Should be a simple question. We were asked if there is an owner and his daughter in the plan ,do we file a 5500 or 5500EZ. The daughter owns 5%. We weren't told whether or not this is incorporated or a partnership. My thought is we do a 5500EZ since it covers only owners. Any other opinions?

I am just now looking at the 401(k) testing for a plan with a 12/31/05 year end. The document says to use prior year testing and the test is failing, however it would pass on a current year basis. I haven't been able to locate anything definitive on the deadline for amending the plan to current year testing.

One source says the plan MAY have 12 months which is the correction period for 401(k) test failures and the amendment is a correction method.

Notice 2005-95 makes a distinction between amendments necessary to meet qualification requirements and discretionary amendments. It is not clear to me on which side of the fence this amendment would fall, since there are other ways to correct the test failure (refunds), I'm not sure it would fall under the "required for qualification" heading.

I have a client that has a ROTH-IRA with 1-1/2 years left on the 5-yr requirement on distributions. The client is interested in rolling over the ROTH-IRA into an annuity. I assume since it is a ROTH-IRA, the funds are "non-qualified". (If the client had a Traditional-IRA, I would assume the funds would then be "qualified")? My questions are: 1) Can one rollover a ROTH-IRA into an annuity; 2) If so, would the annuity be "qualified" or "non-qualified"; and 3) Am I correct in the assumption that the 5-year holding period does not apply to this transaction, since it is actually a "rollover" of the ROTH-IRA and not a "distribution or withdrawal"? Thank you, Jeff Blanchard (E-Mail: jeffreyblanchard@msn.com)

I am a depositor in a thrift institution which has announced an IPO. I have the opportunity to order shares of stock at the IPO price. The stock will be traded on the NASDAQ beginning in early July.

I have received an "Outside Purchase Agreement" from my broker that will allow me to purchase shares for my IRA wiht funds from my IRA. The Outside Purchase Agreement indicates that I must turn over the stock certificate to the company within 30 days of their issuance of a check to purchase the shares.

Shouldn't I have 60 days to give them the stock certificate? The deadline for orders (and payments) to be received is about 2 weeks prior to the anticipated start of trading, and I'm concerned that I won't have the certificate in time to meet their deadline. Does anyone know if the 60 day "redeposit" rule also applies to the "deposit" of securities that are purchased using funds from an IRA?

Thanks for your help.

I've read through the Code, Regs etc.. and I believe that a "statutory employee" could also be considered "self employed" and thus sponsor their own plan (other than certain life insurance salesmen). Could someone please confirm whether I am correct and let me know whether there are any special issues related to this odd situation that I should know about? Thanks.

This is somewhat related to what Sueczer posted.

We administer a 5 participant DB with 3 HCE's and 2 NHCE's. The plan has provided a benefit of 8.25% of average salary for all participants. The employer now wishes to create two groups of participants. Group A will receive 5% and group B 8.25%. The one participant in group A is a 45 year old highly compensated participant. It turns out the group A participant will be terminating employment this year. So the reduction in benefit will mean she will not accrue a benefit this year.

Is there anything wrong with doing this given:

1) A 204(h) notice was given in time (prior to 1,000 hours).

2) The plan will pass 401(a)(4).

3) The amendment was properly executed in time.

Thanks very much.

We heard something to the effect that the IRS will be stepping up the number of audits they do on plans that terminated without IRS filing. Has anyone heard the same? is it rumor or some thing more official?

In my employee presentations, I like to use quotes, analogies, etc. to try to "translate" some of the more arcane (and there are SO many!) and complicated aspects of our business into a simpler message that might actually be understood - and retained.

In an attempt to dilute some of the vitriol coursing through these Message Boards of late, I would like to invite readers to submit quotes, song titles, song lyrics, etc. that have any sort of a tie in - however loose - with retirement plans.

Examples:

"You can lead a horse to water, but you can't make it drink."

"Time Is On My Side" (Rolling Stones)

"You Can't Always Get What You Want" (Rolling Stones)

"You Got Another Think Comin'" (Judas Priest)

And my corporate theme song: "Roll With The Changes" (REO Speedwagon)

Thanks - and have fun!

Other than 404 deduction limitations are there any other plan limits or individual limits to be aware of when the employer has both a defined benefit plan and a Safe Harbor 401(k) plan with new comparability non-elect allocation formula?

Perhaps all of this is obvious, but I thought I'd post it to get some thoughts from those in the hinterlands.

There was a post on the 403(b) forum that lamented the fact that some school districts didn't get the benefit of a Vanguard or Fidelity for their teachers' 403(b) accounts. 403(b) vendors are protected by states and other governments, which are inherently conservative in choosing their vendors for political and other reasons.

But that's not the case with 401(k) plans (even governmental ones) that are moving quickly towards standardization and lower costs and arguably better services. The question is what has been lost in this process. I live in a city that used to have several bank trust departments that did 401(k) administration and there were several regional consulting firms, and these are now gone, absorbed into bigger banks and bigger national consultants. Colleagues have moved to Charlotte, Atlanta and Philadelphia. Who's left are financial advisors who pretty much provide the same services and make the same recommendations (and shift the technical work to those financial centers).

It's like Wal-Mart isn't it - a relentess move to a bigger distribution system with more uniformity and lower costs. It may be good for the participant, but you lose the regional flavor and the local expertise (which I guess wasn't really all that good). I assume that every 401(k) plan in every part of the country will be substantially similar provisions, so the main job of the local advisor will be to sell a fungible product.

A plan sponsor's 401(k) plan was badly mismanaged by the the new (and now former) investment agent, complete with money not being invested timely, bad information being given to the participants, etc. A few participants have requested that their current 401(k) contributions cease, at least until this situation is resolved. Can the sponsor temporarily stop all 401(k) contributions, for maybe 4-5 months, until these problems are fixed, and then resume contributions again for all who are interested in re-starting?

If I am downrange in a tax exempt area from 1 Jan until 31 Dec, can I still max out or even contribute to the Roth IRA. I will have been considered to have no earned income according to my W2. Thanks

SGT McDonald

Partner's can't participate in a premium only plan, but don't they get to exclude the premiums on their returns? If so, that sounds like a wash. What am I missing?

Okay, I've read that if I purchase another company by stock purchase and that company terminates their retirement plan prior to the stock purchase date that the term plan participants can take their money in direct distribution.

But.... (isn't there always a but....) ..... do I have to have all the monies paid out from the terminating plan before the date of the stock purchase?

If I don't, does my current company plan b/c a successor plan......

Hmm.....inquiring minds......

John Doe, age 55, made no prior contributions (elective or catch-up) in 05'. The plan is a fiscal year ending May 31, 2006.

Assuming no plan document restrictions and no testing violations, I have two questions.

#1 Can John

1) Defer 14,000 on 12/31/05;

2) Make a catch up of 4,000 on 12/31/05;

3) Defer 15,000 on 5/31/06; and

4) Make a catch up of 5,000 on 5/31/06

#2

If #1 is yes, does this mean his 415 limit for 5/31/06 is $44 k plus the $9 k in allowable catch-ups.

Tx. for any feedback.

Mark.

Where can I find some credible survey data, by industry, geographic region and employer size on this subject (presumably we are looking at an average ranging from the first day of the month after 30 days of employment to the first day of the month after 90 days of employment)?

Many thanks in advance!

I am working on a Plan Termination form 6088. This form requests the top 25 participants in order by their three year average comp. My problem is that this is a dollar per year plan, therefore no comp history was provided. Is it necessary to fill out collumn (e) on the 6088 for dollar per year plans? If not then how would I determine the top 25 EEs?

Thank you!!

This is a 412i plan , but the question relates to any type plan. We have an employer who wants to amend their plan document to exclude a current participant from the plan. This participant was eligible to participate in the plan 1/1/05 and accrued a benefit in 2005. They will not accrue their benefit for 2006 until they complete 1000 hour of service. Ideally, the client wants to exclude them from the 2006 accrual, but will be willing to start the exclusion in 2007.

This participant is close to being a highly compensated employee due to the compensation level. The plan would pass 410(b) and 401(a)26 excluding her, whether or not she is highly compensated. She is the only employee in her particular job classification.

The issue I am having with this...can you exclude someone once they've become a participant? Would we just amend the plan to exclude her job classification for future accruals?

It is my understanding that upon termination of a self-funded/self-insured plan, any assets left over can be used to fund premiums in the fully insured plan. (Fully insured plan is replacing the self-funded plan).

Is that correct? If so, is there a citation that I can refer to. Thank you.

I had a broker ask me this question, and I had no idea what the answer is. I'm not having any luck finding anyone who knows for sure, so here I am.

We know that profit sharing and 401(k) ("non-pension") plans don't need spousal consent for distributions (and the same goes for pension plans where the distribution is <$5,000) if the document so provides. But why those kinds only? Why does a participant with a $6,000 money purchase plan balance need to have her spouse sign a consent form, but not a participant with the same balance in a profit sharing plan?

Any help? Thanks for the illumination...