We have a client that owns 3 different entities and he wants to set up a sect 125 plan to allow pre-tax premiums for the employees of all 3. Does he need a seperate plan for each entity? Or can this be under 1 plan?

Thanks for any help.

New ERISA 101(m), as added by PPA, is generally effective for plan years beginning after 2006. but has a transition rule that is confusing me. The transition rule provides that, if notice would otherwise be required before the 90th day after enactment of PPA, then the notice need not be provided before the 90th day.

For a calendar year plan, does the transition rule override the general effective date and require notice to be given by 12/2/2006?

Note: I also posted this message on the ESOP board.

Do anyone know the status of the IRS issuing a new category of preparer in order to allow unenrolled preparers to be listed on the Form 2848?

Are there any participant notice requirements for a plan spin off not involving a termination (other than IRS Form 5310-A). I have a situation where a company is spinning off a division and a portion of the plan assets of the original company's plan are going to a newly established plan to be maintained by the spun off division.

A plan has a participant in RMD status, and that participant received a distribution in early 2006. This would take care of his distribution requirement for 2006. He has now requested another distribution.

The plan provides for lump sum distributions only - no annuities or installments.

Can he receive another payment from his account now? This wouldn't count as his 2007 RMD - so I don't know if he can just request distributions at any time. His new request would still leave him with an account balance.

Thank you.

Is anyone aware as to whether the delayed distribution rules of 409A apply to key employees of a publicly-traded company's wholly-owned subsidiary--if such subsidiary is non-publicly traded.

I have a Roth IRA that I started in 1998 with a financial institution and 2 years ago I moved it to another financial institution. I am looking at the option of cashing in part of it to pay off a high rate equity loan. Will I have to pay pentilities and taxes on what I withdraw?

We're about to implement a new 401k Plan with an 11/01 effective date for 401k and Match. To eliminate proration issues, we made the Plan effective 01/01/06. Now we're faced with an odd question. In testing ADP/ACP, do we use compensation from 01/01 to 12/31 or 11/01 to 12/31. It will have a significant impact on whether we select current or prior year testing.

If we go prior year and use the whole year compensation, we won't get a favorable result for the 2007 Plan year. If we go current year and use whole year compensation, we won't get a favorable result for the 2006 PY. Hadn't envisioned this problem initially, but need to deal with it prior to 11/01. Thanks.

I find that payments, to beat the extra 72(t) tax, must begin after separation from service.

I have a partnership that will be disolving. So there is separation but the sponsor will go away so the plan needs to go away also.

One partner wants to start a distribution stream. If he sets up a plan as a Sole Prop and rolls his account to that plan, I think he loses the "separation" qualifier.

(He has non-standard assets so he doesn't want to go to an IRA.)

Any ideas on how this can be accomplished?

Thanks -

I am reviewing the work of another firm. I am unable to contact them for clarification and the client does not know a reason.

A son of an owner is included as an HCE. That is fine. The plan has a Match based on 1000 hours worked/last day. The son worked 705 hours and was active at the end of the year. He did not receive a match because he had no 401(k). However, he was included in testing as eligible/benefiting. No other active with greater than 500 hours was marked eligible. Is this simply a mistake? Or perhaps he is eligible, for lack of thinking of any other possibility, due to family attribution?

Thank you.

Typically I understand that the plan adminsitrator picks the TPA, but that sometimes is bundled with the investment funds. Shouldn't trustees be the ones ultimately signing off on the investment fund arrangement or am I overthinking things?

The specific question is who needs to actually sign off on a change in the investment arrangement, the plan administrator or trustees?

The document has pretty "typical" language about trustees being responsible for investments.

We terminated a 2-person DB plan and filed a Form 5310 with the IRS in September. (The plan is not subject to Title IV.) On the termination date, the plan was not overfunded. However, distributions won't be made until the IRS issues the determination letter. What happens if, by that time, the plan has become overfunded? Can we avoid a reversion (and excise tax) by distributing increased benefits to participants? The plan provides that, in the event of termination, excess funds can be allocated pro-rata among participants.

New ERISA 101(m), as added by PPA, is generally effective for plan years beginning after 2006. but has a transition rule that is confusing me. The transition rule provides that, if notice would otherwise be required before the 90th day after enactment of PPA, then the notice need not be provided before the 90th day.

For a calendar year plan, does the transition rule override the general effective date and require notice to be given by 12/2/2006?

Does anyone know why or if it is true that no qualified plans or IRAs are allowed to rollover into a Simple IRA? I understand the 2 year rule in the reverse direction, but what is the rationale for not allowing say, a traditional IRA to be rolled over to a Simple IRA? Obvisouly for account consolidation purposes. I can't seem to find an answer

May be taking over Plan that uses Individual Aggregate Funding Method, which has a credit balance of $750,000. Looks like 404 Normal Cost was ignored in past as contributions were simply put in as long as they did not exceed the FFL (resulting in the noted credit balance). By looking at past Schedule Bs, there appears to be about $1,000,000 in contribution that would be nondeductible. With this in mind, ...

1) Should prior valuations be redone? If so, must original actuarial assumptions be used? (It appears that a lower interest rate could eliminate the nondeductible contributions.)

2) Should past be "ignored" with future valuations simply reflecting the massive credit balance?

3) Should this Plan be reported to any agency?

Thoughts on this problem will be greatly appreciated.

I just want to make sure that I'm not missing something here. Isn't it true that in order to be an Adopting Employer, a sponsor must have some type of relationship with the original plan sponsor -- i.e., control group, affiliated service group, etc. A TPA is tellling me that unrelated employers can adopt a prototype document now because of GUST.

I'm thinking the only way that non-related employers can be an Adopting Employer is under a Multiple-Employer Plan.

I have a one man profit sharing plan with salary of $210,000. 25% of salary is $52,500. However, 415 limit is $44,000. Can client make $52,500 Employer Profit Sharing contribution and deduct $52,500, but only allocate the maximum of $44,000 and put remainder in suspense for future allocation without incurring any penalties? If penalties, what are they? Thank you.

We are considering extending health plan coverage to those "former" employees on LTD. Fully-insured plan. It will require keeping them on the books as a special category or part-time/consulting status, but apparently the insurance co is on board.

Does anyone do this? We are beginning to think it is unwise for several reasons, but one of which is that it is so far outside the box.

Can someone clearify Section 72(d) for me?

Specifically, I have an employee in a db plan with pvab of 200,000 and after tax employee contributions of 50,000 (interest not included). Plan does not allow lump sums. Do I have to offer the after tax contributions as separate annuity forms? or just have 50,000/200,000 (annuity form) be tax free?

Thank you,

Andrew

I have a client, S-Corp (husband and wife, no employees) who currently have a profit sharing plan which also has merged money purchase plan assets. The client's CPA is recommending that they terminate the plan and transfer the assets to a SEP since the contributions would be the same with no TPA administration cost. The current assets consist of a checking account, which the client runs their contributions through, various brokerage accounts and various annuities. The client does not wish to liguidate any of the current assets. What pitfalls does the client face in trying to do this? Any help would be appreciated.