We currently are working with a plan where ee's are eligible to make deferrals on the first day of the plan year after they have completed one year of service, but are not eligible to receive a profit sharing contribution until they have completed 18 months of service.

This plan is top heavy so in order for the owner to make deferrals, we know that he must make a min. contribution to the eligible NHCE's each year. Up to this point, all employees have been eligible for deferrals and profit sharing. But due to some turn over, now he will have younger ee's who will be eligible to make deferrals in 2006 but would not be eligible to receive a profit sharing contribution until 2007.

I believe that because they are eligible to make deferrals, then they would have to receive the 3% TH minimum. Is this correct?

Also, under the same scenario but the plan was not top heavy, would the ee's who are eligible to defer but not receive a profit sharing contribution be included when doing the 70% test or could each piece of the plan be tested separately to pass the 70% test.

Hope this make sense. Thanks

In a non-safe harbor plan with a discretionary match contribution is the employer required to provide advance notice to participants indicating what the match will be for the following year?

We are currently on the pre-EGTRRA document approval list for our volume plans with our current document provider. Our understanding is that we need to be on the list by January 31, 2006.

Do problems arise if we switch document providers after 1/31/2006 (i.e. is the approval list portable?).

Thanks much.

We have several defined contribution retirement plan clients using distribution forms prepared by a local attorney with a large ERISA practice. He has included a disclosure paragraph on the distribution forms for the new required Relative Value disclosures. There is a blank in the paragraph to enter the approximate monthly annuity payment should the participant choose the annuity option.

We have been unable to find an easy solution for the calcuation of those annuity values. One web site, www.immediateannuities.com only provides a calcuation if the participant is age 40 or over. This doesn't work in many cases.

Does anyone have a solution for getting estimated annuity payment amounts or other options for complying with the relative value regs?

Thanks.

In 2005, we started having our employees pay for a percentage of their health insurance premium. This is a Section 125 plan, and employees had option to either have it done pre-tax or after-tax. For those that selected pre-tax, iis it necessary to report this some how on their W-2. In the W-2 instructions for Box 12, Code W - is for Employer contributions to a Health Savings Account, which appears to be the closest, but ours isn't a Health Savings Account. Thanks.

An sole proprietor in the RE business made contributions to a SEP-IRA during 2005. SP might have had two common law employees. In December, 2005, the individual incorporated his business and also established a DBPP. Corp. is owned by a 414 irrevocable trust. Fiscal year of corp. is 10/31. Individual will have income between $900,000 and $1,000,000.

Does contribution to SEP-IRA affect ability to contribute to corp's DBPP?

Any idea where to get a blank copy of a 1999 5500-EZ? Relius Network software only holds 3 years.

Try to find the phrase illustrated by the pictures.

Wordplay.doc

Is anyone familiar with the concept of doing a "wrap" or master plan around the company's other plans, so that only one 5500 filing is required? F. Durden

I have an employee who is in a simple plan (w2 wages).

Also self employed with Schedule C income.

If he establishes a 401(k) for his self employed income, and he max's out in the simple, what is his limit in the 4K? $15K less his max simple contribution?

Thanks

In a Safe Harbor 401(k), is the employer 3% non-elective contribution tested under 401(a)? For example, if a participant receives only the 3% non-elective and not part of the discretionary profit sharing (due to last day of plan year requirement), do they still "benefit" under 401(a)? Thanks.

Since the PFEA technically expired at 12/31/05, what rates are we to use for RPACL, PBGC variable premium, etc.?

As we all know the DOL requires employers to deposit participant contributions as soon as they can reasonably be segregated from the employer's general assets. This rule applies to participant contributions only, such as deferrals, catch ups, after tax etc... I believe that matching contributions do not have to be made to the plan until the due date of the employer's tax return. That's fine when you are dealing with an annual match, but what about a match made on a per payroll basis? When does that have to be contributed to the plan (assume there is no plan provision addressing the contribuition due date)?

Is it allowed to charge expenses to just terminated participants' accounts if the plan assets are in a pooled account?

If you are charging expenses by calculating pro-rata what the expense should be to a terminated participant's account, is there a limit on the dollar amount that could be charged?

Do you have to inform the participants how much will be charged each year?

Do you have to amend the plan either way (if you want to charge fees or not)?

Thank you for any help!

Participant's last day of employment was 12/30/05. Since 12/31 fell on a non-business day, does that mean 12/30 was the last day of the plan year? Participant must be employed on last day of plan year to receive an allocation of profit sharing contribution. (Calendar year plan.) Thanks.

Now that the Schedule R has the coverage test information on it do you need to file the schedule if you do not have any distributions during the year?

In March 2005, a non-spouse beneficiary requested to have a rollover distribution into his IRA. No one caught it so the rollover went through.

I was informed of it now since 1099-Rs are being prepared.

I'm not sure how to correct this. I know I should inform the participant that the distribution was not eligible to be rolled over; it should be withdrawn from the IRA, and it should be taxable income in 2005.

Should we prepare a 1099-R for 2005 disclosing it as a cash distribution? Or, have it withdrawn and let the IRA issue a 1099-R for 2006 disclosing it as a cash distribution? But then, how would it be reported for 2005?

Straight forward question...

Husband and wife business... want to open an individual 401K plan. Were thinking of also employing a child.

Q/ If they employ the child they will have to file a 5500, not EZ, correct? (EZ instructions state "owner, spouse, partner, spouse of partner". Adding a child constitutes an "Employee other than the owner")

Q/ The child will be considered an HCE due to attribution... so testing should pass no problems, correct?

Thanks!

If a participant receives and rolls over an erroneous duplicate payment, but the plan doesn't catch it till a later tax year, does the trustee have to issue a corrected 1099-R for the past tax year? We're trying to accept refunds from a group of participants who got paid twice, but the trustee is refusing to issue corrected 1099-Rs. It claims that it can only issue 1099-Rs for an open tax year.

I'd understand that position if it had been a cash distribution and there was withholding (the correction method there is § 1341, the original distribution is set in stone, and the participant can claim a tax credit for the refund but the old 1099-R stands); but for a direct "rollback" we need to fix the old 1099-R, don't we?

Thanks!

I am testing a plan for ADP and disaggregating the union/nonunion groups. Both groups fail the ADP test. Can the employer choose to do a QNEC for the union group but do returns for the nonunion group (or vice versa) or must both groups be corrected the same way?