A client of mine is looking to increase plan participation. He has a bonus at the end of each year that he would now like to divide up between all employees who are contributiong to the plan. It would be a flat dollar amount accross the board and no HCE's would receive this. The plan allows for discretionary match contributions.

Anyone see any issues with this?

A client of mine asked if a 5500 needed to be filed on child care reinbursement. I do not handle these plans and am looking for some guidence.

Thanks

Does anyone know of any authority that would allow a 401(k) plan participant to aggregate the value of his/her 401(k) account with investments outside the plan held at the same institution to meet a minimum account balance requirement for receiving lower management fees that wouldn't create a prohibited transaction under ERISA 406(a)(1)(D)? I know that PTE 97-11 allows this for IRAs and Keogh Plans, but I can't find anything allowing it for other qualified accounts.

Is it possible to start a FSA plan mid-month? WOuld it have to end on the last date of the month?

I try and keep my plans qualified, so I am not sure of the answer to this. If a DB plan is disqualified, what happens to the assets in the plan. Let's say it's an owner who is the only one with a DB benefit.

My guess is he would have taxable income either at the individual or corporate level depending on who takes possession of the money. Any idea how this is reported as income on a tax return, either individual or corporate? Any other tidbits to worry about?

I was suppose to begin distributions from my deferred compensation arrangement at age 60 (I elected age 60 on my distribution form). I am 62 now and I have never received a distribution. Am I penalized for my company's error? How is this corrected

Periodically I get the question whether our firm has a program to run a benefits-cost analysis with illustrations showing the impact of the DB deduction (and associated employee pension costs) compared with the after-tax savings if the the small business owner just keeps the income himself and pays taxes on it. I realize this is the typical analysis many small business owners go through. Does anyone know of a good "canned" program for this (commercial or otherwise) where you could show multiple assumptions (tax assumptions and investments) and illustrations. I can do something rough in Excel but would be interested in something a little better if there is something out there. Maybe this is something we normally expect the CPAs to provide for the client but I seem to get the question fairly often.

Ok, say you have a DB plan, IRS approved Volume Submitter. For purposes of benefit accrual, the document uses 3 year average participation comp., except to the extent that there isn't three years of participation, in which case it goes back to employment years to the extent necessary to get a 3 year average.

Now suppose an employer wants to do a minor modification to use only participation compensation.

It would seem that this could be handled as a minor modification on a 5307. But I'd like to see how folks would handle this.

Would you submit now, off-cycle? Wait to file on-cycle? Other?

I might actually have to break down and go to some conference (a great sacrifice, because I HATE business travel) where there's an opportunity to just chit-chat with other folks about some of this stuff in general - anyone have recommendations about one that might particularly focus on 2005-66 and related issues?

With regards to the rule that you can deduct up to the unfunded 404(a)(1)(F) current liability. There is that part that you can not take into account any benefits that were the result of a plan amendment that increased benefits in the last two years.

I request feedback regarding whether a brand new plan is or is not considered an amended plan (i.e can a brand new plan deduct up to its 404(a)(1)(F) current liability in year one?)

Let me know if there is any official confirmation that supports the answer, or whether the answer is just the current conventional wisdom based on reasonable interpretation.

There are 2 conflicting sections of the Code (Section 105(h) and Section 125©) in regards to testing employer contributions under a Section 125 Cafeteria Plan. Are emploeyr contributions supposed to be looked at when perfroming Compliance Testing for Key/HCE? If so, how should they be accounted for? Can you direct me to something in writing regarding this topic? Thanks for your assistance. Have a great day!

Have a calendar year plan that wants to make a discretionary matching contribution starting July 1, 2006 and wants to make it retroactive to Jan 1, 2006. Discretionary Matching are generally made either at beginning or end of plan year. Can this be done? Does client need a board resolution? Is there any other

issues I may be missing?

Sec. 664(a), PL 107-16, 6/7/2001 seems almost too good to be true.

Assume a controlled group includes for-profit and non-profit entities. The 401(k) and (m) plans of the for-profits can exclude all of the employees of the non-profits in a 410 test, provided that (1) 95% of the employees of the for-profits participate in a 401(k) plan which only has an (m) feature, and (2) the non-profit employees participate in a 403(b) program (which only needs to provide for deferals), and (3) none of the non-profit employees participate in the 401(k) and (m) plans.

It seems like a very easy way to discriminate within a controlled group if the for-profit entity employs primarily hce's and has a generous match.

Is it this easy ?

And although the proposed change to regulation Reg §1.410(b)-6(g) is not final yet, the law is retroactive to plan years starting after 1996, so it would seem it can be relied on for past years even though the reg. is not technnically final.

Any thoughts ?

Two participants in a six-life self-directed 401(K) plan have had the correct amounts deposited to their respective accounts and investment choices, but incorrectly allocated between their deferral and matching subaccounts. There's about $2,000 - $3,000 for each shown as deferrals that should have been allocated to the matching subaccount. The plan does not allow loans or hardship withdrawals and all the matching contributions are safe harbor and 100% vested.

Between the hassles involved in getting the investment company to make the adjustments, the employer's reluctance to correct the problem due to his perception of a pr issue with the employees, and the calculations entailed in figuring out the exact transfer amounts and earnings adjustments, we sure are tempted to not fix this. What reasons should be given to the employer to have this fixed? As long as money from this point on goes in correctly, and all previous amounts are in the correct investments in the aggregate for each participant, should this even be an issue? All help is appreciated.

One of the plans I work with funds their match and profit sharing contributions on an ongoing basis throughout the plan year, and for 2005 they overfunded the allocable contributions by in excess of $13,000. Can the trustee reclassify contributions received in 2005 as 2006 contributions? We have not done a 2005 Form 5500 yet, although I assume the employer deducted the entire 2005 contribution amount on its income tax return.

If the trustee can reclassify the excess amount as a 2006 contribution, I realize the employer would need to file an amended tax return. Is this operationally allowable? And are there other ramifications I should be concerned with?

Thanks for your thoughts.

I am working with a takeover case that has the following background:

Plan population was spun off from a larger plan at 1/1/1999.

Formula is:

1. Total service (pre- and post-spinoff)/current pay formula

minus

2. Frozen accrued benefit (constant)

minus

3. Pre-spinoff formula based on frozen service (pre-spinoff) and current pay

I have come to learn that, for FAS 87, the attribution being applied to this entire formula is service since 1/1/1999.

I cannot come up with an argument that would justify this attribution pattern.

I would apply an attribution on each numbered formula component in this manner:

1. Total service

2. No proration (benefit is entirely accrued)

3. No proration (benefit is entirely accrued)

Feedback?

Appears that Rev Proc 2006-27 issues new guidance and replaces the old UNFAIR guidance of Rev Proc 2003-44. When an employee is not given the timely opportunity to participate in a 401(k) it looks like new guidance says the correction is 50% of the missed deferral, not 100%. There also appears to be some new guidance for "brief exclusion" that requires NO correction. Wonder if the "brief exclusion" can be applied to situations where the employer failed to deduct 401(k) deferrals from special bonus payrolls??? That issue seemed to be a pet peeve of all the auditors I dealt with last year.

Hi All,

Does anyone know if there are any FAS 106 implications regarding HRA's and HSA's?

Thanks.

Can an employer withdraw from a multiemployer plan for any or no reason at all? Is the ability to withdraw typically addressed in the CBA?

Company A excluded some participants for 2004 profit sharing contribution. They are going to make corrective contribution for plan year 2004 in 2006. Would this be deductible contribution for 2005? Is there any IRS publication I can refer to? thanks.

a participant died without a beneficiary designation. the decedent has no heirs except for a brother. according to the plan the money gets paid to his estate. the size of the account is small and we doubt there has been a probate case set up. what are you supposed to do in this case with the money?