A one person corporation with a DBPP with one participant withdraws money on a regular basis from DB plan.

No actual plan loans taken and no apparent intent to reimburse the plan.

It appears that this would be:

1. actual taxable distributions (not deemed distributions)

2. prohibited transactions subject to excise taxes.

Any comments on the above?

Also, if the amounts aren't refunded to the plan then the excise tax would be on-going year after year?

And lastly say a person makes a PT in the amoun of $10,000 on say 7/1/05.

Say the loan is repaid on 12/31/2006.

What is the excise tax for 2005? 2006?

Thanks.

Our plans give vesting and eligibility service to workers who have worked at our company through a PEO or other vendor and are hired as full-time permanent employees. We include a paragraph in the new employee guide stating that if someone did work for us as a temporary worker but were not on our payroll, they may be eligible for service credit in our 401k plan and defined benefit plan. We also get reports from our biggest PEOs/vendors and search for any temp workers who may have been hired by us. We ask the new employee to provide us with a statement from the PEO or vendor stating the dates he or she performed work for us and we credit the vesting and eligibility service accordingly.

Any opinions on whether we are meeting our burden under the law (isn't the burden on the employer to find these employees - please keep in mind that we have roughly 100,000 employees so identifying them can be difficult)? Anybody handle this differently?

An ESOP was amended into a profit sharing plan. TPA switched distribution forms to the typical profit sharing form for distributions without being noticed by the employer until recently. Plan states that the participants have a choice of cash or employer stock. Thus, former participants of the ESOP have not been given the opportunity to elect to receive their distributions in employer stock. If you made an application to the IRS under VCP, how would you recommend correcting the problem. We really don't want to go back to each former participant and know give them the option.

Can anyone point me to authority for a plan administrator to reverse a benefit decision that was made in error. For example, where a COBRA disability extension was given to a participant when the individual was not determined to be disabled within the first 60 days of COBRA coverage.

If a plan consists of two separate QSLOBs, is it possible for one of those QSLOBs to rely on a safe harbor match to avoid non-discrimination testing while the other QSLOB relies performs ADP/ACP testing?

Hopefully this is a very simple question BUT I can not find a cite to back up the calculations.

A valuation is being performed as of 1/1/2005.

The participant has an accrued benefit at 1/1/2005 of 1,000 and at 12/31/2005 of 1,500. The participant is NOT currently vested (the plan uses 5 year cliff vesting).

The valuation uses a termination assumption. Does the current liability calculation use vesting to determine the termination liability??

a) 0% vesting (current vesting percentage)

b) Graded (starting at 0% and incrementing at each incidence age until retirement limiting to 100%)

c) 100% of accrued benefit

Any cite to back up the choice???

Thanks in advance for any help.

We have just taken over a new plan and were told that part time employees are eligible to make deferrals to the plan. However, when testing only the ones who actually do defer are counted for testing purposes.

Is this right?

My understanding is that min required contributions that were due on 9/15/05 must be made by 10/31/05. Has there been any discussion or thought in extending the 10/31 deadline to say 1/3/06 to agree with some other extensions?

I realize that the IRS has not issued guidance yet regarding the Form 1099-R Box 7 Distribution Code for "disaster-relief distributions" due to Hurricane Katrina (which are exempt from the 10% 72(t) early distribution penalty pursuant to KETRA), but I wanted to get people's opinion whether you think the IRS will:

1) Recommend that Code "1" be used for disaster-relief distributions and leave it up to the participant to exempt it from the 10% early distribution penalty when they do their 1040/5329.

2) Have Code "2" be used, and modify the 1099-R instructions to add this to the list of 72(t) exceptions.

3) Create a new Code for use for disaster-relief distributions only.

Thanks.

Is there any guidance, other than Reg. §1.457-11© (stating that the amount includible in income is the present value of the compensation), that assist in determining how to calculate present value?

I have a client with an executive participant in a 457(f) plan that is entitled to a monthly annuity for life with a period certain feature. The substantial risk of forfeiture has lifted and the present value of the benefit is now taxable. The deferred comp. agreement does not specify any interest rate or method of calculation. Is there any statutory, regulatory or other guidance on how to value the annuity taking into account the period certain feature?

Or, am I left to rely on a reasonable method?

Thank you.

I am taking over a plan that used projected unit credit as the funding method. The accrual method is years of participation with no limit on years. However the funding is over 10 years. The benefit is the 415 limit. My understanding is that this is an old method that is acceptable. Is this method an acceptable funding method?

In a leveraged S-corp ESOP, 51% of the company is sold to the ESOP at the beginning of the year. At the end of the year the first payment of $300,000 is paid and shares are released and allocated to the plan participants. The principal portion of the payment is $250,000 and the interest is $50,000.

1. For 415 purposes, is the contribution $300,000 or $250,000 or the current value of the released shares (which, by the way is slightly higher than the encumbered price)?

2. Is the $50,000 of interest a factor in the participant allocation at all? I don't see how it could be. I believe the interest should be shown as a plan expense on Schedule I, but the allocation is simply the share allocation as determined by the release calculation (either the principal method or the principal & interest method as dictated by plan document).

I hate to admit this but I've lost track of the process. Have the final Reg's been published? Wasn't there some thought that we'd see them by 9/30?

X is 73 and has always owned 50% of the business. X's late husband, Y, died at 72 and then owned 50% of the business. Until Y's death, Y was receiving his annual MINDI. X still receives her annual MINDI. X is the sole beneficiary of Y's account balance in the plan. The plan is a DC plan.

For 2005, it seems to me that X will get a MINDI from her account as an active participant using the distribution period from the uniform table--which is 24.7--(she has not remarried) and X will also get a MINDI from the account of her late husband using the distribution period from the single life table--which is 14.8-- (since she is the designated beneficiary of these funds). Does anyone think this approach is inconsistent with the law?

X's personal attorney claims that upon her late husband's death his account "merged" into her account and now the entire kit-and-kaboodle can be distributed using the distribution period from the uniform table--which is 24.7 years for a 73 year old.

Any thoughts? Is there an exception to the rules that I missed? Thanks!

for coverage testing, two plans are aggregated, and I check "yes" for item 4b on scehdule T. For 4c(5)&(6): number of nonexcludable employees who benefit under the plan: Do I put the number only benefitting in this Plan? or since I am aggregating, do I put the number who benefit in either plan?

Ok. Here goes a really simple question! I just need verification:

If I put in a Safe Harbor match, and the HCE is the only one who defers, will I still pass all testing?

Please don't laugh... just don't wanna get caught next year having to do a plan re-design. And I am having a brain f**t. Thanks!

Company A (which is a dental practice) currently has two partners and a simple ira plan. The two partners each have a spouse and all four participate in the simple plan.

Company B is a new venture that will be making dental crowns. The idea is to remove the spouses completely from company A. The two spouses would then become equal partners in company B. It is anticipated that the revenue will be derived from selling crowns to Company A and other dental offices.

Company B would like to open up a retirement plan which will only have the two spouses as employees.

Is this possible or does it violate control group or affiliated service group rules?

If this employer decides to adopt this plan regardless of control group or affiliated service group risks, how does the irs find out about this?

Also, given that they are the spouses of the owners of Company A, could they adopt another qualified plan other than a simple ira given that Company A maintains a Simple IRA?

Thank you for your help!

Does anyone know where and when the 30-YR Treasury Rate is published these days? It used to be available in Release H- or G-13 on the first Tuesday after the first Monday of the month. Thanks!

We set up a SH PS 401k plan for a solo medical practice effective 1/1/05. The practice is going to incorporate 12/1/05 having a short year of one month.

How will this affect his PS/401k? Do we combine his income from the solo and PA to get his total compensation before calculating the contribution?

The doctor is the only participant for 2005.

Can I withdraw contributions from Roth IRA in the very next year of contribution. I heard that there is 5 year waiting period. Is it true. I am talking about just the contributions, not the gains. Thanks.