A new client (under 5 participants) with a PSP has not filed 5500's for the last few years.

We have completed all back 5500's and are going to submit to DoL's DFVC program.

Should we hold off on filing the 2005 5500 until we submit the plan to the DoL or should we file the 2005 return and the deliquent returns at the same time.

Any guidance would be helpful.

I brought this issue up partially before, but am hoping to get a survey of responses and reasons from the field here to get a more direct answer.

Company has a 401(k) plan with a December year end. There were 3 eligibles who did not work any hours in 2005 but, because of the 2 weeks in arrears payroll system they are on, received checks on the Jan 15, 2005 payroll, thus received W-2's. Would you include them in your 2005 ADP test?

This question was posed after session to an IRS official at an ASPPA conference earlier this year, and there response was yes, you include them..

Please, if you could, post your feelings and explanations. Thanks ahead of time for any responses!

Prospect is currently a participating employer in a 401(k) plan sponsored by Paychex. Only contributions being made are employee deferrals. Client wishes to terminate their relationship with Paychex and adopt there own 401(k) plan with a safe harbor feature. Would this new plan be considered a new plan or a succesor plan and would they be able to adopt a safe harbor formula for the balance of the 2006 plan year? Thanks in advance for any input.

I understand that there is supposedly something in the 457(b) world referred to as the 10% rule, dealing with eligibility. This, in effect, states that only 10% of HCE's can be included in the plan. Is this true? The person telling me about this was unclear himself, and I am just trying to chase down his information and find out what I can. From what I can tell, those arguing against the 10% rule, say that in order for an HCE to be eligible, they must simply be grouped properly with the other HCE's. As you can tell, I'm very green on this. Thanks in advance for your help!

I have an LLP group client. Many of the partners in this LLP have their own C-Corp. One partner is interested in implementing a medical reimbursement for himself.

Question 1: Can this partner implement his own reimbursement plan (under his c-corp arrangement) or does he have to include the other partners under the LLP/S-Corp arrangement?

Question 2: If he is able to set up a plan under his c-corp, is he required to purchase an executive reimbursment plan such as ExecuCare to be eligible?

Question 3: Does "Attribution" come in to play here? If so, please explain.

If someone could also please explain the differences between an S-Corp and C-Corp in this situation and how each is treated that would really be helpful.

Thanks!!!

One of my special district clients with a long-standing defined benefit pension plan (fully funded, fortunately) would like to implement mandatory employee contributions (to be picked up by the entity) for all participating employees. They are proposing a 3% contribution in years 1 and 2 with an increase to 4% in years 5 and 6 (the increased percentage being applicable to all then-current and all new employees), a 5% mandatory contribution requirement in year 7 and possibly going to 6% in year 8. This seems a bit rich to me. What are you seeing out there, anything higher than 3-4%? Does anyone have a similar schedule of automatic increases? Thank you for your thoughts.

We have an employee who stopped contributing to his dependent care FSA because of a permitted change in election. However, he has a balance in his account but will not have any dependent care expenses for the rest of the year. Can we refund him the balance?

Plan was a 'near-orphan' plan; though company went out of business a few years ago, owners had another business and for the most part continued to maintain plan and file 5500s. DOL audited plan and found nothing major, but as a result the company, or what is left of it, has decided to terminate the plan. Plan has 2 participant accounts (HCEs) and a forfeitures account.

There have been no employees and no compensation paid for 2 years.

The company proposes to terminate and distribute the 2 participant account but there is the sticky issue of the forfeitures account. The way I see it, they can't file a final 5500 until all assets are distributed, but the forfeitures account will likely stick around for several years if the only use for the forfeitures is to pay plan expenses (administrator fees, 5500 filing, etc.). The plan allowed the forfeitures to be used to offset employer contributions, but there have been no contributions for the past few years. They would rather finalize the termination this year.

Any other suggestions short of reversion and paying the excise (which I'm afraid would lead to another audit)?

Hello,

I have a client with an existing 401(k) plan. In considering 401(k) plan options, can the the current entity have one plan for existing employees, and a second plan for everyone hired after a certain date? The second plan's offerings would be different than the first.

Thank You

Is it possible to convert existing 401k contributions that were made after-tax into a Roth 401K?

An employee (non-5% owner) is a participant in a 401(k) plan that is terminating. He is over age 70-1/2. He wants to roll over his plan distribution to an IRA. Is he required to receive a required minimum distribution from the 401(k) plan prior to the rollover, even if he is still working?

Hi, gang -- I have a request from our site's sales manager to find more pages on which to display banner ads for advertisers who want to reach employee benefit professionals (you!). These ads on other pages of our site are an important part of our revenue (which goes to cover salaries and benefits for four employees, server costs, etc.).

Could you live with seeing a banner ad in the top-right corner of the message board pages?

The banners would involve only services or products for employee benefit professionals (no off-topic ads like computer products, etc.). It would be stuff that we think an employee benefit professional would like to know about.

The load time would be practically nil for users with high-speed connections; even with dial-up connections they'd cause a delay of only a couple of seconds.

The banners would not place a "cookie" on your computer or otherwise track you if you decide to click on one for more information. (Per our strict privacy policy.)

Please let me know if this proposal causes stomach-churning for you (post a message in this thread or email me at davebaker <at-sign-here> benefitslink.com). And if you're OK with it, let me know that, too.

THANKS!

Dave Baker

Webmeister

According to Section 515 of ERISA, a pension fund can enforce the collection of delinquent contributions based on the terms of the collective bargaining agreement or the terms of the plan. What happens if those documents are inconsistent and there are no provisions within either stating which controls in the event of a conflict?

Is there a penalty for a delay in depositing employer contributions. In this situation, the employer makes a 2% contribution into the individual 401(k) account irregardless of participation. It has been brought to the employers attention that some hourly employees rates were incorrect and in fixing that problem, they now have to go back and contribute additional funds to the base contribution they make each pay period. So my questions are:

1. Does the ER have to determine any interest lost on the late contributions?

2. Is there a point where if the contribution amount is considered negligible - no action required?

I have handled this with 401(k) employee contributions, but am unsure of employer contributions that are not match related. If you can also suggest a website where I can find additional informaiton that would be great.

Thanks for your assistance.

I'm currently researching what the term "principal residence" may be defined as with respect to a hardship withdrawal. A participant is currently incarcerated and as a result, his spouse's home is being threatened with foreclosure.

There's a concern that intrepreting the term too broadly may allow others to request withdrawals that might violate the plan. Such as, if principal residence is the residence which you return to each day, etc. then the correctional facility would be it. However, I have come across case law which says that because it is not voluntary, for purposes of diversity at least, the correctional facility is not the residence. Any help would be appreciated.

I'm simply looking for any regs. , rules, opinions, that authorize a public employer to contribute both to its state pension system and a union fringe benefit fund. I've already found authority under the state's laws, but simply need to cite to something specific related to the Code or ERISA. Everything I've come across discusses governmental surplus or supplemental plans, and governmental plans in general. Since the fringe benefit fund would cover nonpublic employees- it's not a governmental plan. Any help is appreciated. Thanks

It seems accepted that if a 4975(e)(2) disqualified person exercises a put option, the plan has to obtain a current stock value to make the payment. The question is, does the current value requirement only apply to the put option or any cash distribution of shares in a disqualified person's account? 54.4975-(11)(d)(5) says in the case of a transaction between the plan and a disqualifed person, value must be determined as of the date of the transaction. That would seem to require any payment made to a disqualified person for his shares not be done until a current value is obtained. I don't recall seeing this in documents (except relating to the put option), but we know that doesn't necessarily mean anything. Any thoughts would be appreciated.

We have a taken over a plan that filed their 5500 lasr year about 15 days late. Its a large plan & they did not attach an audit (doesn't sound to me like it was completed.). They did not use DFVC. They received a notice form the IRS today assessing a penalty of $175. (Evidently the IRS hasn't noticed yet that the audit is not attached.) The Department of Labor has not sent any notice. If they hurry, can they get the audit completed & refile under DFVC? I've reviewed the program & seems to me that they would be O.K. to do that as long as it is done prior to the DOL giving notice.

Thanks in advance for any guidance.

The instructions to the 2006 5500 state no sch P required. The form isn't included. Apparently doesn't exist for 2006.

See instx HERE

How does a plan correct for a late profit sharing contribution?

1 Do they have to put earnings in as well?

2 How are the earnings calculated - is it the plan average or a rate determined by the IRS?

3 Do they have to file a 5330?

4 What about deductibility - they lose it for the plan year it was intended for, does it count for the year that it is actually deposited?

5 What about the earnings they are depositing - are they deductible?

Thank you for any feedback!