Per the IRS form 5304 form, compensation is defined as ..."the sum of wages, tips, and other compensation from the employer, subject to federal income tax withholding (as described in section 6051(a)(3))...including salary reduction contribution under this plan..."

Does this mean that eligible compensation should be reduced by anything paid thru the section 125 plan? For example, if an individual earns $30,000/year and contributes $2,000 to an FSA account and $1,000 to the SIMPLE IRA, should that individual base their match on $28,000 (and thus match $840, instead of $900)? Any help is appreciated.

I posted this in the Form 5500 board and didn't get any responses. Maybe I can get some help here!

When filing a schedule A for a welfare plan, I have always reported the insurance carrier. I just received schedule A information where the TPA is listed instead of the ins. carrier. I have never seen this before. Has anyone else?

I called the TPA and all the person could tell me was that it is their name on the schedule a because the premiums are paid to them and they process the claims.

Anyone else have an opinion on this?

Thanks in advance for any help.

Is a SEP treated just like any other DC plan for purposes of satisfying the TH minimum allocation?

I have a potential client with a SEP that they've already made a significant contribution to (for this question, let's assume all participants got at least a 5% allocation). They want to put in a DB plan to supplement with the idea of phasing out the SEP and going with a large DB in future years.

In order to fit the combined deduction limit, my DB benefit has to be less than 2%. Am I allowed to say that the SEP is covering the Top Heavy Minimum? I see a lot of things talking about the defined contribution plan, but since this is a SEP, I don't know if that's included.

Thanks!

Those of us that work on 401k plans know all to well the requirements for remiting participant contributions to the plan on a timely basis. I have now incounterd my first DB plan with mandatory employee/participant contributions and want to know if the same rules govern remitance to these funds. Specifically, if the employer/sponsor withholds the employee/participant contribution on a per pay period basis (bi-weekely) can they elect to remit/transger these funds to the plan once a quarter? Is there any guidane on the timing of the remitance for these funds?

Thanks!

-Jimmy

A severance agreement provides that if the employee terminates for "good reason" or is terminated not "for cause," the employee will receive 5 months salary and benefits (insurance, 401(k)). The salary and benefits will be paid in accordance with the company's regular payroll practice.

Since the employee can terminate for good reason, I understand that the 2 1/2 month and severance options aren't available. Do payments that are made in accordance with regular payroll practice qualify as fixed payment dates for purposes of 409A? If not, how do you structure arrangements like this because it is very possible the payments can fall over 2 years?

Does a required minimum distribution from a SARSEP (for the 100% owner of a business who also has "regular" deductible IRAs) follow the IRA rules (i.e., can calcuate RMD required for each IRA and take distribuion from only one IRA) or the QRP rules (ie., RMD must be made from each such plan)?

Thanks!

Let me set up the scenario...

The participant was over 70½, was receiving RMD's. He passed away. He has no wife, and has listed 10 beneficiaries (i.e., nephews and neices, and friends).

Some beneficiaries have requested a rollover to a qualified plan, some have requested to be paid over a 5 year period, and some a lump sum.

The lump sum is simple enough.

The rollover to a qualified plan - it is my understanding that only a spouse can rollover death benefits...?

And I am unsure of the paid over 5-year period.

Could someone please clarify that only a spouse can rollover death benefits, and whether a beneficiary can receive payments over a 5-year period.

Thank you so much!

A participant has a Simple IRA, a traditional IRA, and a Rollover IRA. He wants to roll them into a qualified plan and have them be considered "Roth" contributions. He from that point forward wants to make Roth contributions to the plan.

Can these IRAs be rolled into the plan and be considered Roth? Will he have to pay any penalties? (to convert to Roth)

Thanks

We have a take over plan that consist of two components. Employee Deferrals and Safe Harbor Match. The eligibility under the plan is 3 months of service with quarterly entry dates. The plan defines compensation for the Safe Harbor Match as Pay Period Compensation. The questions is, does this definition of compensation exempt the plan from Top Heavy requirements?

Suppose you have a DB plan with a 12/31/2005 year end that was amended 2/15/2006 to increase the retirement age from 64 to 65 effective for the 2005 year.

412©(8) allows for retroactive amendments as long as

1) It was executed within 2 1/2 months after the close of the plan year.

2) The amendment does not reduce the accrued benefit of any participant as of the first day of the plan year to which it applies.

If a participant had an accrued benefit of $1,000 on 1/1/05, he would still have an accrued benefit of at least $1,000 after such amendment. However, his PVAB might be less valuable on 1/1/05 because of another year of discounting. Would this negate the amendment?

I have a 403b client in one city who was asked to assist a similar type charity in another city on some similar administration issues in general that they were having problems with (bookkeeping kind of stuff). While he was visiting they expressed that they would also like to have a pension plan. So, he invited them to participate in his plan. NOBODY TALKED TO US! Somehow they enrolled several folks from the second city payroll with the annuity company that holds the assets. During 2005 a check was cut from the second charity payroll to my client's payroll and deposits were made for both deferral and match. This amazes me because they are unable to enroll their own folks without our assistance. How they were able to get these 10 other people from a totally unrealated company enrolled is beyond me.

Of course, no documents were done or amended to adopt the plan by the second charity. We did not include any of these folks in testing because we were unaware of the situation until we did trust accounting and 10 people showed up with accounts that were not on my clients payroll.

And finally my questions. How do I fix this? I believe that once I explain how nasty the ACP testing results will be (they fail every year and now they want to add another 100 people with only 10 actually deferring). Can we just make distributions to all the "illegal" folks? Do I need to file VCP, which is totally cost prohibitve for this charity client? I do not believe they had any idea that these actions were not compliant. They just wanted to give the folks in the other city an apportunity to have a plan, and figured, use ours, it's already set up. Don't just love our jobs? Any input would be appreciated.

Basic Facts: Parent Company A owns Company B. Company B has no employees. Company A has employees and maintains a 401(k) plan.

On October 1, 2006, an unrelated party is buying the stock of Company B. After the sale, the new buyer will hire some employees from Company A. The new owner wants to establish a safe harbor 401(k) plan for these employees effective October 1, 2006. It would be a calendar year plan.

Before the sale, even though Company B had no employees, it was part of a controlled group that did have employees.

The final regs say: A plan is a successor plan if 50% or more of the eligible employees for the first plan year (10-1-06) were eligible employees under a CODA maintained by the employer in the prior year.

For the successor plan rules, before the sale, is Company B considered an employer maintaining Company A's plan?

Any cites would be helpful.

Thanks in advance.

I believe that it is pretty common to use permissive disaggregation in ADP/ACP testing, where the disaggregation is done using the twelve month rule to determine the excludable group.

I also understand that there is a possibility of applying an eighteen month rule to determine the excludable group. The theory behind that of course is that someone can be excluded from participation for 18 months by having a one year wait and and dual entry dates (six months apart).

So the question is whether anyone is actually using the 18 month rule as a bais sfor disaggregation.

We seem to be flunking by a few basis points with the 12 month disaggregation, and since we have over a thousand HCE's I would rather not have to do refunds or the dreaded bottom up QNEC. Thoughts?

Does anyone know of any online seminars for plans in Puerto Rico?

Thank you!

Is a plan required by law, unless otherwise provided by contract, to credit interest on pick up contributions of a participant prior to the particpant becoming vested in a pension benefit under the plan? Participants who terminate employment prior to becoming vested and withdrawal the monies, to include interest can receive a hefty payout...taking the interest with seems to erode the funding position of the plan and therefore not in the best interest of the plan. Any thoughts?

A plan offers employees $300 per month. They may use this towards benefits (insurance) or else they may use as deferrals. Is this okay?

Ineligible employee deferrd in 2005. We followed the instructions in the ERISA outline and forfeited the account and the employer wrote a check to make him whole outside the plan. The Accountant is now asking me how this should be reported. Does she have to amend the w-2, 941 etc. for 2005? This would require him to amend his 2005 tax return?

Can she issue a 1099 of some sort for 2006? Which one?

We have a situation where we prepare many PBGC filings for our clients. We currently prepare the filing, send it to the client for signature and delivery. Our clients are not prepared nor do they desire to fill out forms electronically or otherwise.

However, with the new electronic filing rules to take effect, I am not yet sure how this process can be handled.

Is anyone else in a situation like this thought of a technique to handle this?

Hi All,

If you are an IRA Custodian, this may be on interest to you.

http://www.irs.gov/newsroom/article/0,,id=161331,00.html

It seems OK to me. One concern we had was how to apply the refund if it came in after the tax filing deadline, but that has been addressed. Also, the responsibility for ensuring the custodian codes the amount as a carry-back contribution rests with the IRA owner- which seems like a good thing.

Some fund companies are no longer providing plan documents for SIMPLE IRA's auch as AIM.

They advised to use 5304 from now on.

What is the difference between 5305 and 5305 ?

Which do I use ?

What needs to be written in Section V of the 5304 and provided to employees by November 1st ?

Many THanks