1) The 457(b) plan in question is on a Oct 1 to Sept 30 plan year. Does the 457(b) limit ($15k in 2006) apply to the plan from Oct 1, 2005 to Sept 30, 2006; or is the relevant timeframe Jan 1 to Dec 31, 2006? For example, could particpant max-out in Sept 2006, the last month of the plan year, and then contribute another $15k in October 2006 (thus maxing out for the next plan year), even though that would be a total of $30k during the calendar year?

2) Are there any filing requirements (or other requirements/disadvantages) to changing a fiscal year 457(b) to a calendar-year plan?

I apologize if this has been asked and answered.

An individual (not a 5% owner) with accounts in several qualified plans plans to retire on 7/1/07 over age 70 1/2. To avoid having to take small MRD's from each plan, he wants to roll over the accounts to an IRA. If he does this in 2007 (before his retirement), would he be able to roll over the entire accounts into the IRA? Or, will a portion of each payment be considered the MRD for 2007 (first minimum distribution year) and therefore not eligible for rollover?

Thanks for any help you can give.

Employee is 60 years old and self terminated from employment. Now wants lump sum distribution. Is the distribution code Normal distribution [7] or Separation from Service but Exempt from 10% penalty [2]?

Suppose you have a 1 participant DB with unit benefit of 8% per year, where the participant will have 10 years of participation at NRA. Furthermore, lets assume he accrues $1,200/mo. each year. If they froze the plan in year 3 and want to unfreeze in year 5, does the 133 1/3 rule apply to his prior accrued benefit or the last increase in accrued benefits before the freeze?

They would like to increase the benefit going forward.

Thanks much.

Out of a Simple 401k and Simple IRA, which one would you choose?

This article http://www.research401k.com/simple-ira-401k.html says

"Employer contributions to a Simple 401k & Simple IRA account are subject to different rules. For example, Simple 401k accounts are subject to a Compensation Cap of $220,000 per year for the year 2006."

While the Simple IRA is not subject to this compensation cap. So if you're a high income earner, you would choose the Simple IRA instead of the Simple 401k?

Does anyone have or can direct me to a sample notice to employees for an automatic enrollment provision. This is NOT the safe harbor auto enroll - the employer will be contributing 2% match. It is just to increase participation. Thanks!

1) Does seasonal work (ie timber companies) count as employer or employee driven initiated separation? The employees always had the option to hire back the next spring but it's possible that some were not hired back at behest of employer. Doubt that number reached the 20% threshold though.

2) If a TPA says that a partial plan termination has occurred and all subsequent paperwork shows effected participants at 100% vested but there is no amendment and no determination filing was done...was there indeed a partial plan termination? Can it be determined later that a partial plan termination did NOT occur and the vesting reverted back which then leads to forfeitures? Even though participants may have received multiple statements showing them as 100% vested?

edited note: I'm not trying to get anyone out of anything...#2 is the situation that actually occurred and I'm trying to figure out if it was handled correctly or not.

The trustees of our Taft Hartley pension plan altered the trust agreement so that only they can remove or appoint a trustee. Now neither the union nor management have any control over the trustees. Is this proper? If not what can be done to restore to management and the union the ability to appoint and/or remove trustees?

Our plan does not currently permit many dual purpose items, but we are going to open it up for massages. What types of requirements are normally imposed?

Licensed massage therapist?

Doctor's note?

Should that include Chiropractor?

In a previous posting regarding the new tax law in 2005 that eliminates the 100,000 AGI threshold for doing a conversion to a ROTH IRA starting in 2010, there was the following response:

"The taxability of Roth conversions is based on the deductible/non-deductible history of ALL of an individual's IRA's. If you built up an IRA with deductible contributions in your old low-income days or you rolled over a large amount from an employer plan into an IRA, then most of the amount you convert to Roth will be taxable even if you start making non-deductible contributions now. This is true even if you keep your non-deductible IRA separate.

So for many if not most people, the new ability to Roth convert is NOT the equivalent of removing income limits on Roth contributions. Each individual's situation must still be considered to determine whether a Roth conversion is a good idea."

I can not find where the law says that you consider all of an indivudal's IRAs to determine the taxability of the Roth conversion. Can someone direct me on this? So if someone had a IRA rollover from a qualified plan of $400,000 and then did a nondeductible IRA from 2006 -2010 totaling $32,000, what are you required to look at for the taxability?

Let's say I have a short limitation year because I'm switching my limitation year from calendar year to the plan's (non calendar-year) plan year. I know that I need to prorate the 415 limit for the short limitation year. But, have you come across anything that tells me how to allocate employer contributions to that short limitation year in order to test 415 compliance? I make my matching contribution after the end of the plan year. I'm not coming up with anything yet in the regs and Q&As.

Related question:

Doesn't it seem strange that I could have someone who front-loaded his elective deferrals in the short limitation year -- then get hit with a return due to the short plan year proration of the 415 limit? I guess the anwer to that is -- well, "that's the law"!

This is a non-stand prototype plan. No break-in service rule. Calendar year plan with dual entry dates.

Example: DOH 07/06/06. DOT 09/06/06. DOH 07/06/07. DOT 09/06/07. DOH 07/06/08. DOT 09/06/08. etc....When does this employee satisfy the the service requirement? Would the 6 month elig computation period end 01/06/07, regardless of employment and he would therefore become eligible the later of entry date or rehired date which would be 07/06/08? Or does this employee satsify the 6 month requirement when he actually complete 6 months of service, which would be 09/06/08 so his entry date would be 07/06/09? I know it's a real gripping issue, but I keep thinking about the 12- Month Year of Service option, which continues regardless of employment. Does the same apply for the 6 month serice?

Does anyone know where the SEC stands regarding the remedy under 409A to replace discounted options with non-discounted options? It appears that you would be granting a new option that is backdated--is there any SEC exemption for doing this in order to fix a tax problem? Any idea is appreciated.

Employer wants to fully vest all existing participants in the company retirement plan as of the date of sale to a new owner. Then revert back to the existing schedule for all new participants after that. As long as the change applies to everyone equally this should be OK, correct?

Thanks

Need some help. Not sure how this works. In preparing my Qdro it ask. " the alternate payee's award is or is not entitled to earnings( dividens,interest,gain and losses) from the valuation date to the date the award is segregated from the participants account.

We seperated in 10/7/03 and were divorced in January 06. the court papers say that any and all moneys earned after date of seperation 10/7/03 belong to whom ever earned the money.

Our daughter got married in October 2004 and we withdrew about 20K from the plan to pay for her wedding. So the 401K savings plan would be less at the end of 2004.

So where do I go from here? I also started contributing to the plan again in 2005 but have since stopped.

Need help

Employer has three plans; a frozen DB plan, a safe harbor 401(k) Plan only for participants eligible for the DB Plan, and a 401(k) for everyone else. The safe harbor plan has a 3% non-elective contribution, the non-safe harbor has an employer match.

I assume I would do separate coverage tests for each of the 401(k) Plans treating the participants eligible for the other plan as not benefitting under the Plan I am testing. If they fail the ratio percentage test I could do an average benefit test and would need to test all three plans together. If they failed coverage an employee might get both an employer match under the non-safe harbor plan and an employer non-elective under the safe harbor plan. Is this correct? Would it make any difference if the match was a safe harbor match?

Thanks!

The participant has a loan. The plan only allows for one loan. The participant now wishes to take a hardship distribution under the safe-harbor provisions for hardship, for medical bills. The bills have already been turned over to collection.

The client asked several questions, and please let me know if I am wrong with my responses to the client:

Exhausting all other options/loans from the plan is the only requirement? In other words, they do not have to obtain denials from outside of the plan (i.e., banks)? My response...correct

Loan payments will continue to have to be made? My response...correct

Personal review of the medical bills is required? I told the client that would be the prudent thing to do. (although I do not see where it is required) I also suggested copies of the EOB's.

Does the participant need to provide proof that the money was used to pay the medical bills, or is he on his honor to do that? My repsonse...I believe he is on his honor. I have never seen an employer go through proving it was used for its intention.

I would like to know what your thoughts are on this...thx

What if I suspect he may be trying to get the distribution prior to the issuance of a QDRO? My response...the spouse needs to sign off on the hardship distribution, which should eleviate the concern. As well the distribution forms ask the question is a QDRO pending.

I also told the client that the participant may not contribute (deferrals) for 6 months after the hardship.

Please let me know if there is any disagreement to my responses. In particular, the proof of payment of medical bills and the QDRO question.

Thank you so much!

Can my 403(b) tax paid contributions be rolled over to another retirement plan?

Is a defined contribution plan that calls for forfeitures to be used to reduce employer contributions permitted to forfeit unvested amounts in terminated employee accounts before they have had a 5 year break in service? In other words, if the terminated employee does not request/receive a distribution, does the employer have to wait 5 years to access the nonvested amountsi n such terminated employees account? I am aware of the requirement that nonvested amounts be restored if the employee is rehired.

Thanks!

I understand that the HIPAA Portability Regulations, issued Dec. 30, 2004, changed the special enrollment rules so that loss of coverage under Medicare, Medicaid, CHAMPUS/Tricare or other publicly sponsored or subsidized health plan is no longer a loss of coverage that would trigger a special enrollment right. Does anyone know WHY that change was made? I advise an employer who is not satisfied just to know what the rule is; the employer wants to know why the rule was changed. Any thoughts?