A client is asking "what is the penalty for not having a Surety Bond in place for 2005". I've researched various technical references, but do not see any language that addresses this. In the meantime, I've already found a Surety company that will write a 2005 bond if/when the 2006 bond is purchased. Nonetheless, the client is pressing me for an answer. Thanx.

If an employee terminates with family coverage, covering a spouse and two children, and there are a multitude of health insurance plans available through a multitude of carriers through the employer, can the employee and his/her QB's enroll in any plan of their choosing? We recognize that the insurance companies may have an issue with accepting a QB's election due policy, but is there in something in the COBRA law that says something other than you must step back into what you had before the qualifying event occurred?

Can someone tell me the definition of a Key Employee for purposes of Top Heavy Testing.

I always confuse this in my head.

Thanks

Is this something used by an auditor for large plan filing? If small plan filings (using Sch I) require this, where can I find out more information? Thanks in advance

Participant elects the following as his beneficiaries:

Spouse 50%

Son 50%

Since the spouse is not 100% beneficiary, does the spouse have to sign off on naming someone else the beneficiary. Does the percentage have any affect on this ruling? Is there somewhere I can look that states this ruling?

Thanks

Jill

I'd like someone to point me in the right direction for information there may be on cashing in my SEP IRA immediately without penalty if I have a diagnosed terminal illness. I have about a year to go, maybe less. I do understand there will be tax to pay as it will be considered income. Tks.

I was wondering if anyone has heard anything from the IRS regarding Code Section 412(i) plans and IRS Announcement 2005-80 Settlement Initiative. I understand that these reviews will be centralized. An IRS representative recently stated to me that plan sponsors would be contaced in the next couple of weeks to discuss participation in the program. Has anyone heard anything yet on this subject?

Thanks in advance. Ed

My understanding is that pick-up contributions are subject to the same limitations on in-service distributions as vanilla employer contributions (i.e., retirement, disability, termination of the plan, etc.), under the general rule that pick-up contributions are treated as employer contributions for plan-qualificaton purposes. Employer, however, is not quite ready to give up hope that there is some mechanism by which they can be distributed in connection with a participant's transfer from one of the employer's plans to another (the way that some mandatory after-tax contributions to DB plans are, see, e.g., Rev. Rul. 60-281). Is there such a mechanism? If so, I haven't been able to find it. Thanks.

In what instances would you have to run 401(a)(4) testing on a Safe Harbor 401(k) Integrated PSP?

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?