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?

Calendar year company has an existing SEP. They have been funding these contributions quarterly. They would like to termionate SEP and start 401k with PS contributions as soon as possible.

Question is: What is as soon as possible? Can they start 401k in 2006 or do they have to wait until 1/1/07 since they have funded the SEP in 06? I am getting conflicting info form several sources.

Commenst and cites are appreciated

This is my first post!

I have a question about changing HDHP plan years. We currently have an HDHP w/ HSA, and the plan year runs from 7/1-6/30. We want to change it to a calendar year without losing HDHP status in the meantime. Does anyone have an idea of how this should be done? Is it allowable to have a qualifying HDHP from 7/1-12/31 so that we can start with a fresh calendar year HDHP in January? The IRS notices do not address whether the minimum deductible can be prorated for a short (6 month) plan year; however, we also do not want to require the full annual minumum required deductible for a plan year that only lasts 6 months. Any suggestions?

Thank you.

The employer took the deduction on their corporate tax return, the 5500 reported the employer contribution but the accountant forgot to actually fund the money. Can they pay a penalty and deposit the funds now?

Thanks!

Employer makes an employer contribution... plan has a SH match... Because of the SH match the plan will pass the TH requirement... correct?

Also, due to the catchup deferral the plan exceeds the 25% 415 limit... but that is OK because it was the catchup that put it over. Right?

Sorry for the basic quesitons...

The daily treasury rates can be found here (last column):

http://www.ustreas.gov/offices/domestic-fi...rate/yield.html

click on 'historical data' and look at '2006'

if you sum up all the rates for April and take the average, you arrive at 5.06 which is the rate just released.

The same holds true for March. you can't go back much further than that because they didn't exist for awhile.

so, while 2 months is not a lot to go on, based on the above date it appears you can get a good idea what the rates will be ahead of time

OK, I'm completely out of my element here....just looking for info to point a client in the right direction (ie who to go to for the real expertise).

Years ago I worked for a firm that offered a flexible benefits plan that provided the employees with a base amount of dollars that could be put towards various benefit options. The base amount would provide the minimum coverage for most of the choices (medical, dental, life, disability). The employee could upgrade by using pre-tax deductions...additionally they could choose to use the reimbursement accounts for health, dependent care, etc etc. Lastly, we had the ability to set aside money to purchase additional vacation days and use for parking expenses.

Client asked about our firm doing something almost exactly like that for them....my answer was "Yes, I could find someone to do that for you... and they'll be better and cheaper too!"

Does all of this fall under a single plan document umbrella or is it piecemeal? Can my client go to a single Health & Welfare administration firm and get the documents and administration for this? Spendy? Client isn't extraordinarily large (100 people) so I would imagine firms like WWW would be out of the picture for cost reasons, but what about smaller firms? My guess is that whatever the cost, they will decide it's too expensive and will want to whittle away at the offerings until they reach the acceptable expense level. So does the typical RFP break down the costs by offering?

Deceased participant's benefit began paying installments to 4 beneficiaries in December 2003. Each received another payment in 2004 and again in 2005, however the 2005 payments were miscalculated due to an error in an overstated account balance. This resulted in the 2005 payments almost being doubled. What are the consequences?

Assuming it is 2005 and the 417(e) rate is 5.5%, how would you calculate the maximum contribution to a Cash Balance Plan for a 50 year old employee?

I am thinking GAR '94 @ 5.5% would come into play for a reduction between age 62 and 50, but nothing jives.

Does the years of participation come into play as well since the 415(b) dollar limit is reduced for years of participation less than 10? Or, do we assume there will be at least 10 years of participation and leave it alone.

For salary, let's assume the individual makes over $200,000 even though salary doesn't come into play for the actuarial reduction below 62 and years of service is more than 10.

Any help would be greatly appreciated.

Under Medicare secondary-payer rules, is there an age limit for actives when Medicare becomes primary?

I have an 80 year old actively employed and benefits eligible

After the two year holding period can a SIMPLE IRA be rolled over/transferred to a SEP?

Can this be done? Are there any rulings or information I can read about this?

I'm not too familiar with 403(b) plan in general and I have someone asking me about switching a current Erisa 403(b) to a Non-Erisa 403(b) plan? Can anyone help me here?