Can a 401(k) plan simply add the matching contributions (100% immediate vesting provided) to the employee deferrals and just run an ADP test?

Thanks for any advice....

Would electrolysis be covered under a health fsa?

A particular medical condition promotes facial hair growth. Normally, cosmetic procedures would not be covered, but the condtion is due to a specific illness. Would a letter from the doctor explaining the relationship be beneficial?

If you think this can be covered, please provide any authority that you are aware of - thanks.

Does anyone know what an employer should do if they have not satisfied the universal availability rules?

There are no HCEs in this plan. The employer would like to base match on participant's age. The match will actually be greater as the participant gets older. Can we do this?

Employer sells assets of company to another entity effective 10/1/2006. Same employer is contracted by purchasing entity to run the company through the end of the year. All payroll will be run through the payroll of the selling company but will be paid for by the purchasing company. Any payment of benefits (premiums) will be handled in the same manner.

Who do these employees belong to? Is this a plan termination now? Or on 1/1/2007. All employees are continuing their employment in exactly same manner as they did on 9/30.

Plan was Safe Harbor Plan. If they notify the employees now of the impending termination and their intent to discontinue the matching contribution what does that do? Obviously the plan is no longer Safe Harbor but do we simply test and move on? Matching contributions are made quarterly and are current.

Has anyone looked at the effect that the new SEC proxy disclosure rules will have on the determination of who is a "covered employee" for the 162(m) 1 million dollar deduction limit?

Specifically, e.g., if a CFO's comp must be disclosed under SEC rules, would he be a "covered employee" under 162(m) even if he is not one of the high four?

What, if any, amendments are needed by the Plan and by the separate employers that are no longer going to adopt the multiple employer plan? I'm thinking a resolution by the employers leaving would be sufficient? Would it even need to be a corporate resolution?

As I read the PPA I believe that the combined plan deduction limit is now the defined benefit plan's funding requirement plus 6% to a defined contribution plan. If I am reading this right a firm could fully deduct contributions to both a DBP that has a funding requirement of 40% (I just picked this value for example) of compensation and a 401(k) Safe Harbor Matching Plan that uses a Match of 100% of the 1st 4% deferred. In fact, if I am right, the employer could put in another 2% (assuming 4% is all used up under the SHM) and deduct that contribution too. Regardless of other potential problems, is this right?

Under the PPA of 2006, participants must be permitted to diversify account balances invested in employer securities. Would this rule apply to a trustee directed account which invests in part in employer securities?

Help...I'm looking for a good online calculator to show an employer the tax benefits of adopting a 401(k) plan. Basically, what I am looking for would show them what their overall financial position would be if they 1) don't adopt a plan and simply invest their money after paying taxes or 2) adopt a plan, make employee contributions and invest the remainder tax-deferred.

Example: Hsband and wife can contribute $70k to a plan and the employee cost would be $10k. The client has said, "why don't I just pay tax on the $80k and invest everything after tax, since I will have to pay tax on the $70k later?"

Thanks!

Another question:

Suppose a company maintains a DB and a DC plan. We are cross-testing the two plans in order to pass nondiscrimination. Basically, all the NHCEs participate in the DC plan and receive a 7.5% gateway contribution.

The two owners participate in the DB. Enough NHCEs will participate and receive meaningful DB benefits to qualify under 401(a)(26).

The question is: Under this scenario, is it permissible to determine who participates in the DB plan according to a cutoff date for hire? In other words, for example, could we say that anyone who was hired before 1/1/95 is a DB participant and anyone who was hired afterward is not?

Q: 401(k) plan fails ADP test for 1/1/05 to 12/31/05 plan year. 4 Highly Compensated employees are due refunds below:

Employee 1: $4,000.00

Employee 2: $3,000.00

Employee 3: $2,000.00

Employee 4: $1,000.00

Employee 1 and 3 are still active. Employee 2 terminated on 1/31/06 and took a cash distribution. Employee 4 terminated on 7/14/06 and took a cash distribution as well. Employee's 2 and 4 have ZERO funds in the plan.

Since the March 15th, 2006 deadline is passed, the plan sponser must pay a 10% excise tax. Will this tax be:

A) 10% of $10,000. 10% will apply to all refunds, despite any distributions.

B) 10% of $6,000. The 10% will not apply to EE 2 and 4 since they have already taken a distribution.

C) 10% of $7,000. The 10% will not apply to EE 2 since his distribution was before 3/15/06. But it will apply to EE 4 since his distribution was after 3/15/06.

Are there any formal filing requirements associated with the termination of a VEBA trust, such as an analogue to the Form 1024 in the termination context, or something other than a final 990?

I'm wondering how some of you deal with providing a prospectus in a timely fashion when participants have the ability to change their investments on-line, and neither the Plan Administrator nor the Investment Advisor knows when a participant has made such a change. Large plans that offer a multitude of investment options to hundreds of people couldn't provide a prospectus for every investment to every participant.

I know that some investment managers simply say that all prospectuses are available on-line. Has the DOL ever differentiated between the requirement to "provide" a prospectus vs. "making one available?"

Takeover plan. Plan document allowed everyone hired as of 12/31/2003 to enter the plan.

There is a NHCE (hired prior to 12/31/2003) that typically works 9 hours a week. I have been told the employee will never work 1000 hours so will never actually accrue a benefit. He has never worked over 500 hours during a plan year either.

In my opinion this person is a participant in the plan because of the eligiblity language above. Once a participant - always a participant, right? This means I must include him in my general testing as eligible but not benefiting. Basically he gets a big fat ZERO and brings down my NHCE averages.

BUT

I was reading the plan document and in the 1-Year Break in Service definition it specifically says, "An Employee or Former Employee that works less than 500 hours in a plan year..." It rambles on some more, but the fact that it says an Employee is throwing me off. Does this mean that my NHCE has a break in service? Is he not included in the testing?

Now maybe I am reading this too literally. Maybe a person is considered an Employee the year that he terminates and can incur a break in service, and a former Employee is someone that terminated in a previous year that has no hours and incurs a break in service. So there is no way for an active employee to incur a break in service unless they terminate. There isn't such a thing as a "deemed termination" because the employee isn't working very much is there?

Tell me that I am over analyzing. Tell me that he is a participant and has to be included in the test forever until he is terminated. Tell me I can go back to surfing the internet!! The MLB playoffs have started. The NBA has started training camp. Not to mention all of the bad stuff happening in schoolsThere is a lot of news to be read.

Can a 403(b) plan include a pickup provision in addition to allowing salary deferrals?

I have a client which terminated it's plan in 2005. I was getting ready to do the final 5500 when I noticed on my trust report a blance of 300 bucks. I found out it was a loan that was never deemed when the participant cashed out in '05.

Am I going to have to do a form for '06? I really was just a processing mistake. All the other assets were distributed on or before 12/31.

If a spinoff occurs from a DB plan, is there a problem if the spun-off plan then terminates?

My understanding has been that the answer to the question is yes, because of the non-permanency issue. For that reason, if one company maintains the whole plan, it would be better to spin off the part they want to keep, then terminate the original plan.

However, of course, often this is not feasible, possibly because one company does not maintain the whole plan.

But whatever understanding I have of this matter comes from many years ago, and I am not sure it is correct. Any help would be appreciated.

My client wants to terminate his money purchase keogh. He has never had to file a 5500 EZ as plan only has about 12,000 in assets (has been in existance for 10 years). He is a sole proprietor and the only participant and really cant afford to contribute anymore. His broker told him that he could not just terminate plan (client wants to rollover to an IRA) as it is qualified and as such he needs to talk to his tax advisor (me) as the reason must be valid (ie company is going out of business). Is there a valid reason he can give for terminating this plan? He can't afford to make any more required contributions. (He will NOT be going out of business.) Also if he terminates this month (October) does he need to make a contribution for 2006? Does it get pro-rated for the year? Thanks so much for anyone who can help. As you can see, I don't have much experience with this but I am doing my best. I have read every posting on this forum and the questions were not answered. Also googled the subject, but no luck. I just want to advise him of his options and not make any mistakes. Thanks again!!

Def Comp plan provides for payment of benefits $x per year for y years upon retirement (with an objective formula for reduced benefits payable to participants who terminate before retirement.)

Since amounts will continue to vest (and therefore become deferred) in future years, at least part of the plan will be subject to 409A.

there are no deferement or payment options available under the plan as written. since there is nothing impermissible under 409A, is there any advantage to segregating the pre-2005 plan and maintaining the grandfathered status for those amounts? Is it correct that a violation of 409A in the non-granfathered portion of the plan would subject all defered amounts to penalties and taxes, whether grandfathered or not?