I just want to clarify for myself (I don't work w/ 403b very much) that there have been no new regulations that for 415 limit purposes the 403b contributions must be aggregated w/ the 401a contributions of the plan of a separate employer if the 403b participant "controls" this separate employer.

Just wanted to confirm something:

If you have a plan year beginning in 2005, say, 10-1-2005, can it be amended to allow Roth deferrals starting 1-1-2006? I initially thought it could, but the excerpt from the proposed regs below says otherwise, and couldn't start until the plan year beginning 10-1-06. Wanted to make sure I'm not missing anything. Thanks!

Effective Date

Section 402A is effective for taxable

years beginning after December 31,

2005. These regulations are proposed to

apply to plan years beginning on or after

January 1, 2006.

I put a post on the DB board regarding a DB/DC combination. The question is whether or not having a different NRD in each plan is a BRF issue which requires testing. The NRD in the PS plan is 59.5 and all 21&1 ee's are covered. The NRD in the DB plan is 65 & 5 YOP and some NHCE's are excluded by class, although the 410(b) ratio % test passes at 83%. There seems to be some uncertainty regarding whether or not different NRD's in a DB/DC combo is a BRF isssue.

My question now is, just making the assumption that this needs to be mathematcally tested for current availability, and given that based on the NHCE Concentration % that the safe harbor % is 50%, doesn't this plan pass anyway since the PS NRD is currently availble to 100% of the NHCE's compared to the HCE's and the DB NRD is currently available to 83% of the NHCE's compared to the HCE's? The 83% test goes like this: 24/54 / 31/58 = 83%.

Doctor A owns 100% of Practice (C-Corp.) and employs Doctor B's S-Corp. (Medical Corp.). Doctor B's S-Corp. funnels some money to another C-Corp. (owned not by Dr. B, but 100% owned by Irrevocable Trust). For purposes of this question, let's disregard the actual amount paid from Doctor B's S-Corp. to the C-Corp. owned by the Irrevocable Trust (another issue LOL). The C-Corp. owned by the Irrevocable Trust maintains a qualified plan. As you might have guessed, Dr. B. is the only participant in the qualified plan. Doctor B will soon purchase 50% of Practice. Three years later, Doctor B will purchase the remaining 50% of Practice.

I think the Irrevocable Trust still results in a finding that a controlled group does not exist.

Any argument (that would withstand an IRS challenge) that this is not an affiliated service group? I'm guessing that your answers will be no.

Thanks for your assistence.

Ed

Two part Q:

1. Can I design a plan that makes the participant work 12 consecutive months without being terminated and 1,000 hours before meeting the eligibility requirements even if there is no break in service? The plan would use actual hours worked in determining eligibility.

Example: A calendar year plan with semi-annual entry. Participant A was hired on 2/15/04 terminates on 1/10/05 and gets rehired on 4/20/05. Can I make him/her start the eligibility conditions again, on 4/15/05, or would I be forced to have the participant enter the plan on 7/1/05?

2. If this is no, can I design a plan that makes an employee work 11 consecutive months without being terminated before meeting the eligibility requirements even if the employee worked 1,000 hours during the initial plan year? The plan would have no hours requirement. (apply to the same example above).

Can you pass 410(b) for 401(m) contributions using the average benefit test or must you use the ratio percentage test since the contributions must be tested separately? Can anyone point me to a good reference other that the ERISA outline book or 1.410 in the treasury regs?

Does anyone know if the US Gov't regulations that apply to medicare/medicaid funded healthcare providers flows down to its software vendors? (ex. minority owned business subcontacting)

How is the following reconciled?

1. IRS Pub. 515 (Jan 2005) states on p. 19 in describing the rules for withholding on pension payments to foreign payees that graduated withholding may be used with regard to the portion of the payments attributable to the performance of services in the US after 1986 if you get a Form W-8ECI, the idea being that such amounts are effectively connected income (ECI) and not subject to the statutory 30 % withholding rate under 1441.

2. BUT, Treas. Reg. 1.1441-4(b)(1)(ii) (effective as Jan. 2001 I think) specifically says that the general exception from 1441 for payments otherwise constituting ECI is not applicable to any payments to a nonresident alien from a tax-qualified plan -- in other words, the 1441 regs seemingly overide what is stated in pup 515.

Can anyone shed light?

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Can a QPSA notice be distributed electronically? I read some time ago that the IRS and Treasury were considering this but don't remember seeing anything else about it. Thanks.

Hello,

I wanted to open a Roth IRA for myself and my wife. If we only have about 5,000 a year to contribute, should I max out 1 at 4,000 and other at 1,000 or split them down the middle?

Thanks,

John

I have a participant in a non-qualified plan with pre-tax deferrals and a 401(k) plan sponsored by a different employer? I read that a participant in both plans can contribute the 402(g) limit in the 401(k) plan and contribute the maximum amount in the 457 plan. Is that still the case?

Does the non-qualified plan in any way affect his 415 limit on the 401(k) plan?

My colleges and I are having a disagreement on the following example:

Participant has an account balance of over $200,000 at all times during this period.

3/1/05, Participant takes a loan of $30,000

12/5/05, Participant repays the $30,000 loan balance

12/6/05, Participant takes a loan for $20,000

12/15/05, Participant requests another loan. What is the maximum loan amount he can have?

1. Since the highest amount a participant can have in a 12 month period is $50,000 he cannot receive another loan until 12/16/06.

2. On 12/15/05 he can take a loan of $30,000.

Please let us know which one is correct. Thanks.

If an owner has 100% ownership of one company and is 27% owner of another company, is there a controlled group issue that we need to be concerned about for either company?

Company X has a commissioned sales force to sell its products. Historically, Company X has maintained one self-funded medical plan with several options for all of its employees, which has been funded in part by a VEBA. In 2005, to induce greater productivity among its commissioned sales force, Company X has proposed to peg its subsidy of the commissioned employee's medical benefits upon reaching certain minimum sales goals based on the employee's level withint the Company. To comply with self-funded medical plan nondiscrimination testing, Company X has placed their medical benefits (other than prescription drugs) into an insured arrangement providing substantially similar coverages (other than state mandates) to that provided to salaried employees. In addition, Company X has establised a separate 125 plan for the commissioned employees. As a result of these changes, the Company's account limit for commissioned employees is limited to the incurred but not paid claims for prescription drugs and dental coverage. In order to have these changes respected, Company X is considering whether it needs to either (a) place its liability for incurred but not paid claims for prescription drug and dental benefits attributable to commissioned employees into a separate VEBA or (b) establish subaccounts under the existing VEBA for the saleried employees versus the commissioned employees. What are the pros and cons of each approach and which approach do you consider more likely to result in treatment as separate plans and/or funds?

Started here on 12/1 and just found out about this. We have two individualized safe harbor 401(k) plans (one for union and one for non-union), one defined benefit plan and an excess benefit plan. I know about needing to amend the 401(k) plans and the DB plan for the auto rollover rules by 12/31/2005 (effective 3/28/2005) and the minimum required distribution rules (if applicable change) by 12/31/2005 - but I am perplexed on the 401(k) and (m) regs, the suspension of benefit regs, the 409A changes, as well as the last round of EGTRRA changes. Want to know if I am off base or if I have time to find counsel and work through these amendments.

Re 401(k) and (m): If I read RP 2005-95 (pulled it off of this outstanding web site) it looks like I have until the later of 12/31/2005 OR the end of the plan year in which the (m) and (m) regulations are implemented by the Plan. From what I can tell, they have not been implemented by either plan - so I think this means that I have until 12/31/2006 to amend for these regulations (b/c we will have to use them starting 1/1/2006, etc.).

Re EGTRRA, if I read RP 2005-66, it looks like I have until the end of the cyclical remedial amendment period to finish those amendments (at the earliest January 31, 2007 if we are a Cycle A plan) and submit for a determination letter by January 31, 2007 as well.

Re suspension of benefits (DBP plan): If I read RP 2005-76 correctly, I have until 12/31/2006 to do these amendments for implementation/administration on 1/1/2007.

Re the 409A changes, it is my understanding that the new proposed regs extended the Notice 2005-1 relief and because these are plans that are linked to plan that I have until 12/31/2006 to amend these arrangements.

Am I not hitting the mark(s) with this? Please help - a lot to have to handle my first few weeks on the job.

when exactly must an employer contribute the 3% safe harbor non elective contribution? If the employer offers the safe harbor basic match, when must that contribution be contributed

I am a little confused with the interplay of the 403(b), 402(g) and 415©(1)(A) limits.

I have a 403(b) plan whereby an employee must make a mandatory contribution of 4% of pay. The employer than makes a mandatory contribution of 20% of pay. (Obviously, pay is limited to the 401(a)(17) definition). The 4% of pay contribution is made by salary deferral (i.e., on a pro-rata basis from pay over the year).

The employee then wants to defer as much money as possible into a voluntary 403(b).

I always thought that the mandatory contribution - 4% - did not count against the 402(g) limit because it was not an "elective" deferral. Therefore, it seemed to me that the employee had the full 402(g) limit (including catch-ups) to defer into the voluntary 403(b) - SUBJECT to the 415©(1)(A) limit (which would also include the sum of the mandatory employee and employer contributions to the other 403(b) plan - but would not include any catch-ups).

Am I just wrong? Is the 4% of pay actually counted against the 402(g) limit because it is made on a salary deferral basis, even if it is mandatory?

Thanks so much for any thoughts.

If a DB plan and a PS plan are being permissively aggregated for testing and the PS plan has a 59.5 NRA while the DB plan has a 65 and 5 YOP NRA, is that a BRF issue? The PS plan covers everyone but the DB plan excludes a group of NHCE's. Thanks.

Upon termination of employment, can a plan be written to prohibit rollovers out of the plan? Allow just for lump sum (cash) distributions?