Company A has maintained a SIMPLE IRA since 1999. In 2004, Company A acquires another company and the total employee count now exceeds 100. The transition period runs out 12/31/06 to convert to some other qualified plan.

During 2005, a new entity is formed (Company B) which acquires the stock of Company A along with 5 other previously unrelated companies. Some of the employees of Company A will remain on that payroll, while the others will be moved to the payroll of Company B, the parent, during 2005.

Company B expects to set up a 401(k) for the entire group effective 1/1/06. But, for the balance of 2005 Company B wants to continue the SIMPLE IRA for those employees moved from Company A to its payroll.

Can Company B adopt a SIMPLE IRA now for the benefit of the transferred employees? Or, because Company B did not maintain a SIMPLE before the acquisition, is it precluded from establishing one now since there are more than 100 employees in the controlled group? If yes, how do they continue the SIMPLE benefits fro the transferred employees through 12/31/05? Can Company B just make contributions to the existing accounts without signing Form 5304-SIMPLE?

TIA

Can an employee assistance plan be paid for by employees using pre-tax dollars? A client wishes to attach the cost of the EAP to its medical plan, of which employees share in the cost.

If you do, would you be willing to let me ask you some specific questions off the board?

TIA

Plan has a terminated employee who cannot be located. He had a loan balance for which he should have received a 1099R for a defaulted loan in 2000. To date a 1099R has not been issued. For plan audit purposes is this considered a reportable event?

Sam adopts a profit sharing plan for his sole proprietership. The sole proprietership does not have any employees. The plan has less than $100,000 in assets. Sam also owns an LLC that does not have employees & does not adopt the plan. My understanding is that since we have a group under common control a 5500 must be filed. I do not see any exception merely because the LLC doesn't participate.

Anybody disagree? I just want to make sure I am not missing something.

Is anyone sending out EE notices regarding dependend child and tax issues to members?

I have seen this question answered several ways on this board. If a 100% shareholder in a corporation (with no other employees) sponsors a 401(k) plan with a 1/31/05 plan year end, can the individual who makes a CODA prior to 12/31/05 (plan year end of 401(k) plan) defer $14,000 on compensation earned by 12/31/05 and have compensation contributed to 401(k) by due date of corporation's 1/31/06 tax return (with extensions)? I'm guessing that this is the same riule for a sole proprietor that maintained a 401(k) plan. So the rules under 2510.3-102 do not apply in either case? Thanks. Ed

QB elects timely, sends initial payment within 45 days, however, the payment did not cover all three of the retro months owed at the time of payment.

My question is - does the initial payment HAVE to include all retro, or can the QB have the remains of the 45 days to make a second payment?

Trust document specifies that the initial payment must include all retro amounts, but we cannot find supporting law other than the initial payment must be made with in the 45 days.

Thanks.

We just received notice from out client that they signed and mailed out the form 5500 on Monday, August 1, 2005 for the PYE 12/31/2004. Since the deadline for this form (July 31, 2004) is on a Sunday, does the deadline date get exteneded to the next work day?

The Matching Contribution for 6/30 PYE 401k plan will be made after the 2 1/2 month penalty-free correction period which is September 15th. We know the ACP test will fail.

Other than processing the ADP corrections in time, how best to advise a client on how to proceed? They deposited a 2% match last year and that test failed also. Correction refunds were made after the 2 1/2 month dealine and the client was pissed they had to pay the 10% penalty. This was one reason they fired their prior TPA. We just took over TPA services July 1, 2005. Thanx.

I am aware of a cash balance plan that gives participants who terminated employment vested a 3-month time period to elect a partial lump sum. If the participant does not elect the partial lump sum during the 3-month period, it is forever lost (traditional DB options are available at the earliest retirement age).

I'd like to know if there any other plans that limit the time period when this can be elected.

Is anyone aware of other plans with a similar one-time window for a cash payment?

A formula is a frozen benefit plus 1% of hi 5 compensation based on future years from the date of the freeze. The plan also ratios the average compensation to the frozen average.

The following facts can be used to illustrate the issue and assumes the freeze just occurred:

Frozen benefit = 1,000

Frozen compensation = 10,000

Projected compensation at NRD = 15,000

Projected pension at NRD = 2,500

The question is how to treat the frozen benefit for purposes of FASB. I believe that since it was a benefit earned in a prior period that any compensation increases would just create gain/losses.

Service cost would equal 2,500 minus 1,000 * (15,000 / 10,000). This 1,000 would then be spread over the years.

Likewise the PBO would be 1,000 * (15,000 / 10,000) = 1,500.

Any disagreements??

Thanks for any and all comments.

Does anyone know if there is a rule of thumb as to how often a retirement plan's (profit sharing and 401(k) plan) committee should meet during the course of a year to discuss plan administration/operational matters and how often to review investment matters (appropriateness of funds, performance, diversification, etc.)? I have heard that some 401(k) committees meet every month, some every three months, and some only a couple of times per year. Is there a good rule of thumb as to how many times is sufficient and how many times would not be good enough?

Also, can anyone point me to any good articles or websites that would have a list of the kinds of items that a fiduciary committee should review every time it meets?

I appreciate any thoughts on these points.

Thank you in advance.

We have a situation wherein an employee has been missing several days of work. We requested that this employee supply a doctor's note for days missed to verify that the employee visited the doctor and the reason for the visit. The employee informed us that we could not request her to do this under HIPAA. At the very least I would think we can request a doctor's note verifying that the doctor has seen the employee and that the employee was unable to work for X days. Thoughts? Insights? Any regulation cites?

Thanks

Are there any instances where IRAs are allowed to make loans?

ERISA 4219©(4) permits an employer to prepay withdrawal liability, but it doesn't say anything about discounting the stream of payments to arrive at a lump sum factor. Interest is only referenced in terms of a defaulted amount or overpayment. Can a withdrawing employer apply an interest factor to arrive at a lump sum amount.

I have an S Corp with basis of about $400,000, this Corporation has been my sole source of income for 30 years. I anticipate in possibly having losses this year in the S Corp of about $150,000. I also anticipate having W-2 income of about $60,000, and long term capital gains of about $125,000, interest income of about $10,000. Do I qualify to convert my IRA to a Roth?

I have an employee who was recently legally separated from his spouse (I have the court decree.) No QDRO has been sent in, nor does the legal separation document mention the 401(k) plan.

However, the employee has turned in a new 401(k) beneficiary form to remove the wife. I am not sure about accepting the beneficiary change due to the fact that he is still considered as having a spouse. Has anyone else come across this issue?

Say a plan has a normal ret date of age 50 and the plan allows for in-service distributions after normal ret.

One participant plan.

Say the PVAB at age 50 is $500,000.

Is there any reason why the plan cannot allow for the participant to withdraw say $50,000 one year, then say another $25,000 in three years, etc. as long as the participant does not exceed 415 and meets RMD?

All the distributions will be rolled into an IRA. Otherwise, I believe there would be 10% penalty for early distribution, since this is not a periodic annuity type of pension.

Thanks.

Gary

A guy is over 70 and is still actively employed and receiving his RMD since he is a 5% owner.

His plan was frozen and at the time his AB was 100k, but the 415 $ limit limited his pension to 60k (due to short length of plan participation), the 415 comp limit is 100k too.

He is receivning an annual RMD.

When computing his pension does it seem reasonable to compute a gross benefit based on the 415 $ limit, increased for COLA and significantly increased for increasing age, thus allowing his gross benefit to approach the 100k AB. The gross benefit is then offset by the accumulated value of the prior year distribution.

In other words a couple of things are being addressed:

1) can a pension that has already commenced be increased if the 415 $ limit increses due to COLA?

2) can the 415 limit also be adjusted for age over 65 if the person has commened his RMD? If he commenced recieving his total AB then such a 415 limit adjustment would not be allowed, but in this case he is only receiving the RMD.

Thanks.