Here is our procedure:

Each payroll period, the company calculates the total 401(k) deferrals based on participant rates of deferral. They then write a check for the full amount to the Bank. The bank deposits the check and notifies us, the recordkeepers, that the check was deposited and sends us a listing of each participant's 401(k) amounts. We run the numbers through our recordkeeping system, which allocates the amounts based on each participant's investment elections. Our system then gives us the total amount that needs to be bought into each of the investment funds. We then send over a spreadsheet which lists the account number, cusip, fund, and dollar amount, and whether to Buy or Sell (for distributions) a certain amount.

Do we need some kind of license or certification to be sending that information?

I've done some research and don't see any requirement that an employer who sponsors both a MPP and a PSP combine account balances for participants when determining if the account balance is less than $1000 for the mandatory cashout. Does anyone have information to the contrary?

Company A sponsors a 401(k) Plan. On January 1, 2007, Company A acquires 100% of the stock of Company B. As of January 1, 2007, Company B becomes a wholly owned subsidiary of Company A. Company B does not and never has sponsored a qualified plan. Company A has maintained the 401(k) Plan for 10 years.

Henry has been an employee of Company B for 4 years as of January 1, 2007. On January 5, 2007, Henry is transferred from Company B to Company A. As of January 5, 2007, does Henry have:

(1) 4 days of service for eligibility and vesting purposes for Company A's 401(k) Plan; or

(2) 4 years and 4 days of service for eligibility and vesting purposes for Company A's 401(k) Plan?

Put differently, is service with Company B (a predecessor employer) treated as service with Company A (the entity maintaining the plan at issue)?

Thanks in advance for any help!

A Subchapter S corporation with one doctor employee who is also a partner in an LLP. The Sub S employee performs services for the LLP and the two groups constitute an affiliated service group. The Subchapter S corporation adopts a defined contribution plan that fails coverage and other Code requirements. Can the LLP be held responsible for the qualification defects of the plan sponsored by the Sub S.

We have a plan where a participant requested an in-service distribution, but the request was submitted on a hardship withdrawal form. Our recordkeepers processed the request as a hardship. The Plan Sponsor is now coming back to us stating that they submitted the request on the wrong form; that it is, indeed, an in-service distribution, which the plan allows. Our recordkeeping department is stating that it is too late to change the distribution, and our payment services group also does not want to change the tax reporting records. In order to make any changes, the recordkeeping/payment services groups want a letter from the plan sponsor's attorney absolving them from any ramifications this error causes. Is this a reasonable request?

I just want to make sure I am thinking correctly. The plan I am working on does not currently have a match feature in the document. Can we distribute a SMM and start the match contribution a week later or is there a waiting period??

Also, if the plan has prior year testing can we rely on the 3% for NHCE ACP discrimination testing or do we have to change to current year testing?