Can anyone point me to a sample of a Governmental Excess Benefit Plan? I can't find one anywhere and don't know where to start if I'm forced to draft one from scratch. My usual source, RIA Checkpoint, doesn't have one. Any help would be appreciated. Thanks.

Can an employer amend his plan to say that the "minimum deferral percentage of pay is 5%"???

right now no limits

(dont ask the logic.........)

I recently attended a training class where the instructor pointed out that the recently released IRS Regs on IRA annuities state that each individual annuity contract must satisfy an MRD. This means that you can no longer take an MRD from your regular investment account to cover an IRA Annuity. I have not seen any articles or information that covers this point. I also cannot find the Reg Section referenced.

If anyone has info on this I would appreciate your sharing it.

Thanks!

Laura

Distributions from an HSA used exclusively to pay for or reimburse qualified medical expenses of the account owner or the account owner's spouse or dependents are excludable from gross income. Can a distribution from an HSA used to reimburse a third-party who directly paid the health care provider for qualified medical expenses qualify for this tax-favored treatment? In other words, if an account owner's former spouse pays for the dependent child's doctor visit, can the account owner take a tax-free distribution from his HSA in order to reimburse the former spouse for the expense?

I'm not an insurance fan in DB plans per se, but is there any cite that prevents us from deducting the full premium on say a whole life policy (split funding) if the policy is a paid up policy in say 5 years, but the assumed future working lifetime of the participant is say 20 years ? Would this be an unreasonable funding method if this accelerated full premium was deducted ? There's probably a Revenue Ruling or Rev. Proc. on this but not sure where. Both opinions and cites welcome.

Hi everyone,

I'm a financial planning master's student with a ESOP question.

I understand the tax advantages to the owner and the company of setting up an ESOP. What I'm wondering is: How does the owner benefit financially each year when the company makes its contribution to the ESOP?

A bit more detail: I'm working on a final project for an employee benefits class. Our hypothetical company wants to establish a qualified retirement plan and contribute $190,000 this year. The owner has a retirement savings need of $560,000 in 16 years, in addition to his other resources. I'm supposed to recommend a qualified retirement plan and explain how it will help the owner meet his retirement savings need.

So with a straight profit sharing plan, he would get $X (his portion of the $190,000) a year, and I would need to calculate whether that $X a year would grow into $560,000 in 16 years.

But with an ESOP, is he actually getting anything each year when the company contributes to the plan?

Thanks--I can post more details if necessary.

Leonard Barry

Madison, WI

I ran the ADP test for my plan, excluding the statutorily excludables. Plan fails the ADP test for 2004. Client decides they want to correct by allocating a QNEC. The QNEC is to be allocated to NHCEs who worked 1000+ hours and were active on the last day of the plan year. As part of the correction report, our system provides the allocation figure. I had the system allocate the QNEC and it provides it to all NHCEs who are eligible for the QNEC, regardless of their status as a non-excludable or excludable. My question is: Isn’t the QNEC supposed to be allocated to ONLY those participants who are non-excludables and in the failed ADP test? Should the excludables receive the QNEC allocation? The plan document does not specify this.

I probably haven't tried hard enough to get out of the 7.5% gateway on DB/DC permissively aggregated plans. It seems the "primarily DB in character" exception to the 7.5% gateway usually defeats what I'm trying to do (keep most NHCEs out of the DB plan) and I've tended to just think of "broadly available" perhaps overly simplisticly as simply two plans standing on their own for discrimination testing as normal (i.e., no special relationship between them). However, I noticed the blurb in the (a)(4) regs under the "broadly available" option that states it's applied "assuming that the Average Benefit Percentage test of 1.410(b)-5 were satisfied". Is this of much value from a practical standpoint ? I guess this eases the standard somewhat so it's not just the full normal coverage and discrimination applied to both plans separately as there is a built in ABP "pass". Anyone get any bank-for-the-buck using this approach ? Any example ? (just trying to see what situations it's helpful for).

A small DB plan with all family members except one NHCE - he quits with 700 hours worked. Did not accrue a benefit because 1000 hours required.

Do I fail 410b? I fear I do.

My plan already has language to allow a benefit accrual for this person if needed, but I don't want to recommend it to the client, 'cause the person was not vested.

Do I grant the accrual - then forfeit it?

I'm consulting for a small business that is consolidating two separate entities into one. I'm currently reviewing their policies. They have a "maternity leave policy" that states, female ee's get 4 weeks paid leave for birth, adoption, or placement of foster child. Males get 1 week paid leave upon same. If additional leave is required, the ee must request & discuss it in advance. Ee's may use paid leave if available, or leave without pay.

This policy makes me shudder for a few (hopefully obvious) reasons. I am trying to figure out a way to rework it so that the employer's liability isn't greatly increased, yet in a way that is gender-neutral and offers some recognition of the significance of any of these events in any employee's life. They are small and aren't subject to FMLA. They do not offer STD benefits other than what comes through Aflac (which nobody subscribes to anyway) or the couple of ee's we have in NY state. I would love to hear your suggestions of how I can rephrase this potential disaster waiting to happen! Post to board or email offline at meg.mccormick@gmail.com. Thanks!

A participant defers the full $10k allowed under 408(p) to a Simple 401(k) and then changes employers mid-year. The new employer hosts a traditional 401(k) plan. Is the participant's 402(g) limit reduced by the $10k deferred to the Simple 401(k) earlier in the year or can he defer an additional $14,000?

I see defined contribution would have to go to 2/20 or 3 yr cliff vesting for all nonelective contributions. (sec 1006)

To scroll down a web page, you can just hit your space bar if you're using the Firefox browser (instead of having to use your mouse).

We recently acquired a location in NY. According to the rep in the accounting dept that has been handling benefits for the staff out there, some of the employees have medical benefits with us but they are paid for by the NY DSS all the time so no employee contributions are collected for them. Sometimes when an employee goes on their maternity leave, DSS will pick up the cost to continue the benefit.

Has anyone ever had experience with this?

We haven't seen any record of checks coming in so I'm trying track where things are with this.

thanks!

I have nothing whatsoever to do with this stuff, so fortunately don't even have to read them. But I know some of you have been eagerly awaiting this...

http://www.treas.gov/press/releases/reports/reg15808004.pdf

P.S. - here's the "cover page." http://www.treas.gov/press/releases/js2956.htm

Can a person or company have a Simple IRA at 2 separate investment companies? For example, one employee having a brokerage account with a broker dealer and also having a mutual fund held at the fund company?

I have a client that I have been trying desperately to get census for 2004 to do his 5500. He had a new plan effective 10/1/04. It was a SH plan with the SH match. Employees all filled out enrollment forms, the plan was set up at the mutual fund company, and the safe harbor notice was handed out.

Here's the problem...he never started the deferrals (thus the lack of census!). I am not sure why, but it seems he just didnt get around to it.

Actually, he is just now getting around to having the deferrals taken out of employees checks (October 2005!).

I think I should get new election forms signed, but I have no clue how to handle 2004?

I have never run into this, looking for advice??

thanks!

Can a child, as a named beneficiary, rollover funds into an IRA and avoid taxes. I was under the impression that a spouse was the only person eligible to roll funds over.

Since hearing an IRS actuary say so at an EA meet a few years ago I've thought that it was not permissable to include on a DB plan's minimum funding standard account in-kind contributions (which in general would be a prohibited transaction).

However, I'm having trouble finding written guidance to this effect and would appreciate it if anyone can point me toward some.

This has to be one of the most complicated areas of qualified plans.

Have an employer who may want to sponsor a defined benefit plan. Here are the facts:

Company A is a construction company with 30 employees. It is owned by Mike 47%, Bill 47% and two non-related others for a total of 6%.

Company B is in the business of estimating project costs. It is owned by Mike 25% and Bill 25% and an unrelated person 50%. It has 10 emloyees. The unrelated person has no ownership in company A.

Company B wishes to sponsor a DB plan but does not want to cover employees of company A.

It appears no controlled group exists.

The question is whether an affiliated service group exists.

Niether company will act as a management company for the other. It is true that Company B will do some estimating for company A but the majority of work will be done for other unrelated companies.

Capital is a material income producing factor for company A so it cannot be an FSO. Capital is not a material income producing factor for company B so it would be the FSO. In this case, company B would be the FSO and company A would be the B-org.

Our understanding is that a significant portion of the B-org must be the performance of services for the FSO for an affiliated service group to exist. No services would be performed for the FSO. However, a significant portion of the FSO's business is the performance of services for the B-org.

Do we need to consider this in both directions or is an affiliated service group only present when the B-org performs significant services for the FSO?

Thanks much.