A corporation dissolved in the mid 90s. The officers and Trustees of the corp are still around, so they've kept the plan going. It's been properly updated and 5500s have been filed. Nearly everyone has been paid out, but now the IRS is having a fit because, technically, there isn't a plan sponsor. They want to disqualify the trust and put them through the CAP program.

Maybe I'm out in left field, but it seems to me that the IRS is overreacting. Why can't the Trustees be considered liquidating agents, acting as successors to the employer? Any thoughts from my peers?

Just looking for the comfort that comes from a collaborative consensus.

Under final regulations, designated Roth contributions are subject to the rules of section 401(a)(9)(A) and (B) in the same manner as pre-tax elective contributions. MRDs based on Roth deferrals are non-taxable.

Am I missing something?

Lets say you have an MAGI of 95,000 and you convert a large traditonal IRA to a Roth (resulting in higher income and taxes), is your MAGI still considered 95,000 (i.e. is the conversion ignored) for your Roth IRA contribution meaning you can contribute the full $4000 or does the conversion play a role in your MAGI for the contribution?

Can a Profit Sharing plan that has money invested in a hedge fund incur UBTI? The hedge fund has sent a letter to the effect that the hedge fund has operated in a way that creates Unrelated business taxable income. Does this require the plan to file a 990-T? What other repercussions could there be from this investment?

Document loan policy says loans will be given at a "commercially available rate". I always thought this meant that the loan would be given at the same rate as a fixed, secured rate (similar to a loan secured with a CD or savings account.) The loan at that rate would be around 6%.

I am hearing that the rate should be "Prime" or "Prime Plus" something and that I am wrong about what rate should be used. The prime rate is much higher.

Can anyone comment? Much appreciated.

How are self-insured plans integrating HSAs into their plans? How are premium savings determined for a self-insured plan when stop-loss rates are not decreasing by implementing a high deductible plan? Are self-insured plans changing to fully-insured only plans or are employers offering both of these options? What are common examples of plan offerings that employers are providing when adopting high deductible plans when they currently have a self-insured option only? How can Third Party Administrators make up the loss of pepm from the self-insured plan and/or loss of revenue from stop-loss?

We have a max accrural on vacation time, and someone has recently suggested that we can allow the employees who are about to lose hours of vacation time, to contribute that to the 401(k) Plan instead.

Fact about the plan I think you should know- 401(k) Plan is management only, all others are subject to CBA.

I know under a cafeteria plan you can buy and sell vacation time, however, you if you are going to allow employees to transfer unused $$'s to the 401(k) you have to also offer a cash out.

If we offer the option to transfer at risk vacation hours to the 401(k) would we have to offer that as a cash-out as well?

Thanks for any advice and or guidance links.

In the next few days, I am planning to begin a Roth with one of Vanguards target-date retirement plans. The plan is to deposit what we can each month. (between $150-$250).

Now I am wondering if I should also start one for my wife? We would give the min. needed to start one (1-3K) and then most likely only deposit once or twice a year if we get some extra income. The ultimate plan would then be for her to make larger contributions on hers when she goes back to work full-time in around 10 years. (home with baby)

If we plan to do this, would it be wise to have her start her own roth with a different company? Say T.Rowe? Or does it matter? I would think we could have a little more risk with hers, that's why i was thinking T.Rowe.

Thanks for any input!

Participant died in 2000 prior to their RBD at age 60. The spouse is the sole beneficiary. The spouse did not elect to take a full distribution prior to the end of the 5th year following the participants death. They would now like to take a distribution of the full amount.

Generally, they should be taking payments over their life expectancy which can begin at or before the participant would have been 70.5. Is there any way to accelerate the payments and get the $ out of the plan now or are they stuck with annuity payments?

First a confession...Some slacker friends came over to my home last night and I ended up only get 4 hours of sleep. So stating the obvious, I am having a rough day. Ok now on to my current dilemna...

Some other company set up a safe harbor 401(k) plan we have a DB plan for the client. All employees are covered by both plans. His combined DB and matching contributions are under the 25% limit, but once you add in his deferrals the contribution is over the 25% limit. I am trying to convince myself that this is ok because if there wasn't a matching contribution then I wouldn't be worried about this at all.

Total eligible salary = 272,300

Total DB contribution = 59,275

Total Match contribution = 8,169

Total Deferals for 2005 = 14,000

25% of eligible comp = 68,075

If I subtract the DB and matching contributions from the 25% limit, the plan is $631 under the limit.

What are my options here?

1)Tell them to return all of the deferrals less $631?

2)Eliminate the match contribution (although it is safe harbor and I don't think can just be done away with).

3)Or I am confused and deferrals don't count against the 25% limit anymore, the plan is fine.

4)Something else.

Of course I want to vote for #3 !!

I'm an active employee with a 401(k) account with my current employer. Can I rollover my 401k account while I'm still employeed into an IRA? If so, can I then take a distribution from the new IRA? I am under 59 1/2 years old.

This started out in the "Retirement Plans in General" section, but i think it needs to be in the DB section. It seems there is a window of opportunity for a restricted employee to recieve reduced compensation in the year prior to termination/retirement/distribution to take them out of HCE status so they can receive a lump sum. If a non-owner active participant who has been earning more than the HCE threshold recieves less than the HCE threshold in 2006, they would not be considered an HCE in 2007 and therefore could retire and receive a lump sum distribution in 2007. Is this considered an acceptable loophole? I don't think the intent was for the 110% test to be circumvented. I'm not sure if this is something that needs to be discussed when a restricted employee is thinking about retiring and taking a lump sum. Any thoughts would be appreciated. Thanks.

I have a question about the proposal from the Centers of Medicare and Medicaid Services to require health plans to provide personalized notices of creditable prescription drug coverage upon request. Unless the Medicare Part D enrollment period gets pushed back, we’re supposed to be ready to provide these personalized notices on May 15. How are you planning to make that happen?

I found an older thread on this topic (3/28/2002) but I was wondering if there are any updates or is there some additional thought on the subject. The ESOP did not give diversification notice and now the 6 year period has completely passed.

If we give the participant opportunity today to diversify, how would we handle the distribution? Participant is not yet NRA and the plan does not provide for in service distributions. Any thoughts, suggestions or other references are appreciated.

Is governmental plan status determined only by looking at the participating employers and employees under the plan? Unlike elsewhere in the Code and ERISA where the term "employer" is used and includes the employer's controlled group, the definition of governmental plan seems to focus on the employees for whom the plan was established and the entity that established and/or maintains the plan (the term employer is not used). If a governmental political subdivision or instrumentality maintains governmental plans but then operates a non-governmental for-profit subsdiary, does the mere fact of the subsidiary's existence jeopardize the governmental plan status even if the subsidiary's employees are not eligible for participation in the plans? Under the literal reading of the statutes, this does not seem to be the case (meaning that governmental plan status is determined just by looking at the employees and participating employers in the plan itself). Although there are a number of IRS rulings on governmental plans, I have not been able to find any on this particular point. There are some rulings that discuss how having a de minimis number of non-governmental employees in a governmental plan does not jeopardize the plan's status (at least for DOL and IRS purposes -- PBGC may have another take on this), but those facts are not totally aligned with the issue I am reviewing. Thanks in advance for any input.

Just an FYI, the following question was raised at the "Dialogue with Treasury and IRS" session:

If an employer contributes to a DB plan for participants who also have an account balance in a DC does the 25% limit come into play or do they actually need to receive an annual addition in the DC plan during the current year.

Harlan Weller answered "that is a fairly messy topic and we have no answer at this time"

I find his none answer very enlightening. I guess I will need to tread a little lighter with my advice to clients.

Hi

I am under the OPERS system and I work for a local govt non profit agency. I want to take control of my 403 b plan. is there a way i could do so . my employer tells me that i cannot withdraw any money from my plan until i am employed with them

any ideas would be appreciated.

thanks

Currently any match on an excess contribution must be forfeited

How would that work in a Roth 401k plan where the test fails and Roth 401k amountis to be refunded.

Assume plan matches Roth 401k

If a plan contains the prior year testing method provision and a plan amendment is processed to change the definition of compensation used in the ADP/ACP test, does the prior year test need recalculated with the new definition in order to obtain the ADP/ACP percents to use on the current year test?

Example: Plan amendment in 2006 for compensation provisions (to change from Simplified 415 pay to W-2, or to include only pay while eligible or to exclude fringe benefits from ADP/ACP comp). Do I have to go back to my 2005 test and calculate the 2005 averages using the new definition?

The ERISA Outline Book, 2005 Edition, Chapter 11: 401(k) and 401(m) Testing - Section VI (Performing the ADP test): Part C.2. (Section 414(s) compensation)

2.b.2) says 'yes', but I can't find a regulation to back that up.

Thanks in advace for the help!

Schedule C income. Sole prop passes away in December. Can his spouse make a SEP contribution for 2005.

I think yes.

Thank you