Plan year end and fiscal year end is 12/31/04. Plan sponsor could not make the minimum funding requirement for the 2004 plan year (due 9/15/05).

When is the Form 5330 and the 10% excise tax due? The instructions say "7th month after the end of the employer's tax year or 8.5 months after the last day of the plan year that ends with or within the filer's tax year. That means it is due on 9/15/05, the same day as the minimum funding requirement. Is that right?

Then, if you want to extend the 5330, according to the 5558 instructions, you must file a Form 5558 in time for the IRS to act on it before the normal due date of the Form 5330. That means you would have to file the 5558 to extend the 5330 before the due date of the minimum funding requirement that sets this whole process in motion.

I must be missing something because this does not make sense to me.

Participant wants to take a hardship w/d from a 401(k) Safe Harbor Plan. Can they take all contributions made from the 401k and SAfe Harbor portion, minus any earnings?? Or are they only allowed to take the 401k portoin?

The document says the following:

Nonelective and basic or enhanced matching contributions under the Safe Harbor CODA Contribution provisions are subject to the same distribution restrictions as Elective Deferrals except the Safe Harbor CODA Contributions specified here may not be distributed under the hardship distribution provisions.

The matching contributions that are made to your account to automatically meet certain nondiscrimation requirements are subject to same distribution requirements as your Elective Deferrals.

What does this all mean? What are this participants options?

Its a 401k & Safe Harbor Matching & Profit Sharing Plan. What is he able to take from?

Can a Roth IRA be rolled/transferred into a Roth 401(k) plan?

Is a 4221 withdrawal liability estimate binding? The estimate was way off from what was assessed and we are questioning the value of the estimate if it is not binding on the fund in some way.

Also, are the liability assessments REALLY negotiable? It seems like a solvent employer doesn't have any leverage, but we understand that technically, the Trustees may settle claims for withdrawal liabilty. Does it really happen?

Based on the following from Janice Wegesin's 5500 Preparer's Manual (Aspen) - which is a fine publication, and one I do not mean to disparage in any way! :

*****

The following are common issues raised with regard to fidelity bonding required for pension plans:

1. For purposes of indentifying nonqualifying plan assets held by small pension plans. Common examples are certificates of deposit or Israel Bonds. Typically, these certificates and bonds are physically held by the individual(s) named as plan trustee.

page 3-11

*****

there are some in my office who interpret this as saying any CD that is part of plan assets is a nonqualified asset. And by equivalence they extend this definition to checking accounts (because a previous version of the manual included them with CD's and IB's, notably absent in the current version). Granted Israel Bonds are usually a headache to start without further complicating them...

But has anyone else read this section and interpreted it this way? It seems a little too "broad stroke" to me. I could see reading it as "a CD or Israel Bond held in the name of the individual as trustee is a nonqualifying asset"; that just goes with what pension people have been saying for years: accounts must be set up in the name of the plan. What gets me is that nothing I see in the section quoted says yes, these are examples of nonqualified assets; it says these are "common issues raised"; what does that really mean?

So far, I got a reason of "that's they way we decided to interpret it a few years back, and we'll check when we've got some downtime", but I was hoping to have a solid case for the opposition by that time.

Thanks...

Let's say a plan fails their 1/1/2005 to 12/31/2005 ADP/ACP test. They have until 12/31/2006 to make a correction - whether that is in the form of a QNEC to the NHCE or refunds to the HCE's.

Now, let's say that they DON'T make a correction by 12/31/2006. So now the plan is in an operational failure.

One option is the Self Correction Program. There is the One-to-One correction method described in Appendix B of Rev Proc 2003-44. And there are some other options described in Appendix A.

The Bottom-Up QNEC is not a safe harbor correction method, but let's say that this plan want to use this method to correct their operational failure.

The Final regulations just limited Targeted QNEC's (including the Bottom-Up) to the greater of 5% or twice the plans representative rate.

Since this doesn't go into effect until the 2006 plan year, does the plan have to limit the Bottom-Up QNEC when correcting the 2005 ADP/ACP test?

My company is looking to implement a survivor benefit plan that is solely funded by the company itself. Can anyone help with writing the SPD?

I've searched on this question, but did not find a clear answer. Because the EBSA now offers excise tax relief when submitting to VFCP, I'm not asking about that. I need to know how does the employer treat the lost opportunity costs he deposits in regards to:

1) the plan - contribution or gain?

2) his corporate tax return - expense or deduction?

Thank you

A friend of a friend said that the new limits for 2006 were released - I checked with my usual sources, but couldn't find anything. Thanks for any help.

I'm just taking a poll.

A participant goes over the 402(g) limit in 2003 and the excess deferral is not distributed by 4/15/04. The individual will need to include the excess amount as income in the 2003 tax year by virtue of the amount reported on the individual's 2003 W-2. The excess deferral will be taxed again when it is actually distributed from the plan.

If the excess deferral is processed after 4/15 as a plan operational defect under EPCRS, the "excess deferral operational defect" distribution is tax reported in the year corrected. The correction was made on 12/15/04. The operation defect is tax reported on the 1099-R as taxable in 2004 (Code 8). The taxpayer should have also included the excess when they filed their 1040 for 2003.

Is anyone also tax reporting the excess deferral on a separate 1099-R as taxable in 2003? So in the tax year the operational defect is corrected the individual gets two 1099-Rs (1) operational defect excess deferral + earnings (Code 8) and (2) excess deferral contribution (Code P)?

Neither the 1099-R instructions nor Notices 89-32 or 88-33 require double tax reporting after the 4/15 deadline. I know of one organization that is doing this.

Thanks!!!

The plan consists of 2 owners and a 3rd non-owner HCE. THe plan has a deferral provision and matches $.50 up to the maximum deferral limit.

If the groups are set up so the 2 owners are in a group and the other HCE is in his/her own group. Can we max the 2 owners at the annual contribution limit whilst giving the non-owner HCE a $0 contribution. It seems to me it would pass the testing but somehow does not "feel" right.

Thanks!

First, let me preface this question by stating that I'm an attorney and the firm's actuary is sick today. I had a question concerning 412(i) plans. In determining the mixture of acceptable insurance contracts in a 412(i) plan, a number of sponsors use 50% annuity and 50% life insurance. Is this "required" for each participant or could the sponsor satisfy this 50/50 mix on a plan-wide basis?

Thanks in advance for your help.

Ed

Does anyone know how to coordinate to VCP filings? I am preparing one for failure to sign plan documents timely (including the initial plan doc) and there has already been one filed (with a determ letter request) for a Late Amended GUST document.

I'm pretty sure I should coordinate these, but I don't know how.

Any help anyone?

If a participant chooses to Opt Out of a Profit Sharing Plan/ESOP whatever it may be...do they have to opt-out when they first become eligible, or can they at any point?

Participant was eligible 2002, has received allocations in 2002 and 2003, can they opt out in 2004 or did they have to back in 2002 when they first became eligible?

I know I remember reading something re: this but I cant seem to find the info again.

Thanks

I have recently been made aware that one of my clients, a not-for-profit hospital group which maintains a Money Purchase Pension Plan, also owns another hospital that sponsors it's own 403(b) Plan, administered elsewhere.

The employees of the hospital sponsoring the 403(b) are specifically excluded from participating in the Money Purchase Plan.

The contributions made to the 403(b) Plan are employer non-elective contributions (3% of compensation), and elective deferrals.

The Money Purchase Plan requires a 6% contribution to all eligible employees. No other contributions are made to this plan.

Both plans passed coverage and 415 seperately in 2004. Having only minimal experience with 403(b) plans (and controlled groups for that matter), is there any combined testing must I perform?

Any help is greatly appreciated.

KAG

Can someone point me to reference when this situation occurs and how it should be handled?

I have a participant whose defaulted loan balance is pretty close to their total contributions on file. They terminated, left their contributions and left their loan, too. Now, after several reminders, they are withdrawaling their contributions to pay the loan back.

For some reason, in the back of my mind, I thought there was an IRS provision about how you cannot take all of the contributions on file to offset the loan against.

Or, am I getting confused?

Which is totally possible since I have a 3 year old at home which uses the rest of my brain cells up once I get home .

Any thoughts or help is much appreciated.

A DB plan wants to make participants pay for their own distribution fees. The Plan's lawyer has already amended the plan document and the SPD to accomplish this goal. How are other TPAs adjusting a participant's benefit to reflect the fee payment? We can see two different ways of doing it (perhaps there are others). One way would be to determine the present value of a participant's benefit (using the plan's assumptions), subtract the distribution fee (say $200) and then recompute the monthly payments. A second way would be to simply have the participant repay the distribution fee from some number of annuity payments. For example, if the benefit is $100 a month and the distribution fee is $200, the participant would have to use the first two payments to pay the distribution fee. How are other TPAs adjusting a participant's benefit to reflect distribution fee payments? Thanks!

2 particpant/2employee psp has been in effect for 10 years plus. father son plan.

the assets are separate brokerage accounts and a life ins policy for each. the son is on disability. plan has not been funded in quite some time.

the fathers brokerage account has been distributed to him. he's over 60. initially they wanted to terminate the plan, but now their agent is pushing to freeze the plan in order to avoid the heavy tax penalty on the csv($71,000). we did a corporate resolution to terminate and it was executed. i feel the plan should be terminated, but would there be any way around the fact that the plan was in existence to avoid taxation?

ive never been a fan of life policies in qualified plans.

I as an employee left work 2 hours early to attend a dental appointment that was pre-approved by my HR prior to my appointment. I did not take a lunch that afternoon and the follow day to make up the lost time. I then later was asked to provide proof of my appointment. HR requested a note from my dental provider on their letterhead to include the dentists contact information (name, phone, address, etc.) stating when my appointment was and that I attended.

I honestly did attend my appointment and I would have no problem furnishing documentation stating that I attended. But the way our new HR is handling the situation is making me feel as though they think I am a liar and that I did not attend my appointment.

As an employee, what are my rights under the HIPAA laws? Do I have to disclose my dentists contact information? Can I give a generic note to my employer? I have an appointment card that states when my appointment was, but it does not provide any information about the dental office, do you think this will suffice?

I sifted through some of the HIPAA laws and could not find this exact subject. I would appreciate your comments.

Thank You!

Think of a SAR with a strike price of at least FMV on date of grant. On exercise, employee gets cash equal to 40 percent of the spread and on each of the first and second anniversary of the exercise, she gets another 30 percent. deferred comp subject to 409A? If yes, any exemption? Thanks for your help.