I have a fical year (September 2006) Safe Harbor 401-K. One of the participants (a physician) is going to retire in August 2006. The corporation is going to be paying money due to him (receivables) sometime after he retires.

If the corporation pays him a portion of his receivables anytime during Oct-Dec of this year, can he then defer this into the 06-07 plan year? His hope is to keep delaying these payments so he can contribute them to the 401-K for the next few years. It doesn't feel right to me but I thought I'd run it by the board.

Any thoughts would be appreciated.

Scott

If an active non-owner participant has exceeded the HCE compensation level for 2002-2004, but earns $80,000 for 2005, is that participant a HCE for 2006?? Thanks.

Are different types of weight loss programs covered under an FSA? For example, bariatric surgery, programs such as Jenny Craig or Weight Watchers, OTC pills, prescription pills? I feel that there is some merit to covering some of these, but balk at covering Jenny Craig meals or Weight Watcher's meeting fees.

Does anyone know why the termination dates for non-eligible employees doesn't show up on the Employee Status Report with Termination Dates? Or I should ask, has anyone figured out how to get the term dates to show up? Do you have a customized report? The only way I've been able to get the report to show the term dates for non-eligible employees is to re-import term dates after I've posted eligibility.

Background: Used the statutory exclusion option to pass the 401(k) and 401(m) nondiscrimination test. Understand that my coverage testing for these components must reflect this as well. Do I have the ability to test the profit sharing component of the plan w/o carving out the statutory exclusions for my 401(a)(4) nondiscrimination test (rate groups) and coverage test. The profit sharing component passes the coverage test using the ratio percentage test, but the issue is the rate group testing. Can I test each component for nondiscrimination and coverage differently? Believe me including the employees in my nondiscrimination testing that have only been employed for 6 months would definetly help my rate group testing.

Any clarrification would be greatly appreciated

Employer sponsors a 401k plan and a MPPP. The assets of both plans are held in one trust with an insurance company. I need to clarify if this insurance company meets the definition of a "regulated financial institution" as found in the F5500 instructions and the ERISA Regulations. A review of DOL Advisory Opinion 93-21A leads me to believe that the insurance company, may, in fact, be a "regulated financial institution" and I'm thinking I have to meet the F5500 filing requirements for a master trust. TIA.

I tried searching this. Under final regs, does anything change with the following. Participant leaves company(not voluntary) and is given severence pay for the remaining year. In other words is not performing services and really isn't earned compensation. Can this person continue to make 401(k) contributions from this pay?

Thanks

Several doctor groups are merging into one. All had existing plans. Some decided to merge their plans into one new plan. 3 groups were going to terminate their plans prior to the merger. We had asked that the board resolutions to terminate the plans be in place prior to the merger.

One of the company's current TPA has told them they should not terminate the plan, but freeze it instead. Not sure why, but that doesn't matter to us. However, if they freeze the plan do the assets of that plan count in the Top-Heavy test of the new plan?

Since I cannot find an answer to this in the usual places, I am beginning to think the answer to my question is NO, but I am hoping someone out there might be able to give me a definitive answer.

Thank you.

Due to income factors, discovered I had an excess Roth contribution and requested the return of such. My problem is I am over 59 1/2 and yet the taxable earnings on the 1099-R indicate code 8J (8 = excess contributions plus earnings taxable in 2005; J = Early distribution from Roth IRA). The "J" triggers the 10% penalty on early withdrawal. Is this correct? If not, how should I proceed?

Thanks in advance!

Brutally messed up takeover plan. "Less than competent" actuary that nobody has ever heard of. Refuses so far to acknowledge requests for correction of blatant Schedule B errors. Insists that it is ok to compute current liability using sex neutral tables (plan is 95% female to top it off). On and on and on.

Has not signed anything recently with his enrollment number on it. Hmmm.

Is there a fairly quick way of confirming (current and past) enrollment?

I'm looking for a sample 60 day notice to employees for a benefit freeze.

Can anyone help?

Thanks.

Steve

What is the absolute latest date by which partners/sole proprietors must fund salary deferrals for any given year? Section 401(k) indicates that the amount deferred must be attributable to earnings for work currently performed for the employer; what does this really mean for owners? Any Code citations, letter rulings, etc. would be greatly appreciated.

Urgent query!

The company has agreed to give employees the election to receive shares of stock or to have the shares put into the employees 401(k) account.

I think the election creates constructive receipt for all employees of the FMV of the stock on the date of distribution.

My questions are about what happens on a practical level. Is the employer required to wtihhold income and FICA and FUTA from the next payroll check? What if in that payroll period there is insuffcient income to pay the tax and withholdings? Can a 1099 be issued for the value of the stock instead?

For the employees who ask that the stock be put into their 401(k) accounts, is the income tax imputed because of constructive receipt a wash with the tax saved on the deferral/contribution? Or, is the 401(k) contribution a post-tax contribution?

I'm assuming that in this scenario there is no way to avoid FICA and FUTA, is that right?

This distribution is scheduled to happen within the month. I would greatly appreciate help to clarify the consequences incurred and the procedures that must be followed because of the election. Please help! Thanks.

Can a DB plan have different definitions of service for benefit accrual and 415 limit?

For example, suppose a plan requires 1,000 hours for benefit accrual. A participant will have 9 1/4 years of participation at NRA. The dollar limit would be multiplied by 9/10ths. Could a plan be designed to credit a year of participation for 415 purposes on 1 hour of service? In this case there would be no dollar limitation reduction.

Small employer has a 401(k) plan but, after several years has decided he no longer wants to allow 401(k) contributions. He wants to eliminate the 401(k) feature, but keep the discretionary PS piece. Is a CODA a protected benefit and therefore, is he prevented from eliminating it? Also, since this is not a plan termination, the participants could not take distribution of their 401(k) monies, correct?

Finally, since 401(k) language is throughout the entire document and SPD, if the above is permitted, would you restate the entire document and SPD, or handle the change via a 1-2 page plan amendment, with an SMM?

Thank you

This is a two part question

For a plan that was amended to reduce the involuntary cashout limit to $1000, is there a required amount of time to wait for signed distribution forms before paying out a participant in this situation? Does this rule mean that if I quit and my vested account balance is $800.00, the Plan can cut me a check for $640 and send the rest to IRS without asking me? Is the plan required to have signed distribution forms on file for me (this usually comes up in the annual 5500 audit of some large plans we have).

Secondly, if participant's vested account balance is between $1000 and $5000, the Relius distribution forms have a section for "Proposed Distribution Date". What period is considered reasonable to enter here?

thank you

I received a claim for anesthesia related to a cosmetic breast augmentation. Can I reimburse the anesthesia, or do I consider this part of the cosmetic procedure? Opinions, please.

I have a participant who would like to roll her voluntary after-tax money, including the interest, out of her employer's Profit Sharing Plan. She is not 59 1/2.

I was told it is acceptable if the distribution consists of pre-1987 $$, which it does not. It's all post-1987 $$.

The plan document states that in-service distributions may be made at or after normal retirement age.

Can this be done?

What is the account balance for determining maximum loans in a balanced forward plan if a participant has been paying on a current loan? Is the participant's loan interest paid as of the most recent valuation date added to the account value on this valuation date?

Loans are a participant directed fund.

I didn't see this covered in any recent posts... I'm debating withdrawing some of the contributions I've made to my Roth IRA, but was told the following by Fidelity:

"Whatever dollar amount is not returned back in 60 days, then that money is taxable for that calendar year.

For example, you take out $5,000 from your IRA. You return $4,000 within the 60 day time frame. Then $1,000 is taxable for that year. You would report it as regular income. Also, you would be liable for any early withdrawal penalties on that $1,000."

Is this right? Hasn't the money I paid in already been taxed as income when I first earned it??

It was my understanding that I could withdrawl contributions at anytime with no penalty.

Thanks,

K