Company has a safe harbor 401k plan. They give 3% to all eligible participants. If an employee becomes eligible on Dec 1st - do they only receive 3% on December comp or comp for the entire year? Thanks.

Facts : for the 2004 plan year a DB client pays the max deductible amount of 3 million; past errors are uncovered while doing the 2005 work & the 2004 max should have been 2 million ; 1 million is returned to the client in late 2005 and then a Private Letter Ruling (PLR) is subsequently submitted for IRS's blessing of the return transaction; client now wants to file the 2005 Schedule B before the results of the ruling are known.

Question : Should the 2005 Schedule B be based on a 3 million 2004 contribution or a 2 million 2004 contribution ? and depending on the answer to this question, the 2004 5500 filing might need to be amended as well to show a revised 2004 Schedule B ?

Has anyone had the need to add Roth to a plan, and if so, have you had to process distributions yet, specifically in Relius? I have a client who wants to add Roth and am working through testing the set up in Relius, but am also hoping the Relius users can help out with sharing any experiences with distributions (or any insight into pitfalls or issues (with reports or other fun daily processing))?

If a former employee lives in an area affected by Hurricane Katrina can he take additional distributions from a 403(b) without the distributions being considered a modification to the SEPP? I haven't seen any guidance on this specific topic but I may just have missed it.

Thanks for all your help.

I am a relatively new Relius user and need help finding a report that will show all transactions (buys, sells, fees, dividends) for a given security, including confirmed and non confirmed transactions.

I am trying to prove to our our outside Mutual Fund companies.

Thank you in advance for your help.

AJM

Disclaimer: I am not an expert in ESOPS, so it wouldn't surprise me if there is something I am overlooking. I am having a disagreement with a potential client's CPA on if the client has a controlled group between two companies.

Facts: Company A(C Corp.) is owned 50/50 by Jim and Joe. Company A employs 15 people and is currently sponsoring a 401(k) plan. Company B (C Corp.), a staffing firm, was established by Jim and Joe 50/50. Jim and Joe are the only employees. An ESOP was established for Company B and Jim and Joe sold their stock to the ESOP. The ESOP now owns 100% Company B of which Jim and Joe are the 50/50 accountholders of the ESOP. The ESOP only benefits Jim and Joe and is not setup as a controlled group with Company A. Conversely, the 401(k) plan under Company A does not include Company B as a controlled group either.

The disagreement comes from the attribution rules. The CPA says you use code section 318(a) for ESOPS on controlled group determinations of which the interest in of Company B held by a tax-qualified retirement plan is excluded. Therefore, the companies are not a controlled group for retirement purposes.

I say you use code section 1563(e)(3)(A) for attribution which if a trust has ownership interest in another organization (in this case - Company B) that the interest is attributed to the individuals who have more than a 5% interest in the trust (Jim and Joe). Further, code section 1563(e)(3)© has the same stock exclusion referenced above in section 318(a), however section 414(b) states to disregard this code section in applying the controlled group rules to retirement plans. In affect, Jim and Joe own 50/50 of Company B through attribution of the ESOP stop and the stock exclusion is ignored for a controlled group determination - therefore Company A and B are a controlled group.

Who is right? Do ESOPs have different considerations than 401(k) plans? I know there are CPAs and ESOP experts on this board so I am hoping to have various opinions.

If you are offended by irreverent humor, please stop reading now.

While drinking a 1977 Taylor-Fladgate Port, I saw God last night. I have determined that it is only possible to see God while drinking a vintage Port from a great year.

For those of you who haven't had the good fortune to experience this, let me describe Him to you.

He's apparently in His mid-50's, with a short, grizzled beard. He wears sandals, faded and comfortable looking blue jeans, and a fisherman's hat festooned with corkscrews. He also wears a Taylor-Fladgate T-shirt that on the front says, "Starboard, Hell - head to the Port!" and on the back says," A Port in any storm."

He also has the best looking wife I've ever seen - mid-30's, 5'-10"; glorious red hair; long, beautiful legs in REALLY short cut-off jean shorts, and a skin tight Hooters T-shirt. Sort of a taller Marilu Henner type.

I've seen Jesus through an occasional Rhone, Zinfandel, and on one notable occasion through the last of several brandy snifters of The Macallan 18 year old Scotch, but if you want to see God, you've got to drink the good port!

Here's another post that will surely contribute to the delinquency of some out there.

Make sure you click on manic mode try that too.

http://resinrealm.net/indexpics/bubblewrap.swf

Accounting client is retired, he received a 1099 from his Defined Benefit Plan Distribution and also a W-2 showing wages paid to him coded as Defined Benefit Plan/Nonqualifed Plan....should a DB Distribution received be recorded on a W-2? That doesnt seem right to me that he would have a 1099 and a W-2...any thoughts? My next thought was maybe the W-2 is actually for a deferred comp plan arrangement or something, because its coded as NonQualified Plan and DB Plan, my gut is telling me the coding was incorrect on the W-2? Bottomline..can you W-2 someone for receiving a DB Distribution? And if someone did receive a deferred comp plan, would it be reported on a W-2?

Can someone please point me to the actual regs stating the 3%Nec or SH Match so I can send it to a CPA and educatge him? He is not beleiving me. I am not in my office and need to answer him ASAP. A link would be great!

Thanks!

I believe the answer to this question is a clear "yes", based on Treasury Regs and "Constructive Ownership". But added confirmation and input is appreciated...

If more than 5% of Employer Stock attributes to a particular ESOP participant in a lookback year, is that participant considered to be a "5% Owner" and thus considered a Highly Compensated Employee of the Employer sponsoring the plan?

Thanks,

Espo, QPA

We have a plan that uses the elapsed time method for eligibility and the service is 12 months with January 1st and July 1st as entry dates.

This plan has an employee who was hired 5/17/04, terminated 12/30/04 and was then rehired 6/5/05. If I read Sal's book correctly, because this employee came back within 12 months of her termination date, I need to count the 5 months she was gone as part of her service so she would enter the plan on 7/1/05.

Is this correct?

the Word file has 24 movies to identify. a sample is included above.

no, that is not me sitting at work by the file cabinet.

I'm outstanding. In fact, I'm out standing by the water cooler killing time.

seriously,

as luck would have it, I have found a web site with some more movie pictures in which the people have been 'zapped'. just the clothes show.

of course I guess you could find that web site too, but what fun is that looking up the answers. you people are suppossed to be the movie expert so go ahead and identify them without all that help.

download the file and I wouldn't read anyone elses responses as I suspect those will be the answers or at least gusses.

out to ruin WDIK's week. Ha, all in good fun.

We have a pension client that informed us that their plan had 120k in it after it's first plan year that ended 12/31/2004.

We never prepared a valuation for 2004 and it appeared that the 120k may have been a rollover after the plan year.

We later learned that the 120k was actually made or reported to be made on 12/31/2004 (though it may have actually been made after 12/31/2004) and that even though we never did a valuation they took it as a pension deduction on their tax return, thus indicating that it was on behalf of their pension plan.

They went on to contribute 185k for the 2005 plan year.

We are now preparing the 2005 5500EZ.

Any suggestions as to how to file this return given that it is the first return being filed and there should have been a return for 2004?

Thanks.

Gary

We have a plan that is converting from a DB plan to a DC plan. The 403(b) TSA is going to be controlled by the employer. IRC section 415(k)(4) says that the 415 limitation applies with respect to plans controlled by the employee, which is NOT the case here. Does that mean we can avoid the 415(k)(4) limitation or is that an overly cute reading of the Code?

Way too many questions on this topic in my office:

The proposed regs say if you have a 409A compliant plan that provides for a mandatory lump sum of a specified amount, then paying that amount out is fine. If the plan doesn't have a specified amount stated, the plan can be amended to provide a $10,000 threshhold that terminates the interest in all like plans.

Makes we wonder - couldn't you just amend the plan, at least this year, to put in any specified amount? Why the $10,000 limit?

Or, was this supposed to mean that you could amend a pre-409A plan to put in a de minimis amount without making the plan 409A compliant (which the language doesn't support)?

One man show profit sharing plan wants to invest in a LP. There should be no reason why he cant is there? There are no other EEs/Participants to harm with the investment. It is his money to lose if the investment falls flat on its face. Am I missing anything? He is not an owner... just an investor.

Thanks

We discovered that a plan has been incorrectly calculating the matching contributions. The matching formula is 50% up to the first 6% of compensation. The 6% of compensation was not been capped. In addition, the contributions were based on compensation over the 401(a)(17) limit.

To correct the issue, we will forfeit the excess match adjusted for earnings.

This has been done incorrectly for several years. How many years do we need to go back and make this correction?

Pension Plan currently permits alternate payees to elect an immediate, lum-sum distribution. Other forms of distribution, including various annuity options, are available at the earlier of participant's attainment of "earliest retirment age" under Section 414(p) or Participant's termination of employment.

1.417(e)-1(b) provides that a plan may not offer a paritcipant separating from service age age 45 an immediate lump-sum distribution or a QJSA commencing at normal retirement age. If it is going to offer an immediate lump-sum, it must also offer an immediate QJSA.

Under this logic, must the plan described above also offer an alternate payee an immediate annuity option?

Thanks!

Department of Law

120 Broadway

New York, NY 10271

Department of Law

The State Capitol

Albany, NY 12224

For More Information:

518-473-5525

For Immediate Release

June 13, 2006

NYSUT’S MEMBERS BENEFITS UNIT SETTLES PROBE

Settlement is Part of Ongoing Investigation of Retirement Products

Attorney General Eliot Spitzer today announced an agreement to resolve an investigation of the marketing of retirement products to members of the state’s largest teachers’ union.

Under the agreement, an arm of the New York State United Teachers (NYSUT) will adopt a series of reforms and pay $100,000 to the state to cover costs of the investigation.

The agreement follows a lengthy probe revealing that NYSUT’s Member Benefits unit accepted payments from an insurance company to promote the company’s retirement products to NYSUT members. The unit did not disclose this arrangement and, instead, took steps to conceal it.

"A simple rule that my office has enforced time and time again is that fiduciaries must place the interests of their clients first," Spitzer said. "Accordingly, an office set up to counsel union members on retirement alternatives should always provide objective advice and full disclosure of relevant facts. That did not happen in this instance. But as result of this agreement, reforms have been adopted to ensure that this standard will be met in the future."

The investigation revealed that a retirement product endorsed by the unit – a so-called 403(b) plan offered by the Dutch insurance giant ING and its predecessor, Aetna Life Insurance and Annuity Company– charged investors fees and expenses as high as 2.85 percent per year while delivering only limited benefits. The unit endorsed the plan (even though cheaper alternatives were available) in return for undisclosed payments of as much as $3 million per year.

The unit took pains to hide this "silent partnership" with ING/Aetna. The unit would urge union members to attend financial planning seminars, claiming that: "There’s no sales pitch - they [the seminars] do not promote specific products or services." But contrary to this claim, the seminars were used as a "foot in the door" to promote ING/Aetna retirement products.

In addition, the unit redirected calls it received arising from the retirement seminars to ING/Aetna employees, who answered the phones with their first names only. Callers thought they were talking to NYSUT benefits unit personnel when in fact they were talking to the insurance company’s marketing representatives.

In late 2004, after it became aware of the Attorney General’s investigation of insurance and retirement products, the unit drafted a new disclosure policy, which was described by officials in an internal e-mail as moving from a "try to hid[e] it" approach to a more open approach that included disclosing all payments from ING.

Under today’s agreement, the unit agrees to the following:

Conduct open bidding for future retirement plan endorsements;

Provide full disclosure of any and all payments from insurance companies;

Allow members an opportunity to roll over savings to a new endorsed plan at no cost;

Provide free and objective investment advice to members; and

Hire an independent consultant to oversee reforms and report to the Attorney General’s office.

More than 50,000 New York teachers and other school district employees bought into the retirement plan without having been told by the unit of the payments it received from ING/Aetna.

The investigation underlying today’s settlement was conducted by Assistant Attorneys General Peter Dean and Harriet Rosen, under the direction of David D. Brown IV, Chief of the Attorney General’s Investment Protection Bureau.

A broad investigation of the marketing of retirement products continues.

Attachments:

NYSUT AOD

Exhibits

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