lets say you have a client who owns a business. his wife owns an unrelated business and they have a minor child. the attribution rules imply that there is a controlled group. several reference documents also imply that this effect is unintentional. the question is - do you allow this couple to establish separate plans?

Is the key difference between deferring compensation in a tax exempt 457(b) and 457(f) substantial risk of forfeiture? In other words, if a tax exempt doesn't care about conditioning benefits on performance of substantial services, can we say there is no reason to offer a 457(b) plan?

Are all ineligible 457 plans subject to 457(f) including frozen deferred compensation plans?

Thank you

I have an LLC with multiple working members. Some of these members have their PC own their share of the LLC and receive the income. What compensation is used for the LLC's plan for those members. The amount that flows to the PC, the amount of income in the PC or the amount of W-2 income they decide to use?

I have a client who wants to start a SIMPLE IRA. She has a Schedule C and makes about $10-15 K per year. Can she still start a SIMPLE IRA for 2005? I know if there are other employees, they must be given a 60-day notice period. However, can that be waived in the case of a self-employed individual with no other employees?

Also, does the salary reduction have to be made in advance? That is, for 2006, would she have to give notice of how much to defer by 12/31/05? This can't be done at the end of the year as a tax planning tool, can it?

If she currently has a SEP agreement in place, would this preclude her from having a SIMPLE IRA for 2005 anyway? Or could the SEP be terminated and then the SIMPLE IRA be started in its place?

For some reason, recent personal message that I have sent to other board members are not being saved in my "Sent Items" folder. Is there some setting I need to change? Have any others experienced a similar problem?

A 78 y/o sold his interest in the company he still works at. He had been taking RMDs for the last several years. Is a 2005 RMD required for this employee?

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?