Has anyone ever had this problem? You enter a new plan into Relius (a takeover) and enter beginning account balances. When you try to post the gain for that year, you get an error message that it cannot post because there's a zero basis. The census account screen shows beginning dollars and units, but there's no beginning cost basis. Is this related?

This is a PS with 1 employer account and 2 rollover accounts, all cash.

I'm trying to find the answer to a trivia question. So far, I've come up short.

There have been 3 players born in Maryland who hit 40 home runs in a season. Who are they?

I've come up with:

1. Babe Ruth (well, duh)

2. Jimmy Foxx

3. ??? I don't know

The answer isn't Al Kaline, Harold Baines, or Cal Ripken. Despite their brilliant careers, none of them ever hit 40 in one year.

A sole proprietor is the only participant in a qualified plan. The individual dies, so there's no longer a plan sponsor or administrator. Who can sign the Form 5500-EZ?

NOTE: This isn't an orphan plan; there's a successor trustee. But, the trustee doesn't sign and file Form 5500/Form 5500-EZ.

The statute defining adjusted gross income for purposes of the Roth conversion privilege provides that AGI is calculated excluding required minimum distributions pursuant to IRC Section 401(a)(9). The final regulations, however, provide for the following:

1.408A-3, Q-6. Is a required minimum distribution from an IRA for a year included in income for purposes of determining modified AGI?

A-6. (a) Yes. For taxable years beginning before January 1, 2005, any required minimum distribution from an IRA under section 408(a)(6) and (b)(3) (which generally incorporate the provisions of section 401(a)(9)) is included in income for purposes of determining modified AGI.

(b) For taxable years beginning after December 31, 2004, and solely for purposes of the $100,000 limitation applicable to conversions, modified AGI does not include any required minimum distributions from an IRA under section 408(a)(6) and (b)(3).

This language does not say that RMDs of 401(a) plans may not be excluded. It is simply silent. Both the BNA portfolio series and CCH state that any RMD is excluded. But, I have seen many commentators who say that only IRA RMD's may be excluded.

So - what does this community think?

Thanks for any insight.

new client wants to utilized VCP to correct failure of updating plan for GUST/EGTRRA/401(A)9 etc. 2 participant psp. since i have never had to file a VCP and am not an enrolled agent, i am not eligible to include Power of Attorney. it would be a waste of my time, money, etc to become an enrolled agent unless i was doing VCP filings frequently. what options do i have other than to prepare the application and have the plan sponsor sign off on it? any unenrolled agents have experience with this?

Small 401(k)/Safe Harbor Plan. The company had extentions on their taxes for 2004. They just submitted their 2004 SH contribution and the 2 HCE (both owners) figured their final 2004 income and sent in 2004 employee deferrals for themselves. Is this considered a late payment? Do they have to mark yes on the 5500 and pay in excise tax etc?? Any suggestions? Thanks!

We have an employee who is on the Company's medical plan. Her husband works for another employer and will be going on long-term disability effective Oct. 1. Can her husband enroll in our Company's plan or is this not considered a qualifying event? I’m assuming his coverage will terminate since he will be going on LTD.

Thanks for any insight.

Is it customary for earnings on the pre-marital portion of an account to be considered non-marital? For example, husband has $100,000 in his account on the date of marriage. Contributions of $300,000 are made during the marriage. Contributions of $5,000 are made after the marriage, prior to the QDRO. It is clear that $300,000 plus applicable earnings are marital. It is also clear that $5,000 plus applicable earnings are NOT marital. Although earnings on the $100,000 were earned during the marriage, are they typically considered part of the marital portion? I realize what the parties agree to and what the Order states are what goes. Looking for customary equitable distribution rules. Thanks!

We acquired a smaller hospital that operated a governmental 403(b). We are non-governmental and operate both a 401(k) and 403(b). We want to stop our involvement in sponsoring the acquired hospital's 403(b). There are no employer contributions, just employee elective deferrals. There are no plan documents just provider service agreements. With no termination provisions for 403(b) plans, how do we formally end our involvement with the acquired company's 403(b)? Can we just terminate the provider service agreements? Any advice is appreciated.

Hi. We wrapped our welfare benefit programs into one plan mid year. Does anyone know the proper way to file 5500(s) for this year. Do we need to file separate final 5500s for all of the individual programs, or can we file one 5500 for the wrap plan? I don't know which is the proper way since we wrapped our programs into one plan in the middle of the year.

Thanks.

Our Health Plan runs 10/1-9/30 and our flex plan runs 1/1-12/31. We have just switched our Health Insurance Carrier for the plan year beginning 10/1/05. I have elected to switch to my spouse's employer sponsored plan effective 10/1/05. My employer provides a flex credit to employees - one amount if you are on the plan (because the employer pays the single premium) and a higher amount if you are not on the plan. For the period 10/1/05 - 12/31/05, can my employer credit increase since I am electing off of our plan? I am being told that it cannot because change in coverage is not a change in status. I understand that I cannot change my own pre-tax election, but I was thinking that a change in an employer credit would be allowd. Any thoughts?

Thanks!

Hi. We wrapped our welfare benefit programs into one plan mid year. Does anyone know the proper way to file 5500(s) for this year. Do we need to file separate final 5500s for all of the individual programs, or can we file one 5500 for the wrap plan? I don't know which is the proper way since we wrapped our programs into one plan in the middle of the year.

Thanks.

Hi. We wrapped our welfare benefit programs into one plan mid year. Does anyone know the proper way to file 5500(s) for this year. Do we need to file separate final 5500s for all of the individual programs, or can we file one 5500 for the wrap plan? I don't know which is the proper way since we wrapped our programs into one plan in the middle of the year.

Thanks.

Does anyone have any experience with the IRS program with regard to over 50 "lost participant" requests? I have some information that tells us that requests of over 50 employees will be billed at $1750 plus $0.50 per person. (Up to 49 is free.) We have a client with approximately 60 lost participants. It's hard to explain to them why the cost jumps from $0 to $1750 when they are only over by 11 participants. I know the line had to be drawn somewhere......

You must submit a preliminary letter for review prior to sending in the over 50 requests. Is it possible that the IRS reviews each case individually and, when they respond to advise if the letter is acceptable, then provide you with a fee that might be more reasonable? Any experiences/thoughts appreciated.

Assume a situation where the amount involved is within the involuntary cash-out / automatic IRA rollover range of $1,000 - $5,000. The terminated participant elects a cash distribution (minus withholding) and the check is prepared and mailed. Some time later, the check is returned as undeliverable or is never cashed. Attempts are made to locate the participant but the search is unsuccessful. Due to the passage of time the withholding may not be recoverable and we are left with 80% of the taxable amount in the cash account of the plan. Assuming the 1099-R record can be changed and we have written authorization from the plan sponsor, I would think it would be appropriate to allow the rollover of the remaining amount to the IRA. The revised 1099-R would reflect the rollover of the amount involved and the taxable amount would be the withholding. This would serve a couple of purposes: 1) preservation of the participant's distribution, and 2) allowing the plan sponsor to be in compliance with the plan document requirement to distribute the vested account balances of terminated participants with balances ranging from $1000-$5,000. Any thoughts?

Generally, a participant must exhaust all possible sources of financial assistance, including plan loan, prior to applying for a hardship.

With regards to victims of Hurricane Katrina, do you think they are required to apply for a plan loan before requesting hardship?

Thanks

For new hires we have a 30 enrollment period during which if they elect any benefits they are enrolled retroactively back to their date of hire (we have first day coverage). So if a person is hired on August 15th they can wait until September 13th to enroll in medical, but their coverage is retroactive to August 15th if they had any claims. Our attorneys said we cannot use this same methodology for the FSA's. They said HC and DC FSA's go into effect the date of election and can never be retroactive. So using the same example above, the person elects DC FSA on September 13th - that is the day their coverage starts and no claims can be submitted before this date. This is a real problem in explaining to employees and also in programming our HRIS. None of us in benefits has every encountered this before - has anyone heard of this?

We have a 125 with FSAs that operates on fiscal year. Dependent Care participant paid for entire summer's day care with one check at beginning of summer. The plan year ended in the middle of the summer (i.e.: about 1/2 of what she paid was for the weeks before the plan). Participant sent in copy of check and tuition bill for the total.

I've always told participants that the dependent care service is incurred on the last day of the period for which you paid. i.e. you pay on Monday for the full week but the service isn't incurred until Friday. Therefore we can't reimburse until after Friday and then only up to what you have in the Dependent Care FSA at that time and only based on the plan year that includes that Friday. I've even mentioned monthly payments in employee enrollment meetings - i.e.: you pay for the whole month at the first of the month but the service isn't incurred until the last day of the month.

So, do I reimburse the part of the expense that incurred in the plan year that ended mid-summer with dollars set aside for that year and the rest with dollars set aside this year? or is all reimbursable only with this year's dollars since the last day of the period fell in this plan year? (Which means participant forfeits last year's dollars).

And, what other documentation do I request since the bill was for the whole period as was the check they wrote?

Thanks for any help and cites you can give!!

Can a former employee of company A who participated in the 401(k) plan of company A in 2005 and deferred $2,705 in salary deferrals establish their own Simple IRA at their own business (Company B) in the same calendar year? If they can, can they defer the full $10,000 plus matching or are their contributions reduced by the deferrals made into the 401(k). I was not sure given that the 2005 deferral limit for 401(k)'s is $14,000

Our department is being spun-off and our department manager is forming his own new company...an LLC taxed as a sole proprietorship. We have elected to take COBRA benefits, and have gone through the list of options for favorable tax treatment (cafeteria plan, HSA and now HRA). As part of the comparison of these options, we are trying to determine if the spouse and dependents of a self-employed person may have their COBRA premiums reimbursed through an HRA (we understand that the self-employed person himself may not participate in the HRA). Has anyone come across this situation?