Anyone had any issues or problems with a scenario with a client (one man plan) funds relatively modest amounts for his age and compensation (currently age 64 and over 200k comp) for 7 years and then in his final 3 years wants to max his funding. Using an Ind. Aggregate funding method I'm getting some pretty huge numbers given the past service/participation on the 415 limit where he previously was no where close to accruing at the 415 limit, but now essentially is "catching-up" to the 415 limit via huge accruals (amendment)and contributions. I guess I get a little nervous about this level of contribution (around 400k) though I don't see anything wrong with the math or funding method. Just curious if anyone has had any similar experiences and/or audit issues with such an approach. In the end he'll have the same maximum distributable 415 limit as someone funding more level amounts over a 10 year period, but it's just not a very smooth approach.

Client has an integrated plan with the base contribution approximates 8% of pay. Plan is also Top Heavy and intially failed 410(b) due to large number of retirements during the year. As a means of passing 410(b) I am able to include the top heavy group for average benefits testing under 401(a)(4). Do I then simply start at the 3% top heavy contribution and increase that number until I pass the 401(a)(4) test? Or do I have to start at the oldest employees (in terms of service, not age) and bring them in at the regular contribution rate in order to pass (in other words separate out the top heavy from 401(a)(4))?

ErisaNut...you and I had talked about this before and this was the reason that I was increasing the top heavy to pass 401(a)(4), just had lost my train of thought back then.

Any thoughts on T.C. Summary Opinion 2006-58

http://www.ustaxcourt.gov/InOpHistoric/runyan.sum.WPD.pdf specifically that the deadline for the SIMPLE contribution is January 31. From everything else that I have read, the deadline for depositing the salary deferral contribution (for the unincorporated business owner) is the employer’s tax filing deadline-

Regarding acquisiiton of employer obligations by a individual account plan (profit sharing plan in this case)the provisions of ERISA 407 provide that:

Immediately following the acquisition of such an obligation ( part of a new issue of employer stock in this case), the plan may not hold more than 25% of the aggregate amount of the obligations issued in such issue and outstanding at the time of the acquisition and persons independent of the issuer must hold at least 50% of the aggregate amount of that issue. Also, after the acquisition, the plan may not have more than 25% of its assets invested in obligations of the employer or its affiliates.

Can someone help me with the illusive defintion of "persons independent of the issuer" ? All of the new issue will likely be subscribed by current sharehlders, some of who are officers and directors. Would current directors, current shareholders, officers, etc. be excluded or included in that definintion ?

Companies offering Adoption Assistance benefits...... what is the $$ amount and eligibility?

I have 3500 coming soon and I would like to put it into a Roth Ira either thru Vanguard or Fidelity. The thing is... I am a college student and this past year have not been employed. Can i put this 3500 into a Roth ira as my current balance and then pickup a job and begin to contribute to the IRA? I guess I am just wondering how I can get this into the Roth at this time so I can start drawing the interest. Is there any way I can do this? Thanks

Hello. We have a situation I haven't experienced before and need some assistance. A small company that has a 401(k) we administer (I'll call it Small Co., since I'm not very creative) was recently purchased by another company (Big Co.) that is a member of a PEO. Big is part of the PEO's 401(k) plan and tells us that the employees of Small cannot participate in it.

1. Can the existing Small 401(k) be amended so that Big Co. becomes the plan sponsor and the plan will continue to cover just the Small employees?

2. Can it be run and maintained separately, or is it similar to a controlled group situation in that the PEO's plan and the plan maintained for the Small employees must be tested together?

3. Is there anything else I should know about this situation?

Thanks a lot. I hope never to have to deal with PEO's again after this!

Hi all,

Has anyone amended their plans for the final 401(k) regulations (including the Safe Harbor for hardship distributions) that are effective for plan years that begin on or after January 1, 2006?

Also, has anyone amended to remove Safe-Harbor language from plan documents from plans that do not actually use the 401(k) Safe Harbor?

Is anyone doing an amendment that includes both final 401(k) and removal of “safe-harbor “plan provisions.

Corporation X purchases corporation Y in May 2005. X has a 401(k) plan and Y has no qualified retirement plan. It is my understanding that there is a transition period which the controlled group is deemed to pas coverage until the plan year starting January 1, 2007.

Under the Corbel document Y is excluded until they are an adopting employer. It is my understanding this would exclude Y's employees from the ADP testing for 2006.

In 2007 if Y adopts a separate plan would X and Y both have to pass the ADP test separately? Can it be aggregated or does it have to be aggregated?

Any advice would be appreciated. Thanks!

I know EGTRRA impacted rollovers. But, is a rollover from a profit sharing plan to a SEP IRA permissable?

The definition of compensation in a plan document is W-2 Wages and is defined as follows: W-2 wages means wages for federal income tax withholding purposes, as defined under Code Section 3401(a), plus all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code Sections 6041, 6051 and 6052, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of employment or services performed (such as the exception for agricultural labor in Code Section 3401(a)(2).

Client is a bank and bank purchases Bank Owned Life Insurance (BOLI) for some of their executives. In 2005, one of the executives retired and he received the benefit from the BOLI. His 2005 W-2 Box 1 (Wages, Tips and Other Comp) is $75,000and his 2005 W-2 Box 5 (medicare wages and tips) is in excess of $1 million because it includes the BOLI proceeds which are taxable.

Would you base a profit sharing contribution on $75,000 (Box 1) or Box 5 which would be maxed at $210,000 for 2005?

Just took over a DC plan from Kansas. Can any of you Jayhawker TPA's tell me if Kansas requires withholding on plan distributions?

Thanks!

I know that certain states require financial institutions to obtain tax waivers where death distributions are paid from the institutions' accounts. Does anyone know whether these same obligations would apply to IRAs? Since I don't have any experience working with tax waivers, I'm looking for any guidance anyone may have (whether that guidance is specific to a certain state or of a general nature). Thank you.

Hi Everyone,

I am looking for plan documents like SPD etc of DB and DC plans with an floor-offset arrangement.

Does anyone know any website or any link where i can obtain these.

Thanks in advance !!!

Amit

Off-calendar year plan ends August 31, 2005, and is the first year of the plan.

In determining the top heavy status we use August 31, 2005 to determine top heavy for 8/31/2005 and 8/31/2006 year ends.

Question is, in determining the Key Employee status of an officer we look at compensation earned for the period ending 8/31/2005, however does the compensation have to exceed $130,000 or $135,000?

I have a state regulated corporation that is making a supplemental securites offering under state law (i.e., not SEC - less than 500 shareholders). The question regards purchase of some of these securities by the company's defined contribuiton profit sharing plan (no 401k features as of now).

The provisions of Sec 407 provide that:

Immediately following the acquisition of such an obligation, the plan may not hold more than 25% of the aggregate amount of the obligations issued in such issue and outstanding at the time of the acquisition and persons independent of the issuer must hold at least 50% of the aggregate amount of that issue.564 Also, after the acquisition, the plan may not have more than 25% of its assets invested in obligations of the employer or its affiliates.

What is the defintion of "persons independent of the issuer" ? Would current directors, shareholders, officers, etc. be excluded from that definintion ?

401k plan administered by insurance company is currently taking the non-vested money from termed participants and placing them in a non-vested account. The participant is then made 100% vested in the remaining balance. They do not make those non-vested funds available to the company, which uses forfeitures to offset contributions. I don't have a problem with that, but they also don't allow the participant to trade that non-vested part of their account. So, should the participant make a trade in his original account and then rehire....we've got a problem. Or do we? Would the participant owe, or be owed based upon the earnings differential, a residual income amount once those forfeited funds are reinstated?

anyone else do this? I don't take forfeited money until the 5 year break or a distribution occurs, but evidently they don't follow this train of thought.

A terminated participant has a balance of $ 107.00 in their account and wants to cash out. Do we have to withhold the mandatory 20% ( $21.00) or can we send them a check for the full balance and have them pay the taxes at tax time?

We have some pretty old benefit files in storage (over five years). These include applications/enrollment forms, billing records and contracts. Many are from carriers we don't use anymore. How long do you keep files in storage? When and what do you shred?

I have a time-sensitive question in connection with the purchase of a business and the associated transfer of assets and liabilities between two DB plans. Participants under Seller's Plan will become Participants under Buyer's Plan as of the Closing Date. NRD under Seller's Plan is 62; under Buyer's Plan, NRD is 65.

Benefits under Seller's Plan will be frozen under Buyer's Plan, and a modified wear-away will be established for active employees, under which the transferred employee's accrued benefit will be the greater of:

Option A - his or her benefit as if he or she had continued under Seller's Plan for up to two years after the Closing Date, or

Option B - his or her frozen Seller's Plan benefit plus the benefit he or she accrues under Buyer's Plan.

My question is with respect to Option B. When calculating the amount attributable to credited service under Buyer's Plan, is it necessary to import the NRD (62) under Seller's Plan? That seems strange (and very complicated to administer), but I'm concerned that using Buyer's Plan's NRD (65) might violate Section 411's vesting rules, under which I think such a change would be treated as if it were an amendment to Seller's Plan. If I'm looking at the question right, it appears to boil down to whether you can amend a DB plan to raise the normal retirement date with respect to credited service after a specified date. Either or both impressions could be wrong, though. BTW, changing the formula is not an option, as it has already been communicated to the transferring employees.

Any comments appreciated.