How do you determine if a new loan is considered a “replacement loan”?

Here are the facts:

Plan allows one outstanding loan per participant. Maximum loan amount is the lesser of 50% of vested value or $50,000 (reduced by….so on)

Participant takes “loan number 1” in 2003 amortized over 5 years. Participant has enough cash and pays off the balance of loan number 1 in 2005. (Maximum allowable term ends in 2008)

Participant then takes out loan number 2 in 2005 amortized over five more years shortly after paying off loan number 1. (Maximum allowable term ends in 2010)

No problem as far as only having one loan at a time as far as the document is concerned. Loan is not for purchase of home. The amount is well under $50k.

So, is loan number 2 considered a replacement loan even though she paid off the other loan with her own funds?

I am trying to determine if we need to take both loans into consideration to calculate the maximum amount of the new loan (50% of vested value).

Thanks.

Plan has 6 mth eligiiblity requirement w/ entry dates of 1/1 and 7/1. Plan amends to provide 1 year eligibility w/ same entry dates. If an employee met the 6 mths before the amendment is effective but not before her 7/1 entry date, can she be exclued?

Is there a recommended procedure for terminating the health plan for retirees? I am working with a small employer who has always provided retiree benefits (paying only 25% of the premium), but they would like to remove the retiree class from eligibility.

Thanks for any input.

It is my understanding the contributions are tax-deductible. I have an individual HSA, file a Schedule C so deduct my health insurance premiums - anyone know if my funding contributions are to be included on the same line on Schedule C where I list my actual health premiums? Thanks.

Hi, I hope someone can help me. I was going through my tax records and realized the person who had prepared my taxes for the year 2000, did not include my Roth deduction (the 4th of the 4 year spread deductions). Do I simply deduct the amount this year, or will there be fines I will have to pay as well? Thanks for any help, Jim

I can't get the user Profile Options section to work... is it just me?

Edit - never mind - just me! My User Agent switcher was on and screwing with it...

Ignore this. Unless you can learn from my mistakes.

Hi everyone!

Stupid question from my neck of the woods.....

If an accountant performs a limited scope audit, is it possible for them to issue an unqualified opinion? I was always under the impression that any limited scope audit could only issue a disclaimer, since they didn't look at/test the procedures at the financial institution.

Thanks!!!!

Vicki

Hi! I'm new to the board, but had a question about Cafeteria Plans...specifically concerning the entity that oversees Cafeteria Plans in the State of California. In most states, the DOI is the chief entity responsible for 125's, but in this case, the DOI reps that I've spoken to in CA are clueless. The last one I spoke with said she had been with the DOI for 30 years and had never heard of a Cafeteria Plan. Extremely discouraging!!!

I'm trying to find out what licenses are required to conduct 125 business in the state. I would really appreciate any and all help you all can provide. Thanks so much!

Do all plans need an amendment for Retroactive Annuity Starting Dates (by the end of 12/31/05 I believe) or is a RASD an optional design feature to where if the plan doesn't provide for a RASD there is no amendment required ?

I have a client who is interested in using IRA funds to help purchase a business. I am somewhat familiar with the prohibited transaction and UBIT considerations, but I'm sure someone has much more experience than I do. Would it be better to have the new company set up a one-man 401(k) plan that invests in qualifying employer securities or have a directed IRA hold the shares directly (via Swanson)? They want to use Guidant, and I'm skeptical of almost eveyone. Please point me in the right direction. Thanks.

According to http://www.wtplaw.com/News/articles.asp?NewsID=287

BEWARE OF TRANSMITTING SOCIAL SECURITY NUMBERS – HOW MARYLAND’S NEW SOCIAL SECURITY NUMBER PRIVACY ACT MAY AFFECT YOU AND YOUR BUSINESS

01/25/2006

Jennifer Ryan Lazenby

Maryland’s new Social Security Number Privacy Act became effective January 1, 2006. The Act prohibits, among other things, the public posting of an individual’s Social Security number or the public display of an individual’s Social Security number. Very few employers or businesses actually contemplate posting Social Security numbers for the public to see, so at first blush the Act may not seem relevant to your company.

The Act, however, is also directed at normally private actions that may become “public” through a breach of security. Transmitting an individual’s Social Security number by mail, facsimile or over the Internet is also prohibited.

Practically, the Act will have a huge impact on Maryland businesses, probably far greater than ever expected by the legislature and the general public. The use of Social Security numbers is prevalent in today’s society. Social Security numbers appear on insurance cards, credit reports, tax returns and employment applications.

There are some exceptions to the Act, including the use of an individual’s Social Security number if required by State or Federal law. Moreover, continuous use of an individual’s Social Security number may be permitted under certain circumstances if the user provides an annual disclosure informing the individual of his/her right to order, in writing, that the use of his/her Social Security number stop.

Although the Act does not specifically define how violators will be punished, precautions should be taken to avoid civil liability and to protect the identity of your clients, employees, etc.

If you use Social Security numbers in your business, provide the holders of the numbers written notice of the Act and inform them of their right to opt out of such use.

Evaluate the effectiveness of your internal procedures.

Make employees aware of the new law and regularly verify that your internet connection is secure.

If possible, recode your records to use only the last four digits of Social Security numbers.

Require an individual to complete a waiver if he/she asks you to forward information containing his/her Social Security number to third parties.

The above outline is intended only as a broad overview of The Social Security Number Privacy Act applicability and does not constitute legal advice.

I remember laws being passed that kept firms from printing Social Security Numbers on statements etc. However, it seems to me that this goes way beyond that. Do Maryland clients need to start using employee identification numbers when sending information via fax or internet?

Our clients send in census data, contributions, etc. using the SSN as the identifier.

Thanks,

Stephen

Brother owns 100% of company and has his sister working as the only other employee. Is the sister considered an HCE for purposes of testing in a solo 401k?

Does a plan have to specify in the plan document that it uses the early participation exclusion option in IRC 401(k)(3)(F) or 401(m)(5)© in order to make use of those options in performing the ADP and ACP tests?

Does an ERISA 403(b) plan with a matching contribution subject to the ACP test have to specify in the plan document that it uses the early participation exclusion option of IRC 401(m)(5)© in order to make use of that option?

I am 17 and want to start a Roth IRA. I’m working and want to invest $3000 into the Roth IRA. I plan on contributing $3000 - $4000 each year. I’m not going touch my money till I’m 60 unless I need to for a house. I’m in it for the long term. What Bonds or Stocks do you suggest I invest in? If I want a stock Roth IRA would DOW INDUSTRIALS be a good choice?? Or would NAZDAQ be a good choice? Please give me your opinion on a safe but good in tress rate stock. Thanks any information is appreciated deeply.

A participant wants to take out a hardship distribution for a lease / purchase of a primary residence. We've got a copy of the lease / purchase agreement where it looks like it is a lease agreement for the first 12 months with the option to purchase the residence after 12 months. Does this qualify for a hardship distribution for the reason of purchasing a primary residence even if the purchase will not take place until one year later?

In order to take advantage of shifting QMACs to the adp test or borrowing elective deferrals to the acp test, does a plan need to contain language in order to do so? Most plan documents I have seen contain language which defines how an ADR or ACR is calculated and what money types are to be taken into account respectively, but because it is a testing methodology I am not sure it needs to be defined in the document.?\

thoughts?

For the umpteenth time over a period of years, we've been solicited by a firm that claims it can reunite terminated participants with their long-forgotten benefits that are currently held by "government agencies" and are just waiting to be picked up. We figured they're talking about the PBGC. Their literature does mention a hefty fee that will only be paid from the distributed benefit resulting in no "out of pocket cost to the participant". I'm guessing their fee isn't predicated on the participant signing a promise to pay after receiving a distribution, as the cost to chase down non-paying participants would be huge. Would they have a deal with an investment firm that'll pay them the fee once they get the investment? Even if they themselves are some kind of investment firm subject to SEC rules, how can they legally charge a fee that's far in excess of what similar firms charge for fees, commissions, etc.? Of course, their literature doesn't have a phone number.

Client is an October 31 fiscal year end plan... When calculating the RMD, I can use the plan year end balance, correct? Do not have to determine what is in the plan on December 31.

I am creating a service proposal for a new client. The client currently has one investment option available to participants for all pre-tax contributions. It is a privately held fund. The current provider has assured the client that the plan in compliant with ERISA 404© requirements regarding a "broad range" of investment options. I'm not sure that is the case. Does anyone have any input?