If you give an HCE a match on their catch up contribution, is the match included on the ACP test?

I can't seem to find the answer in the regs on this.

S-corp. client deposits 55,000 into account in 2006. Initially thought $30,000 was 2005 deduction. Discover no W-2 wages were paid.

Fix - Client took $60,000 in W-2 for 2006 - $15,000 applied toward deferral & $15,000 toward PS. $14,000 must stay in as nondeductible contribution and apply excise and deduct in 2007. $11,000 must be refunded for exceeding the limit.

Any other suggestions or ways around the excise tax (broker wants to know, he's in a pickle)?

A new client of ours let us know that they have been doing administration on their plan based on an SPD. No one can locate a copy of the actual document. We want to go through VCP to submit a GUST document. Will we also have to provide a pre-GUST document or all copies of plans from the effective date? Has anyone ever done this and had success?

Thank you!

Can anyone help me with the timeframe (specific date) in which deductions taken from an employees check must be credited to the Employees Dependent Care Account for reimbursement to the employee? Is there a law under Erisa or other IRS regulation?

Example: Employee has a $200.00 paycheck deduction for Dependent Daycare. Employer must credit the Flex Account with the $200.00 to allow for reimbursement of the funds back to the employee.

The problem I'm having is an employer isn't consistently forwarding the deductions to the accounts for reimbursement. In any given week the employer may take 1-2 weeks before sending the check to the carrier for posting to the employee flex account.

What is the timeframe for these payments to be posted in the employee account.

Thank you very much!

Sandra

I have an employee who was given wrong information by the TPA and based her annual election on the wrong information. I know that employees can only change their election with a change in family status. No change has occurred and the TPA will not process the claim how they told the employee they would. Here's the example and if you can provide suggestions, I would appreciate it. She was told that orthodontia could be submitted as a one time lump billing and then reimbursed accordingly. Now the TPA says it can only be reimbursed over the entire time period of the braces being on ie 24 months. Is the taxpayer liable if the TPA would process anyway? Thank you for your guidance.

I was asked.... if a client missed a RMD back in 2005 and the 50% penalty tax was paid.... does he still have to take the 2005 RMD in 2006 in addition to the 2006 RMD? it was suggested to me that... "hey, he missed it, he paid the penalty so the only RMD needed to be withdrawn in 2006 would be the 2006 RMD.

Thoughts?

Thanks

We are starting to see alot more plans with prevailing wage contributions. In doing some research, we are finding some areas where these contributions can be used (offsets, QNEC's, etc.), but they have a few complexities that we aren't familiar with. Can anyone suggest a good resource on Prevailing Wage plans and how they can be incorporated into 401(k)s, things like that?

Thanks,

Tim

A new client for us has prior valuations prepared by another TPA for his Target Benefit plan using assumptions I have never seen. The interest rate used to compute the benefit is 5.5%. I know that the 401(a)(4) regs provide standard interest rates of no less than 7.5% nor greater than 8.5 percent. The regs provide that the Commissioner may change the defition of standard interest rate. Has this rate been changed to allow for 5.5 and I just missed it?

If an employer has never requested or reported FAS information in the past, but will do FAS reporting this year, do you agree that the correct approach would be to start with a net obligation/asset for the current reporting year, rather than reconstructing the FAS accounting back to the start of the plan?

Blackout notice was timely provided to some but not all participants when changing recordkeepers. Blackout period still in effect Is there any cure for the failure to provide the notice to all? Is anyone aware that DOL has taken enforcement action for such failure to provide notice?

Employer X is in the process of designing a new 401(k) plan for certain of its employees, effective January 1, 2008. Based on the last digit of its TIN, Employer X's cycle under Rev. Proc. 2005-66 is Cycle B, which ends February 28, 2008. Does Employer X need to file its newly established 401(k) plan by February 28, 2008 or risk filing off-cycle?

My client sent out a notice in November 2006 for a Safe Harbor Basic Match in 2007. A week ago, he changed his mind and now wants to just do a regular profit sharing contribution.

My question is, what type of amendments/notices should I prepare for him?

I am guessing the partiicpants need a 30 day notice. But during that 30 days is the plan still considered Safe harbor? Even though the company has made no match yet this year?

Thank you for your responses!

I have a 401K, opened less than a year ago. I chose to invest it in the Target 2035 Vanguard Retirement Fund. A year of employment is about to pass, which means my 401K will receive 40% of every dollar i contribute. I understand the value of free money, so i will maximizing this opportunity.

I'm also starting a Roth IRA with Vanguard. Does it behoove me to pour more money into the same Target 2035 Retirement fund by way of the Roth? Instead, should I consider another fund for the sake of diversity?

For many years I have heard the term Section 79 plans. When I do a search on the topic all I see is some blurbs about group term life insurance. I don't even get a google ad in the margin. These can't be very popular if no one is willing to pay a nickel for a targeted ad search.

Anyway, I get the impression that the 412(i) crowd is looking around for a new code section. I am meeting with someone Thursday to convince them that their clients don't need to be involved in a Section 79 plan, but I really don't know enough to talk about it. When the financial advisor first asked if I knew about Section 79 plans, I got confused with Section 72(t). I'm sure I am not far off with the 412(i) reference because if you do a search for "Section 79 retirement plan" you will get a 412(i) plan website that is now pitching section 79 plans.

From what I can determine Section 79 is not a qualified plan, but they claim to be tax deferred. They have something to do with insurance.

I feel like I know where this is heading, but anyone here know if anything is going down?

A this time I would like to obtain a table of UP84 mortality rates for ages 16 or so to 111.

Where can I get this table? And other tables as necessary?

Thanks.

New Plan effective 1/1/06, signed in December of 2006, EIN ends in "1"

Must this plan be submitted by 1/31/07, or since it is a new plan, do we have until the due date of the tax return, or 3/15/07, plus extensions?

Thanks (and what happened to the board covering these items?)

An insured frozen defined benefit plan is funded using the Unit Credit method. Insurance is valued using the current cash values in the assets, and adding a term cost to the Normal Cost. Since no benefits are accruing the Normal Cost = -0-. Should the term cost also go to -0-?

A small client has two common law employees. The client recently established a cross-tested retirement plan program. Under the defined contribution component element of the cross-tested program, these common-law employees receive/are eligible to make (1) elective deferrals, (2) 3% safe-harbour non-elective contributions and (3) profit sharing contributions.

As the contributions under (1) and (2) above are 100% vested, the client asked if these amounts could be held in a single account. As the profit sharing contributions are subject to a top-heavy vesting schedule, they would be held in a separate account.

Is there anything that would prohibit the client for establising a single account for each employee with respect to elective deferrals and the 3% safe harbour contributions?

Thanks in advance for your thoughts.

Ed

A 401(k) plan limits elective deferrals to 15% of compensation. Compensation does not include commissions. After the end of the year, due to the fact that the non-highly compensated employees were payed large commissions, the amount of compensation for the HCE's that can be considered to get a passing eligible compensation ratio is lowered, which increases the deferral percentage. The NHCE's are deferring at a good rate so there is no real inpact on the ADP test. However, the percentage for the HCE's is now over 15%.

Can this be corrected with a distribution?

I am new to this area so I need a little assistance.

Is there a new ruling with respect to the impact of deferring a benefit? This is all of the information I was given, other than the fact that it was under PPA.

I have done some research and have not come up with anything - any assistance, with the appropriate cite, is appreciated.

Thanks.