A DBO plan provides (appropriately enough) benefits upon an employee's death, and no lifetime retirement or disability benefits.

Is the plan a welfare plan or pension plan under ERISA?

If the plan requires employee contributions, is a trust required?

My tentative answer is: it's probably a welfare plan, and trust is required.

I want to avoid the trust requirement. The DOL's nonenforcement policy in Technical Release 97-01 doesn't apply to unfunded plans. However, top hat pension plans are exempt from the trust requirement, and it seems inconsistent to apply it to top hat welfare plans. I don't know of any DOL enforcement in this area. Anyone have any recent experiences? I'm not entirely uncomfortable taking the position that the plan is a deferred comp plan exempt from 409A.

Our client (Parent) sponsors a single employer 401(k) plan covering several control group members. Parent company is selling a subsidiary (which will become an unrelated employer to parent) in October but desires to continue covering the subsidiary in the plan post-sale. Parent is converting the plan to a multiple employer plan as of 10/17/05 to accomplish this.

QUESTION: How will ADP testing be performed for parent and new unrelated company for 2005? Is the plan tested as a single employer plan through 10/17 and then tested again as a multiple employer plan as of 10/17 through 12/31? Or, is the plan tested as a single employer plan through 12/31 treating the employees of the unrelated company as no longer eligible as of 10/17 (and then testing the unrelated company separately from 10/17 through 12/31)? Or none of the above?

DC plan has life insurance policies. In addition to reporting on Part III of Schedule A, I believe the cash value also needs to be reported on Schedule H.

My question: what line is normally used to report this? The only insurance policies that seem to be specifically mentioned are insurance company general accounts/unallocated contracts. [Line 1.c.14]

Would you put this in the "other" line -- line 1.c.15?

Thanks for your help,

Casey

A doctor's office with 4 doctors and about 30 employees.

One doctor decides to leave the office to start a separate practice and she is taking a nurse and a nurse practitioner with her. The nurse and NP only worked for the one doctor who is leaving, they did not perform any services for the remaining doctors. All three are not fully vested.

The split is not on amicable terms.

Would this possibly qualify as a partial termination and allow all three to become vested?

TIA

Owner A and Owner B each own 50% of corporation X (a c-corp). Company X has a 401(k) plan with a calendar plan year. As of 04-30-2005 A & B go their own way and dissolve company X.

Owner B starts his own company and wants to take over the X 401(k) plan that he was in and continue contributions etc. for the employees of X who went to work for him.

Is it okay to amend the ABC plan to list a new employer with new EIN and just continue the plan showing a change in sponsorship of the plan on the 12-31-2005 form 5500? Is it to late to do this amendment now? Does X have to terminate the plan and Owner B start his own plan and roll over to his own plan?

I do not work with SEPs very often and am always confused by controlled group questions so am hoping others can help me out.

Two unrelated business partners each establish their own single member LLCs and each establish a SEP in the name of their single member LLC. (Obviously the single member LLC is disregarded so the SEPs, I assume, are basically treated as if established by a sole proprietor?).

The two business partners, in turn, use their single member LLCs to each take a 50% interest in an S corp. which is their principal business venture. The S corp has no employees--just the two owners--and has been operating for several years in this form.

In addition, the two individuals recently decided to each take a 36% individual interest (not through the S Corp or their LLCs) in another, well-established corporation that has several employees. Although the 2 individuals each individually own 36% of the company, the remaining 28% is owned by various unrelated individuals or entities.

Accountant seems to think that the employees in the new company must be counted as controlled group employees and allowed to participate in the SEPs previously set up by the individuals through their single member LLCs. Given that the 2 individuals do not effectively control 80% of the new company, I cannot see how there is any argument that the new company employees would have to be included or covered under the SEP. (Even if the two individuals did own a combined 80% of the new company, I'm not sure the new company employees would have to be counted.) What am I missing?

An April year-end plan terminates on 4/1/2005. Come 10/1/2005, the plan sponsor decides to call off the termination and proceed merrily along with the plan. Being this termination recission is past the 412©(8) deadline do I:

a) continue to prorate the NC and amortization bases by 11/12 or;

b) treat the plan as not terminated and not prorate them?

I can't say I have ever had this happen before. However, I am leaning toward the latter option as Rev. Rul. 79-237 describes a plan that is terminating and this one is not, well at least not now.

In reading the new comparability rules, it seems that a partnership can make comparable contributions to the HSAs of partners and make no contributions to the HSAs of employees of the firm and pass the comparability test. Am I missing some potential nondiscrimination problem here?

Is the Roth 401(k) that goes into effect 1/1/06, available as a Roth 403(b)? Sorry if this is a stupid question.

Is there a prohibition against transferring non-employer stock assets from the ESOP portion of a KSOP to the 401k portion? The KSOP in question will not receive any further contributions of employer stock. There is no encumberance. The plan sponsor is a sub-s corporation that pays very significant dividends on the stock.

The plan sponsor would like to get the dividends moved to the 401k portion of the plan to more easily facilitate participants self-directing the investment of these funds and to get away from a future possible problem of the ESOP not being invested primarily in employer stock (knowning this may or may not be a real problem). The question is whether there is any reason making such transfers is not permissible or advisable.

I recently attempted to do a full-amount hardship withdrawal from my 401K (which I undoubtedly qualify for - putting myself through school and attempting to buy a home.) I have been told that I can not withdraw but instead have to take out a loan and that I am eligible for only 50%.

But it gets better. If I elect to do this, not only does it incur an additional payment for me (to repay the loan), it also prevents me from accessing the other 50% should the need arise because it is used as collateral on the 50% loan.

What is wrong with this picture? Doesn't hardship truly mean what it implies? Can anyone address whether or not I can actually withdraw the full amount and if so, how?? My pension fund company is being extremely difficult and insists that there is only one choice - the loan. Then I ask you, if that is the case, what is the purpose of the hardship option??

Thank you for any and all help that anyone can offer.

Anyone know what date a plan would have had to be terminated by in order to avoid needing the mandatory IRA rollover amendment ?

1. It's always been my understanding that assets held for investment (Line 1c) should agree to the investment assets reported on the audited financial statements. If you agree, what do you do with interest-bearing cash accounts that AREN'T classified as investment assets? For example, a plan's general operating accounts might be interest-bearing, but they're not investments. I've been putting these amounts in the catch-all bucket on Line 1e. Does anyone use a different approach?

2. When participant loans are secured by individual account balances, loans in default don't get reported on Schedule G or Schedule H. How do you handle the book/return difference for the defaulted loans? Where do you plug the amount on Line 2?

3. Is anyone else in October 17th hell? At this point, I'm probably over-thinking Form 5500 and not seeing things clearly.

I need help regarding the distribution code for an individual who incurs a deem distribution and is over age 59 1/2. In consulting with two people in my office, one of our experts says use Code 7 and the other one says use Code L. Any advice or arguments someone can lend on this subject would be appreciated.

Thank you !!!

Employer offers STD and funds through general assets and there are over 100 employees covered. Is a Form 5500 required for this. Due to the self funding I am not sure this qualifies as a welfare plan.

Thank you.

What kind of plan is this?

I have a plan that should have filed a Form 5310-A a few years ago, to be considered a QSLOB. They just realized they did not file it though. If they file it now, will it cause a red flag or penalties?

KETRA allows for loans up to the lesser of 100% of the account or $100,000. For loans over 50% of the vested account the plan must receive valuable collateral prior to granting the loan for the loan to avoid being a prohibited transaction and a deemed distribution. Since previously all the plans that I worked with were limited to 50% of the balance, how do you advise clients who want to know what collateral to get and what to do with it once they have it? Also, if the loan is defaulted upon, what is the plan suppose to do with the collateral? It's not like they would convert it to cash and give it back to the account of the participant that defaulted on the loan. Realistically, what are others telling their clients?

DB Plan counts hours. Amending to change vesting and benefit accrual computation periods from employment date and anniversaries thereof to calendar year. Hours worked during "overlap" will be credited in both periods.

Any special pitfalls I should be aware of ? I am aware of the regs for elapsed time to hours, or vica versa, amendment but found nothing like them on computation period amendment.

Thanks.

Terminated welfare plan has paid off all participant claim obligations and the balance remaining in the trust reverts to the sponsor. There were no employee contributions to the plan.

Question: where does the amout returned to the sponsor get reported on 5500 Sch I, Part 1? It does not meet the definition of a transfer for Line 2k because it is not to another plan. Do I just include it in line 2h Other Expenses in order to get the begining and ending net plan assets to reconcile?