Does anyone know if a pastor can make a SIMPLE IRA contribution based on income reveiced as a housing allowance?

Thank you for your help.

403(b) plan had language prohibiting any distributions before 59 1/2.

administrator has allowed distributions before 59 1/2.

i have read rev proc 2006-27 and am thinking that VCP (versus SCP) is the way to go.

can you confirm?

thanks in advance for your help.

Employee is turning 65 and will now get his insurance through Medicare. However he will stay be able to maintain his spouse on the Employers group policy under COBRA. He will continue on as an employee and have the Cobra premiums deducted from his paycheck. Do these premiums still qualify under the section 125 plan as pre-tax even though he is the employee and will not be covered under the policy?

Thanks,

Roger

We have a client who provided us incorrect census information on an ineligible participant. This information allowed the participant to erroneously enter the plan and defer. When it was discovered, there was a distribution made from the plan to the participant, and we are not sure how to 1099R the participant.

I am of the mindset that we should not have distributed the $$ as we did, but stated a Mistake of Fact and had this handles through payroll. Of course it is too late for that course of action, so I am not sure what code to use if we 1099 the ineligible participant.

Any recommendations or suggestions would be greatly appreciated.

A prospect is under an IRS Audit. They have asked us to look at the situation.

1. The IRS Agent's review states the merger of a Profit Sharing plan into a 401(k) plan constitutes a plan termination. They use Rev Ruling 2002-42 and they say that because the Profit Sharing plan had a 5-year vesting schedule 20, 40, 60, 80, 100 but the plan it was merged into (the 401(k) plan) had a 6-year graded schedule, 0, 20, 40, 60, 80, 100, that this a complete termination of the PS plan. At the time of the merger, language was added to the 401(k) to maintain the vested percent from the PS plan but only for purposes of the merged PS balances only, so the reports show everyone's prior PS balance continued upward on that old schedule.

2. Also, the PS plan excluded some employees, but still passed the 70% coverage (ratio percent) test. But, the IRS agent writes "there are no provisions under the Code that allow you to include only employees who have certain job titles", stating that we cannot use language that says "The following Employees are not eligible: All employees other than Employees with job title a)___, Employees with job title b)___, and Employees with job title c)___" even though this passed the 70% coverage test. This document is a Age Weighted formula document (volume submitter).

Any comments/thoughts would be great.

Facts:

Current AGI is >160K

Currently maxing out contribution limit in 401K ($15,500)

Need to rollover former 401K plans to a traditional IRA.... value in excess of $200K

Married filing jointly

Non-income spouse

Investing background is limited to 401K investing. Recent job change and promotion have created new investing opportunities

Have $1500 per month to invest beyond 401K & IRA contribution limits.

Questions:

Can new IRA be opened to transfer old 401K's and then begin transfer to ROTH in 2010 with a transfer of only a portion of traditional funds? (to limit tax liability)

Can we both contribute $4,000 each to IRA's for years 2006 through 2010 and then convert to ROTH's in 2010 and only pay taxes on earnings if we do not deduct the contributions in tax years 2006-2010?

If old 401K's are rolled into new IRA account, should separate IRA's be opened to convert to ROTH's in 2010 (ie $4,000 annual contribution x 5 years per account would mean each IRA would have $20,000 plus earnings at time of rollover)?

Advice and/or ideas welcome.

Thanks!

Section 401(k) of the final regs has a limit on targeted QNEC that can be included in the ADP test. Section 401(m) has a fairly similar limit on QNEC that can be included in the ACP test. It also mentions in pages 78150 and 78152 that there is a new limit on targeted matching contributions, which limits the extent to which QMAC can be used to avoid the new limit on QNEC. Page 78189 of section 401(m) defines the new limits on matching contributions that can be used to satisfy the ACP test. Page 78152 and 78189 clearly specify only the ACP test. The limit on targeted QNEC does mention both the ADP & ACP test, but it doesn't mention QMAC. Where do the final regs mention a new limit on QMAC in the ADP test? Maybe there is none. Our Master Plan alows for QMAC to be made to satisfy ADP test. This QMAC contribution can be bottom-up, flat $ and uniform match %.

Would you be in agreement that it appears we could allocate "targeted QMAC" above the 5% limitation to satisfy ADP test?

Plan has both ADP and ACP using Current Year Method. Understand that you can shift Elective Contributions from ADP Testing to ACP Testing to help pass ACP Testing if 1) plan is required to pass ADP Testing, and 2) the ADP Test is satisfied when you include the Electives being shifted to ACP Testing. Question is related to second criteria. What if ADP Testing initially fails, but testing does not "actually fail" since Catch-Up Contributions are applied to Excess Contribution Amount; thereby eliminating Excess Contributions. I note that no amount of Catch-Up was needed for IRC 402(g), and that only $3,000 of the $5,000 allowance was used for ADP Testing. Can you still shift Elective Deferrals to ACP Testing, provided that the shift does not create Excess Contributions under ADP Testing?

We have a policy that if an employee wants to add a grandchild on their health insurance, they must prove that they are providing full support for this child and the child resides in their home. This either needs done within 30 days of the birth or at open enrollment. We also ask they provide us annually their tax return to show they claim this grandchild (with financials blackened out). We recently had an employee not return the annual tax return because they thought they could get medical assistance for the child. Well they cannot get assistance because the household makes too much money so they would like to add the grandchild back on coverage. The child was removed at open enrollment and I do not see a qualifying event here that allows them to add her right now. I see no problem doing it at open enrollment but let me know your thoughts. Thank you in advance for your help.

An employer is transferring from one insurance plan to another. They have waited until the last minute (well, the last week of the month) to make this decision and notify their employees of the plan change.

There is one Cobra Beneficiary who is just being notified as well. The new carrier is requiring the paperwork to be received prior to the effective date (2/1) in order to allow coverage.

Is there any part of the Cobra regulation that states the employer must provide a certain timeframe for the open enrollment election?

Thank you for your assistance.

My wife would like to maximize contributions to her 457b over the next three years beyond the $20,500 allowed to someone over 50. We have inquired into the regulations that govern being able to contribute up to $30,000. The plan document seems to put the normal retirement age at 55 (though, in reality, no one or hardly anyone ever retires at that age and pensions are not available until one is 60). The question is whether this mention in the plan document means that one could only take advantage of the special catchup contributions, therefore, at age 52-54. The plan administrator does not seem to be too savvy about this matter nor does the rep from the investment firm who gets all the 457b business. Their bottom-line answer is that she is past the time when she could have done this? Is this the meaning of NRA in this context? Or does it means something else?

Frank

I’m a former employee of a company that has just been acquired. I left the company around 5 months before the announcement was made.

ESOP shares are historically paid out at the appraised value for the year of termination. Since the appraised value is not known until the close of the financial year, the former employee would have to wait until after the close of the financial year to receive their funds.

In the past, distributions have been made at least 6 months after the close of the financial year. I was expecting my ESOP account to be transferred to me in March/April of 2008.

As I left 1 month into the new financial year, I would normally have to wait until mid 2007 before knowing the appraised value for the stock I own. Since the company has been purchased by a publicly traded company, this appraisal process will no longer take place.

Should I expect to receive the buyout price for the ESOP shares? How are former employees who left in the plan year normally handled? Any insight would be appreciated.

We use Relius Administration version 11.1.2 as our valuation software. The software give you an option to apply IRC 404(a)(1)(A)(ii) for purposes of calculating the maximum contribution. When this option is selected, if any three individuals together have more than 50 percent of the total unfunded cost for the plan, then their unfunded costs will be amortized over at least 5 years.

I'm curious why the software give you an option to apply IRC 404(a)(1)(A)(ii). I wasn't aware that this regulation is optional. Are there circumstances when the regulation is not applicable?

Obviously, in many cases the maximum deduction using IRC 404(a)(1)(d) (150% limitation) is greater than the normal cost applying IRC 404(a)(1)(A)(ii). As such, my question would be irrelevant.

However, in situations where the maximum deduction using IRC 404(a)(1)(d) is not available (i.e., new plan), must you apply IRC 404(a)(1)(A)(ii)? I think the answer is yes but why does Relius give you an option?

I did a search to see if this question has been posed before, but couldn't find anything.

A participant has low compensation and defers most of it. The plan is top-heavy and the TH minimum contribution would put the participant over the 415 limit. Is the TH contribution reduced so it doesn't exceed the 415 limit, or is the TH minimum paid and the participant would then have a refund of deferrals for exceeding the 415 limit?

Under PPA, the lump sum limit seems to be defined in terms of the interest rate (ie. the greater of 5.5%, the rate that would provide 105% of the benefit that would be provided using the s417(e) rate, or the rate in the plan.

What if your plan actuarial equivalence is 6% and the 1983GAM table (50% blend)? Is the max lump sum based on 6% (being the highest rate of the 3) and the plan mortality table (83GAM(50%))? Or, 6% and the latest GATT (ie applicable mortality table)?

I had a company from 92 to 96 which had keogh plan for me (only employee). Company was dissolved in 96 or 97. I have never filed 5500EZ and off course had no idea it had to be filed. I was trying to consolidate my retirements accounts in SEP-IRA when fidelity inform me that I need to file all old 5500EZ.

I hear its a big penality for late filing.

total money in plan is about 180K.

I am really really looking for any professional who can help me to file these or figure out how to resolve it.

if you know of anyone who does this for living, please let me know.

thanks a million

harvi

Lots of forfeitures.

Are the rules for reimbursing the sponsor/administrator for expenses from FSA/DCAP forfeitures are strict as the DOL rules for retirement plan reimbursements (i.e. direct expenses only and not overhead) or is there more flexibility?

I have a participant who was terminated 12/31/2005 and I'm doing testing for 2006. He got one last paycheck in 2006 for the first pay period in 2006, where he made $190 in deferrals and got a $90 safe harbor match. Do I include him in 2006 testing and use 01/01/2006 as his termination date or ignore him for 2006 testing?

I'm finding a lack of detailed information on this subject. Client allows employees to sell up to so many vacation days to directly offset pre-tax health plan contributions. Net taxable income is the same as if employee cashed out the days. There is no option to purchase vacation days.

If an employee doesn't sell any days and doesn't use all their vacation days, can they still roll-over vacation? I know the difference betwn elective and non-elective days, and elective days cannot be rolled forward, but not sure how to differentiate when ees only have the ability to sell.

Thx, Lp

I am trying to access a scorecard that can be used to evaluate proposals for health insurance coverage. Suggestions?

Thank you.