I have a client who has a Safe Harbor 401(k) Plan. They satisfy the safe harbor requirements by making the 3% SHNEC. They have recently asked me to amend the document to exclude bonuses from the definition of compensation. (They no longer want to allow the participant to defer on their bonuses and they no longer want to consider bonuses when calculating the 3% SHNEC.) Aside from the additional compensation testing that needs to be done for excluding bonuses, can this be done? Is it permissible to exclude bonuses in a safe harbor 401(k) Plan?

A minor child is designated as the beneficiary of a death benefit. In most (all?) states, the benefit can't be paid directly to the child. The payment check(s) must be issued to the "Parent or guardian of the minor child...".

How do you prepare Form 1099-R at year-end? Common sense tells me that the income is taxable to the beneficiary, not to his/her guardian. Shouldn't the Form 1099-R should be filed under the minor child's name, as recipient, using the child's own SSN? The fact that the payment checks are issued under the protection of a parent or guardian doesn't change the ultimate tax treatment of the benefit.

How do you handle this situation? How do you prepare Form 1099-R when a minor child is designated as beneficiary of a death benefit?

Can the user fee for a funding waiver application be paid from the pension trust?

client has a MP and a PS that have not been amended for GUST or EGTRRA. they want to get rid of the MP. is it necessary to bring both the MP and the PS into the VCP program and then merge the MP into the PS or can i first merge the MP into the PS and take the merged PS into VCP. this would cause the emoloyer to only have to pay one compliance fee. however, my inclination is you have to submit both plans.

Is it permissible to allow participants to elect to contribute to either the pre-tax or the roth 401k, but not both? (Not allow them to elect 2% Roth and 2% pre-tax)

Here are the facts: Participant's account balance is $1800.00. Participant wants a loan in amount of $1000.00. It is my understanding that the loan amount can be up to $1800.00 but the COLLATERAL for the loan cannot exceed 50% of the account balance. If this is correct and the participant wants to put up additional collateral, how is this handled?

I have a Profit SHaring and Money Purchase plan that has not been contributed to in almost 20 years. It was transferred to a bank trust department and held there for about 5 years. Then transferred to a Brokerage company and just held and assests have continued to grow. I have not filed any 5500ez because I only recently discovered that maybe I was supposed to. I have been told to just transfer all of it to an IRA in the same brokerage company. Is that a good idea?

a participant in a 401(k) rolled his balance into an ira when he left the employer. now, after surrender fees have passed, he wants to roll this ira into another ira that he has set up. is this ok??????

What are permissible ways for a TPA to pass on 12b-1 fees to a company? Can the TPA place the reimbursed fees into the forfeiture account if the employer uses that account to reduce the match?

If a plan sponsor if selling two stores from it's overall portfolio of stores, what happens to the 401(k) vesting of the participants who work at that store? Do they automatically become 100% vested? If not, could the plan sponsor, as a good will effort, make all of these employees 100% vested in the 401(k) plan? Or would this be viewed as discriminatory.

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,