When calculating a minimum distribution for a participant that has an outstanding loan balance under the plan, do you use the entire account balance including the outstanding loan balance?

Thanks.

Okay, sorry for what may seem like a stupid question, but I have to ask it b/c I dont think it works, but my boss for some reason thinks it does, here it goes.

401(K) Profit Sharing Plan with Prior Pension Plan Assets merged in.

All participants are still employeed with balances, can you draft something in the document that states all money will be rolled out of the plan into individual IRA's except the 401(k) money? I have never heard of such an idea before, considering everyone is consider "active". Any ideas!

If a partner of an LLC died during 2005, and his compensation will not be determined until 2006, can a 2005 deferral contribution be made at that time.

Thanks!

To the general administrator of the message boards,

I think it would be helpful to have a separate forum for 409A. This huge topic is generating numerous discussions (and will certainly continue to do so), but the discussions are scattered among various places on the message boards.

If a SIMPLE IRA participant earns $10,000 in w-2 wages, could he defer the full $10,000 into the SIMPLE IRA and get a 3% contribution from the business. This would mean the participant would actually have $10,300 put in for a year in which he earned only $10,000. Is this possible?

Participant is hired 3/24/04 works 1000 hrs and terminates 9/20/04.

He gets rehired on 6/6/05 and works the entire 2005 plan year, obtaining another 1000 hrs.

Would he become eligible 7/1/05 since he worked 1000 hr the first year and got rehired in 2005?

We have a plan for a large company that owns several hotels and restaurants. They would like to implement a negative enrollment program but would like to exclude from the negative enrollment those employees whose compensation is primarily made up of tips. They feel it would be unfair to those employees because of the uncertainty of their income from week to week. They do not want to exclude these employees from the plan, they just don't want them to be subject to the negative enrollment.

Can they do this?

Plan has a normal retirement date of age 65. Lost participant terminated before age 65 is found at age 67. If the plan payments are retro to age 65, I understand that the regs require interest on the back payments. But does the spouse have to consent to a joint and survivor annuity retro to age 65 by seeing a comparison of the spousal benefit at age 65 vs age 67? Is the QJSA a greater benefit commencing at age 67 than age 65?

The assets the QDRO's are dividing are from my 401K and my retirement. My ex-lawyer, I fired him, did anything my ex-wife's lawyer wanted. He was supposed to write the QDRO for me and even collected the money for doing so but never wrote the QDRO. My ex-wife's lawyer wrote many QDRO's each full of errors that my lawyer passed on to me to sign and return. No chance! My lawyer ignored the fact that having her lawyer write the QDRO's was like allowing the wolf to guard the chicken coop. The ex-wife's lawyer expects me to sign the junk QDRO's that he has puked out, giving benefits that the ex-wife is not entitled to. That is not going to happen. I am aware that the court or the plan administrator will not accept a QDRO written by a layperson so I have to have a lawyer on my side. I have written the QDRO's as needed. Yes I know that they can be tricky, but from what I have seen I have a much better handle on it than either my ex-lawyer or the ex-wife's lawyer.

Can I have a lawyer review my QDRO’s, add his signature, add mine and submit this to the plan administrator, and if accepted as a QDRO, send it to the courts? Or in other words do I have to get my ex-wife and her lawyer to sign the QDROs?

IRS announced a new schedule of user fees that applies starting February 1, 2006.

http://www.irs.gov/pub/irs-tege/ir-2005-144.pdf

http://www.irs.gov/pub/irs-tege/ep_user_fee_appendix.pdf

Some of the increases are pretty dramatic.

For example,

Form 5310 (for plan terminations) increases from $225 to $1,000

all Private Letter Rulings will cost $9,000 (regardless of plan asset amount). Currently, it costs only $625 for plans with assets under $250,000.

What do you think of these increases?

Is there any way to get IRS to scale back these increases?

..... Jeff

An Esop (formally a profit sharing plan) is being terminated. No contributions have been made to the plan for more than 15 years. Over the years, all the participants have been paid out their benefits in cash ... except for the sole/majority shareholder of the employer-sponsor. The plan's only remaining asset is about 22% of the outstanding shares.

The plan is now being terminated. The intent is for the owner/shareholder/participant/officer/employee to elect a direct transfer of these shares to an IRA. The IRA custodian has now raised the question of whether the transfer and/or holding of these shares in the owner's IRA constitutes a prohibited transaction and is requiring an opinion letter from me in order to accept the shares. Yikes and help!

BTW, the motivation for terminating the plan is to avoid the expense of performing an annual valuation. I'm told that the IRA custodian will accept an annual representation as to the value of the shares from the owner.

Any thoughts will be much appreciated.

A client currently has a SARSEP. They are adopting a new comparability profit sharing plan for 2005, with plans to change it to a safe harbor 401(k) plan for 2006.

1) For 2005, are the SARSEP deferrals included in the average benefits test when performing 401(a)(4) testing?

2) If they had adopted the profit sharing plan earlier in the year, could they have made it a 401(k) plan using prior year testing, and allowed the HCEs to make additional deferrals into the 401(k) plan (even though they were limited in the SARSEP plan)?

We have a 125 plan for employees to pay for their medical insurance premiums. Our enrollment form for the medical coverage gives us authorization to deduct their premiums from their pay. Must an employee authorize a separate withholding for the pretax payment of their premium payments and if so, must a new authorization be given each year?

I put 2,000 dollars in a roth ira with brownco years ago. browco is closing up shop and getting absorbed by etrade. I don't want to do business with etrade. I pissed away the 2,000 on risky internet stocks during the boom. It is now worth 3 bucks. My commission to sell the stock is more than it is worth. If I do sell the stock and close the account...what are my tax liabilities and/ or penalties since I am not 59 1/2?

Thanks

Non profit wants to establish a safe harbor matching k plan eff 7/1/2006 that also may include a discretionary nonelective contribution.

Questions: (1) Is a mid year safe harbor k permitted even though employees had non-ERISA 403(b) available to them before?

(2) Can the plan be effective 1/1, but SHMatch eff 7/1/06 to eliminate proration of 415 and 401(a)(17) limits for short plan year?

Thanks for any help.

How is the term “retired” defined for RMD purposes when deferring payments to a non-5% owner? We have both a DB and DC plan. We have people that retire for purposes of beginning payments from our DB plan, yet return to work immediately afterwards (next day) on a part time basis (subject to a monthly limit of 100 hours). Are these people considered retired for RMD purposes on the DC plan if they are still employed on a part-time or irregular basis after their "retirement" with the same employer? Thanks.

It's my understanding that 403(b) plans need to be updated for EGTRRA, but not necessarily by 12/31/05. According to a Corbel person, we don't have a specific date by which these amendments must be adopted. I went on to ask if there are EGTRRA amendments that would be specific to 403(b) plans and the answer was to just use the standard QP EGTRRA amendments.

However, I read that EGTRRA eliminated the maximum exclusion allowance, and also changed the definition of 415 compensation so that Employer contributions can be made for 5 years after an employee terminates.

Shouldn't those 2 items be included in the EGTRRA amendments adopted by a 403(b) plan? There may be other issues specific to 403(b)s as well.

I am curious as to when cross-testing became available or at least, when did it become widely used in the industry as a plan design format. I am looking at an existing profit sharing plan and trying to determine if the plan design was appropriate at it's inception since it is clearly inappropriate now. This may be due to changes in demographics of the sponsor's workforce but I am not certain. Any thoughts from the EB veterans out there?

My wife and I are both employed by a Washington State County, and are members of the PERS 2 retirement system. I have set up 457 deferred compensation plans for both of us to which we comtribute $4k and $6k anually.

I thought that we could set up Roth IRA's also, but in reading the IRS web site information, I am now confused. We are in our mid 50's, and are playing catch up on building our retirements. Do the 457's preclude us from contributing to Roth IRA's?

Can an amendment eliminating forced distributions from the plan be made effective 3/28/05, same as the automatic rollover amendments?

If not, then must the plan sponsor adopt the auto rollover amendment effective 3/28/05 and then adopt the no forced distribution amendment effective on signing of amendment.

Plan sponsor has never done any forced distributions even though document language says cash out distributions will be done as soon as is administratively feasible.

Thanks