I am encountering something I have never dealt with before, so if anybody could provide some insight, I would appreciate it!

Our CPA firm prepares financial statements for a Joint Apprentice Training Committee for a Local Union of the IBEW. In December, 2003, the local received a memo from the national union regarding the preparation of a LM-2 report and a T-1 form. However, the T-1 form can be avoided if the training committee files an ERISA Form 5500 with the DOL.

My question is what information would be reported on the Form 5500? I see a code 4J for an apprenticeship program, but what would go on the Form. Financial information? For the 5500 itself, who would be considered a participant in terms of reporting? If there are over 100 participants, does the committee need a certified audit of its financial statements?

Again, any information that anyone could provide would be appreciated.

I originally posted this in Plan Terminations, but although a lot of users viewed, I did not receive any answers. So I will try it here.

After reading Sections 4050, 4022, and 4044 of the PBGC Regulations and the March 17, 2000 amendents to these Regulatioons, I think I am now thoroughly confused. When calculating the amount to remit to the PBGC for benefits for which there is an elective lump sum, it appears that the 1983 GAM Table with a 6 year setback for females should be used. However, I have no idea what interest rate should be used. Can someone please verify the mortality table and tell me how to determine the proper interest rate(s)?

Has anyone done an analysis they can share or have you seen an article on the conversion of a regular IRA to a Roth IRA (or a large portion of the IRA being converted) with the conversion amount not included in the AGI Calculation with the intension of a using Designated beneficiary trust (probably a conduit trusts) as the beneficiary with only grandchildren as the trust beneficiaries. Key is individual being able to get into the AGI limit in the year of conversion (possibly first year of retirement) and other assets being used to pay the income tax on the conversion. Idea is convert an amount the IRA owner will not need in retirement and to get the longer tax deferral available to the grandchildren.

Can a 50% LLC owner receive deferred compensation in their capacity as an employee of the LLC? I'm unfamiliar with def'd comp for LLC members. My client wants to offer ownership to a key employee but still wants to tie the employee to the entity for 5 yrs via some form of forfeiture. Thanks!

2 questions:

1. What is the deadline for adding safe harbor provisions to an existing 401k Plan?

2. What is deadline for signing EGTRRA amendment for a restated plan (that previously signed EGTRRA amendment when the GUST restatement was done)

Client with existing 401k plan provides 401(k) safe harbor notice for the 2006 plan year to its employees on 12/1/05. Because document is volume submitter, brand new document must be executed which is done on 12/1/05.

However, client inadvertently did not sign egtrra on 12/1/05.

what is the deadline to sign egtrra amendment on a newly restated document to add 401k safe harbor provisions?

Does the fact that EGTRRA amendment not being signed have any affect on 401k safe harbor?

Thanks

I have a takeover plan where the owner (57) and son (31) deferred maximum and owner recevied max contribution under SH non-elective and discretionary profit sharing. Son recevied same 2% PS as rest of staff. There are only six staff memebers and several are near age 50. When I ran the non-discrimination testing, it seemed to fail miserably under the Ave. Benefits Test. Am I correct to assume that the deferrals are requried to be included in the testing?

this is an updated version of what has been passed around for years.

However there are now 72 songs to identify by the pictures.

in all fairness, a list of Christmas songs is included, though not every song on the list will be used, just to confuse you.

And, in all fairness to others, please do not provide answers in this thread. I suppose you can always start a new thread and label it quite plainly ANSWERS so you don't spoil the torture for anyone else.

hey, I just looked at this today, created it to a word document. I am completely baffled at the moment looking at some of the stuff, so good luck!

Recent growth at my company resulted in highly compensated employees hitting ADP testing caps in our SARSEP for 2004. In 2005 we would likely have exceeded the 25 employee SARSEP limit as well. So the SARSEP was terminated early this year and replaced with a 401k Safe Harbor plan.

I cannot find many references on the BenefitsLink forums regarding options for terminated SARSEP plans. The only clear options are: 1) SARSEP and 401k accounts can be kept separate; or 2) the SARSEP can be rolled over into the new 401k account.

A) Can the terminated SARSEP be rolled over to an IRA? Or would this only be allowed after leaving the employment of the company sponsoring the plan?

B) The SARSEP was in place long enough that two brokerages were used for holding SARSEP accounts. First a full service brokerage and later a discount brokerage. Some employees hold accounts at both SARSEP account brokerages. Did the the termination of the SARSEP dissallow combining these accounts (ie. transferring from the full service brokerage to the discount broker)?

Thanks for any input.

Do the QJSA rules apply to a nonelecting church plan?

In perusing another topic on this board, Tom Poje mentioned in passing that if one classification in a cross-tested plan is "Owners" then the children of the owners are in. We have a plan, drafted by a law firm, that has "Owners" as one class and "Children of Owners" as another group. Is this a problem? That is, are the children already included in the first group? And, if they are, how do you keep them out of that group?

A non-safe harbor plan, written on a prototype document, sent a "Wait and See" Safe Harbor nonelective notice to the participants in a timely manner prior to the start of the 2005 plan year (calendar year plan). The plan sponsor notifies the participants in 2005 that the plan will be amended to be a Safe Harbor plan for 2005.

For 2006 they decide to use the "Wait and See" approach again. Does the Plan therefore have to be amended again, prior to 1/1/2006, to remove the safe harbor provisions, or is it ok to leave the safe harbor provisions in the plan pending the plan sponsor's decision regarding the safe harbor contributions later in 2006?

Thanks!

per a request, here is the hardship report. (requires you to check 'zero activity' accounts, just in case you have sources and one (or more) sources has been elimnated, zapped or whatever.

also the safe harbor allocation report.

This report works if account number for the safe harbor is greater than 799 and all other nonelective accounts are less than 800. One would have to modify the report to work for other conditions.

it is hoped these work.I tinkered with the safe harbor report the other day.

It should print by division and give totals by division, and the % of SHNEC.

should also indicate if someone is at 415 limit, but then that is what I fooled with the other day and I might have broken it.

I have a business with cafeteria & 401k plans which switched from c-corp to s-corp on 5/1/05. There are 2 shareholders, 50% each.

The question is as an s-corp, must the 50% owners be excluded from the cafeteria plan? They have both been participating since 1/1/05 from my understanding.

Plan's definitionof compensation includes deferred compensation. Client wants to amend to exclude deferred compensation for 2005 Plan Year because a Highly Compensated Employee who retired but comes back to help out has wages and deferred compensation. They don't want to give allocations on deferred compensation.

Can the amendment be signed now to be effective as of 1/1/05 or does it have to be effective 1/1/06?

Thanks for all input.

I had this post on the Correction Forum, but was given a suggestion to add into the 401(k) Forum (hopefully will generate some responses).

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I know this is fairly common issue, but I wanted some clarification from different previous posts. I apologize in advance for the length, but wanted to drill deeper into this issue. 401(k) Plan Sponsor has not been taking deferrals on Bonuses for a number of years. Plan document INCLUDES Bonuses in definition of Compensation.

FIRST QUESTION

Is this specific situation covered under Rev Proc 2003-44 Appendix B Section.02 - "Exclusion of Eligible Employees"? Specifically, is the "Expansion of Correction Method to Partial Year Exclusion" meant to correct the exclusion of deferrals from periodic bonuses (that were otherwise allowed to participate) or is this section meant only to apply to situations when a participant is excluded from participating at all for a portion of the year.

Many posts here seem to indicate that the proscribed correction in this section (using ADP and ACP % of respective employee group) would be appropriate.

Others indicate that the failure is not following the employee direction (i.e. standing deferral %) and that the correction would require using the actual employee deferral election in effect (under the general principle of putting the Plan in same position it would have been in).

Has anyone had specific interaction with the IRS on which correction is proper?

SECOND QUESTION

If you believe that the ADP and ACP %'s should be used, I have some clarification questions.

It is my understanding that using the ADP% and ACP% is suggested because this would ensure that the plan would still pass the ADP/ACP test and not need to be recalculated (e.g. if correction is for prior years).

However, in the case of bonus corrections, does this mean that ALL eligible employees would receive a corrective contribution (at the ADP%) or only those employees that have been otherwise deferring (on all other non-bonus Compensation).

For example, assume you have 3 NHCEs with the following Deferral %s

NHCE 1 10%

NHCE 2 2%

NHCE 3 0%

Average ADP for Group = 4%

Under the Correction in Appendix A & B, would all 3 NHCE's receive a correction equal to 4% of Bonuses or would the 4% only be given to NHCE 1 & 2? If the latter is used, it would seem that this would change the overall average ADP of the NHCE group (which contradicts the reason for using the ADP %).

To keep the Non-Discrimination Test results the same, it would seem reasonable that you would use a "modified" ADP% for "participating employees" in this situation (10% + 2% / 2 = 6% Average) and give 6% to NHCEs #1 and #2.

FINAL QUESTION

If using the ADP% for a correction under Appendix A Section .05, which ADP% would you use if the Plan is restructured for testing purposes? Would you use the ADP Test Results before or after restructuring? Language at the end of the Section .05 seems to indicate that you would use test results before restructuring (please clarify this reading is correct).

I have a new client whose money purchase pension plan and profit sharing plan are under audit. Apparently, neither plan had been amended to comply with regulatory changes starting in 1981. The IRS is instructing me that to bring the plans into compliance and not lose qualification, all required amendments must be drafted and adopted, starting with TEFRA/DEFRA/REA, and going forward to present day. It seems quite silly to execute these amendments when GUST and EGTRAA supercede them.

Notwithstanding the fact that I was 8 years old when TEFRA came out, can anyone point me in the direction of a good resource or model amendment for TEFRA/DEFRA/REA? I am not sure where to start in drafting such an amendment.

Can a company have 2 different eligibility dates if you are offering the 125 for health premiums and for FSA accounts such as medical and child care.

In other words could new employees join for health premiums within 3 months of employment but join after 1 year for medical or child care savings accounts? Any guidance would be greatly appreciated.

Nonprofit executive enters into a severance agreement in 1997 that provides him with deferred compensation each year for the rest of his life, equalling approximately $4,000/months.

Severance agreement does not reserve right to amend or eliminate the benefit.

Severance agreement does not require future performance of services other than consulting services for one year following termination.

As of one year following formation of the agreement (i.e., December 1998), the promised benefit is completely "earned and vested," and, I would argue, exempt from 409A, but for the following language:

"in the event that EMPLOYER discovers that EXECUTIVE, during his term as Executive Director, has engaged in any acts of financial impropriety constituting intentional misconduct or gross neglect, the EMPLOYER reserves the right to terminate any future payments to EXECUTIVE."

In other words, this "risk of forfeiture" is based on past acts, whenever discovered by Employer. Is this a "substantial risk of forfeiture" such that 409A applies to the deferred compensation?

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If a Company allows a participant in a non-qualified deferral plan to terminate participation in that plan and take his account balance into income by december 31, 2005 can that same participant CONTINUE his participation in the Company's SERP? Can a participant who terminates participation under the Company's non-qualified deferral plan on December 31, 2005 - participate in a new company deferral plan for the 2006 plan year. In other words -- does the transition relief give participants a pass on the five year restriction (i.e. can't participate in another deferred comp plan for five years). Thoughts? Is this set out anywhere in the guidance?