I have a plan where there is a HCE who waived out of the plan. Is he required to get a Safe Harbor Contribution? Is he still included in my testing when I run a profit sharing contribution? Thanks for any insight!

Does anyone see a problem with providing for vesting and distribution upon "change in control" where the def comp agreement provides a definition of change in control that is narrower than the definition in 409A?

Here is how our Sec 125 Premium Conversion Agreement reads.

"I agree to have my gross salary re-directed to pay any employee contributions/premiums for employer-sponsered benefit plans, in accordance with Section 125 of the Internal Revenue Code. I instruct my employer to make these contribution on my behalf.

This salary re-direction arrangement will continue until:

The end of the plan year covered by this agreement. For future plan years, I will have the opportunity to modify this agreement;"

Do I need the employee to complete one every year? If so, how can I word is so I don't have to?

An employer pays X toward the premiums for everybody's health insurance. Some people want family coverage that costs more than the amount the employer pays. Therefore, they want to put in a plan that would allow these employees to pay the additional amount on a pre-tax basis.

Here's the rub -- it just so happens that the employees who need the family coverage are HCEs. The NHCEs are fine with just the amount the employer is paying so they don't need to use the plan.

The NHCEs would be able to jump in anytime they have a change in family status and need family coverage, but until then, is the plan discriminatory just because HCEs are the only ones using it?

I have a question regarding the status of an HCE in 2005 versus the status in a short plan year.

From 07-01-03 thru 06/30-04 a participant had compensation in excess of $100,000.

The plan then went to a short plan year from 07-01-04 thru 12-31-04 and that same participant did not have

compensation in excess of $90,000 for that period.

He has never been an owner.

Because his compensation in the short plan year was not in excess of $90,000 my question is "Is he considered an HCE for 2005? For the calander year of 2005, he had compensation in excess of $100,000.

Thanks for your help

lets say you have two medical groups, each with a 401(k) plan, that join forces and form a new company. the intent is to terminate the plans of the "old" companies (merging would be messy) and start a new one for the new company. the catch is that the new company has the same tax id# as one of the "old" companies. (not sure why they did that). So, they are terminating a 401(k) plan of an employer with the same tax id# as the employer for which a new plan is being established. if it was the same employer, they can't start a new 401(k) within 12 months of the termination of an old plan, but its not the same employer. the question is - will the DOL or IRS object to this?

When a minor child participates in a qualified plan and receives a distribution (it's rare, but it does happen), isn't Form 1099-R issued to the child (and not to the child's guardian or custodian)?

I can't find this issue addressed anywhere in the form's instructions or an IRS publication.

I'm confused on how to go about calculating the current economic benefit amount for his 1099. Hopefully someone can point me to a resource. We have one client this year that has an insurance policy with a face amount of $250,000. He is 53 years old. Now we are having this huge office discussion on what value he gets a 1099 for and it seems everyone has a different opinion.

I thought it was simply multiplying the table 2001 rate for a 53 year old which is $3.20 by 250, which would equal $800.

Someone else in my office brought up the fact that the first $50,000 face amount in a qualified plan is "free". So his calculation would be $3.20 times 200 = $640.

Now another person brought up the fact that she thinks you have to subtract the cash value of the policy from the face amount prior to calculating. I don't know what the cash value is at this time, but let's just say it is $20,000. So her calculation is $736. She says she has never heard about the first $50,000 of face amount being "free".

Now I am wondering if they are both right and the calculation is actualy 250 - 50 - 20 times 3.20 = $576.

I do recall at a flexible spending account seminar someone mentioning something about $50,000 of life insurance but I don't remember what exactly they were referrign to. Also the argument about the cash value of the policy having to be subtracted because he the client is being taxed on the pure insurance benefit seems to be a logical argument.

It all adds up to me being really confused and not sure where to go next to find out how much the client's 1099 should actually be. I'm considering calling the IRS and asking them. Any thoughts?

I have a death benefit that was payable to a trust. I'm doing a 1099 for the trust to show the amount received. Do I show on the 1099R box 2a that the entire amount is taxable?

Is there a limit on how many SMMs one plan may issue before updating the SPD? I read that the SPD must be updated once for every 5 SMMs issued. Is this correct?

Thanks,

Is this method still acceptable to disclose information to participants ?

Thanks.

My husbands company changed from Lincoln Financial 401K annuity to Hilliard Lyons 401K retirement plan.

During the Q&A sessin with the investment advisors from HL and all participants in the plan, I ask about possible cost of this kind of transfer. We were assured that no cost was involved.

We all signed the roll-over forms, and after everything was a done deal..... 3% surrender charge for everybody.

We are steamed!!!

Doesn't HL have the obligation to inform us about this? Inform themselfes before taking over and rolling over a retirement plan for a whole company?

During my first phone call they told me that, in their contact with LF they were told that our old plan existed long enough that no surrender charges were due. He told me to send in copies of my statement, they would check into this.

In their written answer to my letter, the investment advosor implies that I misunderstood their answer to my question during the initial Q&A. They meant that all transfer within their plan was free. They have no control over the other companys fee structure. No more mentioning of contacting LF beforehand. No it's all my misunderstanding and confusion...

I understand that they have no control over other companys, but ...

were THEY not obligated to inform us about any surrender charges BEFORE we all signed on with them?

were THEY not obligated to check with the old plan about fees?

were they not obligated to know about fees?

Who can I contact to lodge a formal complaint?

Any tips, hints, help... would be appreciated.

Thanks

Heike

I have a financial advisor who has a Canadian client... one man show. He wants to establish a Solo 401K plan. He (the client) earns $ here in the states from US companies. I told him that the Canadian client can establish a Solo ... he pays US taxes... why not? Please, any thoughts would be great.. and any rulings or other info would be greatly appreciated!

Can anyone provide any insight as to what "readily tradable" means with respect to the valuation of stock options at fair market value on the date of grant for Code Section 409A purposes? Thanks.

A client of mine wants to amend their DB plan to allow in-service distributions to participants who are working beyond the normal retirement age. (The CEO/5% owner, who is age 69 and still actively-employed, wants to start receiving his benefits and continue to work.)

Of course, the plan would be amended to allow any beyond-normal retirement age participant to elect to receive in-service distributions. However, my contact at the client company tells me that they considered amending the plan a few years ago to allow this, but that they were told that it would be discriminatory if only HCEs took advantage of it.

Question: Is this accurate? i.e., Could a non-discriminatory plan feature be deemed to be discriminatory merely because HCEs take advantage of the feature disproportionately more than non-HCEs who have access to the same feature?

The Bank that I work for is conducting a Tuition Reimursement survey and would like to know if any of you would share your policy with us.

Thank you,

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

The IRS has raised the User Fee for 5310 filings from $250 to $1,000, effective for filings postmarked February 2006. Interesting that a one-person plan will pay the same fee as a 10,000 life plan.

Given the sensitivity of small clients to costs, will be interesting to see how this increase in the user fee is received (one guess). I know we'll be busy getting whatever we can get out prior to the end of month deadline.

And I'm sure that more clients will opt out of the determination letter process and terminate without a letter.