Employee (over 65 at retirement) elected COBRA upon retiring and, now, (while still covered under COBRA) elects Medicare. If the retiree has a claim, what is the integration order of the two coverages?

A new client asked me to take a look at his retirement programs....I've uncovered a problem and would appreciate any advice inre solutions. He runs two businesses; in business A, he is the sole employee and he has a combo money purchase/profit sharing plan, to which he contributes the maximum.

In business B, he is a 50% owner, and in 2004 the company started a SIMPLE plan for its employees. He does not participate in this program.

This apparent control group violation doesn't appear in the paperwork for the DOL Voluntary Fiduciary Correction Program.

What are the appropriate steps to correct this error? Can the company that set up the SIMPLE (AG Edwards) be held liable for failing to ask about the existence of other retirement programs?

I have directed him to not make any 2005 contributions into any of the plans until this is resolved, but would appreciate any other thoughts.

thanks, mlm

We have encountered a situation were the failure of an ADP test was determined after the sole HCE required to take a distribution rolled over his entire account balance. It is my understanding that the Plan is in compliance because the excess contributions were distributed on a timely basis; is this correct? Obviously, part of the amount rolled over was not eligible, and the taxation for the participant was incorrect. Does anyone know what should be done at this time?

well, based on the CPI numbers for Jun/Jul/Aug I have the 'exact' comp limit at 219,800 and the DC 415 limit at 43,976. there is still one month to go, but based on that, it looks like we could be at 220,000 for comp and 44,000 for the annual addition in 2006. (unless there is something wrong with the spreadsheet I have)

Official numbers usually out by end of October.

Here is the Issue:

My client, Lets call him Mr. Doe, received RMD Checks regularly. But due to his sickness was not able to deposit them in his bank account. Mr. Doe dies, the checks are still not deposited from late 2004. Can his kids deposit those checks now, assuming that the checks will be honored? If the checks are not honored can they ask for the checks to be reissued? Will there be any kind of penalty or tax on late deposits?

Thank you all for your help.

I have a plan that employees a husband and wife. Recently the husband died. They are both over the age of 70 1/2 and both have accounts in the plan. MRD's were not started because they are still employed. Now that the husband has passed away, we are rolling over the balance in the spouse's account to an IRA for the wife.

The wife is still employed. Will the wife have to take MRD's from her husband's account? If so, am I right in saying that the first MRD must be made before the end of the year following the year the husband died? In this case 2006?

A new plan was established effective 1/1/2004, but there was no money in the plan at the end of the year and no receivable contributions. Does this plan require a 5500 for 2004? If so, do we have to attach a Schedule I and show zero assets? I have heard that this triggers a response from the IRS. If not, for 2005 are we o.k. filing a first return with the plan effective date of 1/1/2004?

I heard that the IRS had been targeting a 9/15 release date (before the ABA annual meeting). Does anyone have any recent intelligence?

A 3% SH 401k plan with a X-tested PS feature includes a last day rule for the PS allocation. If a participant terminates he is entitled to the 3% SH allocation. Does that mean he is subjec to the gateway allocation if it is more than 3% of comp?? Thanks.

A rehired retiree dies while an active employee. The plan says you restart the benefit he elected at 1st retirement but add in the additional accruals for the second term of employment. He elected a straight life annuity (SLA) at 1st retirement. He was married and his spouse consented. Do you offer the QPSA on all benefits earned or do you just offer the QPSA on the benefits earned during the second period of employment (since the spouse never consented to an SLA on that piece)?

A speaker at a recent conference advocated charging low balance fees to terminated participants with small balances as an alternative to locating missing participants. The speaker suggested $5.00/quarter until the account was zero.

We have a plan we tookover with more than 20 terminated participants with QNEC balances under $50 who terminated years ago. It is a reasonable assumption that the combined administrative costs between our effort and the client to locate these participants, issue checks and 1099's will exceed the distributable amounts.

Any thoughts or experience with low balance fees?

Hi,

I'm 18, and I'm very lucky to be in a situation right now where I don't have to pay for college, so I'd like to invest my earnings in a Roth. I have a few questions about that.

1--are there different kinds of Roths? Do I have the option of setting it up through different banks, etc.? If so, will some places charge different fees than others?

2--I made about $1000 in 'legitimate' paychecks this summer, jobs where I was actually on a payroll. However, I made another $1000 'under the table'--housesitting, babysitting, etc. Am I only able to deposit the $1000 from my "real jobs," or if I claim the other $1000 on my income tax forms, can I add that money to a Roth as well?

Thanks so much.

This looks like a simple question, but I'm stumped.

A client has 5 shareholders ... all doctors. The client is a hospital-based practice with no NHCEs. Also, there are no ASG issues. Four doctors maintain individual DC plans, while the fifth doctor sponsors a DB plan. Does the DB Plan satisfy Code Section 401(a)(26)?

Is one option for at least one other doctor to indicate that at least his DC Plan and the fith doctor's DB Plan are permissively aggregated to satisfy Code Section 410(b)? If that were to occur, then the DB Plan would also satisfy Code Section 401(a)(26).

Thanks in advance. Ed

I have a client with a 6/30/05 fiscal year-end. An HCE deferred the maximum $14,000 from 1/1/05 through 6/30/05. The ADP/ACP testing failed for the 6/30/05 PYE and this HCE had to take a $14,000 refund and received this prior to 9/15/05. Is there any way for this person to make any additional deferrals from his paycheck in the 2005 calendar year?

I have a client that needs to put a Safe Harbor in place for this year and I know October 1 in the dropdead date for starting the plan. However, no 30 day has ever been given. Is it too late as of September 16th to implement this plan?

IRS & Trreas issue Hurricane Relief for Qualified Plans and 403(b) a/c s

IRS Announcement 2005-70

I just got a call from a client who has a copy of a letter taht the SSA sent to a former ee of the plan. The SSA told her she MAY have $550 in this plan. We have been the TPA since 2002 and have no record of this ee (she term'd in 1991). My guess is that she was put on the SSA the first go around as an "A" and then never put on again as a "D" when she was paid out. If memory serves, when we were doing the C/R forms, we still had this SSA schedule.

What do we need to do to report to the SSA that this former ee no longer has benefits in this plan? I do not have a copy of the letter at this time, and we are working with the client to get valuations from the 1990s (free erisa had 5500s available back to 2000). Thanks for the help.

Heres the story....An Ex-employees is on COBRA and the wife was declared Disabled. So they get the 29 months. The wife dies. What happens to the Ex-employees COBRA. In addition, let me know what happens if she died before or after the 18 months. Thanks in advance

We have a client in a high-turnover/low wage industry who is considering adopting an automatic enrollment provision for their 401(k) plan. Current eligibility is age 21 and 30 days service, with entry at the beginning of the month coincident with or next following satisfaction of the eligibility requirements. One problem we identified is the difficulty of providing "reasonable" and "effective" notice of the opportunity to make an election, considering that the service requirement for eligibility is so short. Does anyone see a problem with a provision maintaining the current eligibility requirements, but providing that the automatic salary deferrals will begin at a later date, such as the first of the quarter coinciding with or next following the date of particiation date? (Example: DOH 1/15, entry 3/1, automatic deferrals begin 4/1). I realize that in some cases entry and automatic deferrals would happen on the same date.

Thoughts are appreciated.

Our loan policy states the term of the loan may not extend beyond the participant's normal retirement age as dfined in the plan. Is this requirement specific to our loan policy or is this a requirement?