Say we have a calendar year 2005 valuation. The corporate bond weighted average interest rate at 1/05 was 6.10%. 90 percent of that rate is 5.49%. Let's say that for 412 purposes, 6.10% is used to calculate current liability.

What is the permissible range of interest rates for calculating current liability under 404? Must the rate be the same as for 412? Does it matter if the size of the plan is less than or greater than 100 participants?

This is one of those instances where "I see how you're doing it, but I can't find a citation that says you can do it that way."

Thanks.

We have a plan currently in for review on plan termination. Our case has a 100% owner and his two kids as the sole participants. Plan was underfunded on a termination basis so we had the owner execute a waiver (I know, not the correct language, more like agreement to not take full benefits) as we have on other cases in the past without question.

The IRS reviewer (we in MA, IRS in CA) came back recently and said that there had been a "sea change" on the part of the IRS with regards to these waivers. She was requesting that the waiver be rescinded and in its place that the plan document be amended (her language) to "provide that rank and file participants be paid in full prior to the owner". Note that she was NOT stating that the IRS would no longer go along with the concept, rather that the plan be formally amended rather than the waiver be executed.

Has anyone else been running into this recently? Not sure where to start on their amendment as her language doesn't look entirely appropriate (what is a "rank and file" employee under the Code - what about HCE nonowners). Any guidance would be appreciated (BTW, turnaround time on these term DL apps has been recently running over 12 months before initial contact).

If a participant in a DB Plan is 100% vested in a $10,000 accrued beneft in the DB plan and the participant rolled an additional $90,000 from either an IRA or a DC plan into he DB plan, is the participant able to borrow $50,000 from the DB plan?

I think the answer is yes, but I didn't see any authority on this.

Thanks in advance.

Ed

Attorney/client has come to us with the idea of moving existing real estate he has in plan into an LLC. He thinks that will (1) eliminate the requirement to have an annual appraisal/valuation and (2) provide a means for the recordkeeper/custodian to include it as an asset on their daily platform.

I know that a valuation will still be required, but can you reference a site or documentation on this so that I can provide to him? Also, any thoughts on a way to accomodate this type of asset on a "daily" platform?

Thanks in advance for any advice or comments.

A question was just posed to me which I have no idea what the answer is. Can anyone suggest a resource where I could obtain the answer? The question is:

What is the expected number of retirees in the private sector over the next five to ten years?

I was recently told the following about Section 125 Premium Only Plans (125 POP ).

I was informed by a payroll company that they do not even perform non-discrimination testing on 125 POP plans. The representative I spoke to, said that the IRS is essentially turning a blind eye towards the plans because there are very limited areas for abuse.

After doing some basic research on Section 125 Premium Only Plans, it seems that the IRC does in fact call for a form of modified testing when the plan is used only for group health benefits. I'm not an expert on 125 plans, nor do I wish to be.

I'd like to know if anyone has heard the same thing about non-discrimination testing for such plans. Do you know exactly what testing is needed? I read conflicting information on this as well.

Personally, I think it would be rather difficult for the IRS to determine, since there is no 5500 required for small 125 POP plans. I personally don't see them going out to look for this. However, I'm not ready to advise a client about them, based on what a salesman from a payroll company told me.

Does anyone know what the user fee is to submit a 457 Plan to IRS and where did it come from?

thnks

On 12.31.04, the 4 Key Employees of ABC Corp had a balance of $ 100,000. One had a contribution rate of 5%.

The three active non key employees had a balance of $ 38,000. There was an additional non key employee who took a $12,000 distribution on 5/15/04 and terminated on 5/15/02.

When doing the top heavy test for the 12.31.04 determination date,

1. Can the $12,000 distribution still be used due to the one-year look back because it was still in the plan on 1.1.04?

2. When is the top heavy contribution due?

Just checking my skills.

Thanks

I need some help before I go blind from trying to read state regs on line. We currently offer benefits to same gender domestic partners in the above states. One of our carriers has written our coverage to include coverage not only for same gender but also for opposite gender domestic partners in the states of Georgia, Maryland, New Jersey and Arizona. The carrier has stated that it is a state requirement that if we cover same gender domestic partners, we need to cover opposite gender domestic partners in those states, too.

I am having trouble finding that requirement and wonder if anyone more familiar with regulations in those states can point me in the right direction.

Payroll company is the recordkeeper. They pull the 401k deposits from employer’s account on date of payroll but do not deposit with the custodian until 6+ days later. Does the employer have full responsibility for late deposits?

There is a code 3I for use on the Form 5500 that is used to indicate "Plan requiring that all or part of employer contributions be invested and held, at least for a limited time period, in employer securities."

When filing a Form 5500 for an ESOP or a stock bonus plan do you use this code? Technically, the "Plan" does not normally require this, but rather gives fiduciary discretion. I can see where some plans may require that some or all of the contributions are required to be invested in er securities, such as in the case of a plan where the matching contribution is always made in er stock. But, does an ESOP or stock bonus plan by definition mean this code should also be used? Does the primarily invested requirement referenced in the document meet this definition of a plan requiring that all or part of employer contributions be invested in er securities?

I am interested in feedback on what others are doing, and when they are using this code on the Form 5500.

Thanks!

When calculating the RMD for beneficiaries (children of deceased mother) does it need to be recalculated each year based on the beney's life expectancy or can it remain a flat amount? Thanks!

Does anyone know when we should get any more information on these regulations from the IRS?

Are there any legal issues caused when an employer plan sponsor gives an employee the option of either waiving participation in the plan or not being allowed to work additional hours for the current plan year in order to keep the employee below the 1000 hours requirement for a contribution allocation? The employer has limited funds available for contributions and does not want to contribute for new employees. Note that the Plan Document does allow waivers of participation.

Are employers who maintain a premium-only plan (125 plan) with fewer than 100 employees required to file a Form 5500? I don't know what the status of this filing is. Thanks.

I know that a Form 5500EZ filer is not eligible for the DFVC, but does anyone have a suggestion for how to handle delinquent 5500EZs? I have a situation where a friend failed to file their 2003 5500EZ and had a balance of $.27 in 2004 when they terminated the plan. They haven't heard anything from the DOL/IRS and have the forms ready to send. Does anyone have any suggesitons on how to proceed?

I am puzzled. I withdrew $10,000 to fund a purchase of a new home from my Roth IRA. However, I recently came into extra dollars and I would like to stick some of that money (about $6,000) back into my Roth IRA to replace the money I took out. Can I do this without running afoul of the annual contrabution limit? I have already contrabuted $3,000 for this year.

Can a new Federal employee who has maxed contributions to his previous state employer through a 457 Deferred comp plan this year now contribute additionally in same tax year to the Federal Thriift Plan (a 401k look alike but technically 401(a) /501(a))?

I just moved from the State (of WA) to the Federal Gov. The Federal Thrift Savings Plan (TSP) says it is ""like" 401 (k) s" but actually references 401(a) and 501 (a) in it's not very up to date plan materials. I have contributed to this year's annual max (including >50 age catch up ) to my previous employer's DCP 457 plan. Can I now contribute to the max (it is a % and total max) to the Federal Thriift Savings Plan also? Even better can I use the Thriift Savings Plan's own age > 50 catch up too ?!

The literature on 457s does say that the accumulated maximums for the 457 " no longer affects maximums for 401(k)s" but does not mention the Fed Thrift Plan . Unfortunately the Federal Thrift Plan's materials which appear out of date just says that (Part 2 "Participating in the TSP and another Tax Deferred Retirement Plan" page 4) " ..relates to excess deferrals made to the TSP and other qualified employer plan as described under sections 401(K), 403(b), 408(k) , 501© (18) . It does not mention 457s. It then says that the elective deferral limit applies to the total of all contributions to these in the year....

The IRS, TSF web sites have not been helpful so far.

Thanks, I would be very grateful for advice, suggestions, resources .

Just looking at a new (to us) plan established in 2001.

Facts and circumstances are as follows:

Plan established in 2001 with immediate eligibility; sources include employee deferrals and an employer match on deferrals.

Plan amended beginning of 2002 to get rid of match.

Our population available to us solely focused on people with account balances as of 12/31/2003 (calendar year plan).

Based on this population (which I think makes the circumstances WORSE), there were 53 participants hired in 2002 and earlier; there were 34 participants terminated in 2002, mainly on two specific termination dates.

Thanks to the large payroll company previously doing admin, reallocated forfeitures on the 2001 match were identified as a separate source in their accounting (presumably reallocated in future years based on current year comp); these totalled around $104,000 by end of 2004.

Looks to me like a partial termination occurred given 34 out of 53. Any comments?

Question ; (not been able to find it anywhere on the net)

Can you direct transfer a Roth from company "A" to company "B" without incuring any withdrawal penalty imposed by company "A"? Are there any set rules?

I was told that is common practice as a way to discourage asset movements? Is there any truth to that?

For the sake of consolidation, I would like to move my Roth to a much desired institution.

Thnx