If a plan consists of two separate QSLOBs, is it possible for one of those QSLOBs to rely on a safe harbor match to avoid non-discrimination testing while the other QSLOB relies performs ADP/ACP testing?

Hopefully this is a very simple question BUT I can not find a cite to back up the calculations.

A valuation is being performed as of 1/1/2005.

The participant has an accrued benefit at 1/1/2005 of 1,000 and at 12/31/2005 of 1,500. The participant is NOT currently vested (the plan uses 5 year cliff vesting).

The valuation uses a termination assumption. Does the current liability calculation use vesting to determine the termination liability??

a) 0% vesting (current vesting percentage)

b) Graded (starting at 0% and incrementing at each incidence age until retirement limiting to 100%)

c) 100% of accrued benefit

Any cite to back up the choice???

Thanks in advance for any help.

We have just taken over a new plan and were told that part time employees are eligible to make deferrals to the plan. However, when testing only the ones who actually do defer are counted for testing purposes.

Is this right?

My understanding is that min required contributions that were due on 9/15/05 must be made by 10/31/05. Has there been any discussion or thought in extending the 10/31 deadline to say 1/3/06 to agree with some other extensions?

I realize that the IRS has not issued guidance yet regarding the Form 1099-R Box 7 Distribution Code for "disaster-relief distributions" due to Hurricane Katrina (which are exempt from the 10% 72(t) early distribution penalty pursuant to KETRA), but I wanted to get people's opinion whether you think the IRS will:

1) Recommend that Code "1" be used for disaster-relief distributions and leave it up to the participant to exempt it from the 10% early distribution penalty when they do their 1040/5329.

2) Have Code "2" be used, and modify the 1099-R instructions to add this to the list of 72(t) exceptions.

3) Create a new Code for use for disaster-relief distributions only.

Thanks.

Is there any guidance, other than Reg. §1.457-11© (stating that the amount includible in income is the present value of the compensation), that assist in determining how to calculate present value?

I have a client with an executive participant in a 457(f) plan that is entitled to a monthly annuity for life with a period certain feature. The substantial risk of forfeiture has lifted and the present value of the benefit is now taxable. The deferred comp. agreement does not specify any interest rate or method of calculation. Is there any statutory, regulatory or other guidance on how to value the annuity taking into account the period certain feature?

Or, am I left to rely on a reasonable method?

Thank you.

I am taking over a plan that used projected unit credit as the funding method. The accrual method is years of participation with no limit on years. However the funding is over 10 years. The benefit is the 415 limit. My understanding is that this is an old method that is acceptable. Is this method an acceptable funding method?

In a leveraged S-corp ESOP, 51% of the company is sold to the ESOP at the beginning of the year. At the end of the year the first payment of $300,000 is paid and shares are released and allocated to the plan participants. The principal portion of the payment is $250,000 and the interest is $50,000.

1. For 415 purposes, is the contribution $300,000 or $250,000 or the current value of the released shares (which, by the way is slightly higher than the encumbered price)?

2. Is the $50,000 of interest a factor in the participant allocation at all? I don't see how it could be. I believe the interest should be shown as a plan expense on Schedule I, but the allocation is simply the share allocation as determined by the release calculation (either the principal method or the principal & interest method as dictated by plan document).

I hate to admit this but I've lost track of the process. Have the final Reg's been published? Wasn't there some thought that we'd see them by 9/30?

X is 73 and has always owned 50% of the business. X's late husband, Y, died at 72 and then owned 50% of the business. Until Y's death, Y was receiving his annual MINDI. X still receives her annual MINDI. X is the sole beneficiary of Y's account balance in the plan. The plan is a DC plan.

For 2005, it seems to me that X will get a MINDI from her account as an active participant using the distribution period from the uniform table--which is 24.7--(she has not remarried) and X will also get a MINDI from the account of her late husband using the distribution period from the single life table--which is 14.8-- (since she is the designated beneficiary of these funds). Does anyone think this approach is inconsistent with the law?

X's personal attorney claims that upon her late husband's death his account "merged" into her account and now the entire kit-and-kaboodle can be distributed using the distribution period from the uniform table--which is 24.7 years for a 73 year old.

Any thoughts? Is there an exception to the rules that I missed? Thanks!

for coverage testing, two plans are aggregated, and I check "yes" for item 4b on scehdule T. For 4c(5)&(6): number of nonexcludable employees who benefit under the plan: Do I put the number only benefitting in this Plan? or since I am aggregating, do I put the number who benefit in either plan?

Ok. Here goes a really simple question! I just need verification:

If I put in a Safe Harbor match, and the HCE is the only one who defers, will I still pass all testing?

Please don't laugh... just don't wanna get caught next year having to do a plan re-design. And I am having a brain f**t. Thanks!

Company A (which is a dental practice) currently has two partners and a simple ira plan. The two partners each have a spouse and all four participate in the simple plan.

Company B is a new venture that will be making dental crowns. The idea is to remove the spouses completely from company A. The two spouses would then become equal partners in company B. It is anticipated that the revenue will be derived from selling crowns to Company A and other dental offices.

Company B would like to open up a retirement plan which will only have the two spouses as employees.

Is this possible or does it violate control group or affiliated service group rules?

If this employer decides to adopt this plan regardless of control group or affiliated service group risks, how does the irs find out about this?

Also, given that they are the spouses of the owners of Company A, could they adopt another qualified plan other than a simple ira given that Company A maintains a Simple IRA?

Thank you for your help!

Does anyone know where and when the 30-YR Treasury Rate is published these days? It used to be available in Release H- or G-13 on the first Tuesday after the first Monday of the month. Thanks!

We set up a SH PS 401k plan for a solo medical practice effective 1/1/05. The practice is going to incorporate 12/1/05 having a short year of one month.

How will this affect his PS/401k? Do we combine his income from the solo and PA to get his total compensation before calculating the contribution?

The doctor is the only participant for 2005.

Can I withdraw contributions from Roth IRA in the very next year of contribution. I heard that there is 5 year waiting period. Is it true. I am talking about just the contributions, not the gains. Thanks.

So we see the senate committees (Finance and HELP) reached a compromise on their respective bills and the result (S.1783) now goes to the full Senate for a vote. What's going on with the House bill(s) ?? Isn't there a fairly similar bill(s) over there ? Is this on the fast track then ?

client neglected to deduct salary deferral amount as well as make the matching contribution on the final paycheck for several employees. the client's auditor discovered. is it necessary for the employer to make the contribution and the match on behalf of the group of terminees? is this even a qualification failure?

Can a participant withdraw funds from an IRA account to pay fees related to divorce proceedings and avoid the 10% excise tax, since the IRA owner is not age 59 1/2? I have not heard of this, but some people in the office that I work at say they have read articles that indicate that this is an allowable distribution to avoid the excise tax.

Thanks for any replies.

Sole Proprietor has a handful of W-2 employees. Has a PS plan to where he makes a contribution each year, split between his employees (Schedule C expense) and himself (Page 1 Form 1040 above the line deduction). Starting in 2004, he began to pay his spouse on a basis such that she is reporting the income from her husband as her own Schedule C income. Question is can this Schedule C income for her be considered for a PS plan contribution? My belief is that she would need to be paid on a W-2 basis in order to (after meeting the eligibility requirements) become eligible to participate in the plan.

Anyone have any thoughts? Thanks for any help.