We may have accidentally mailed a Form 5500-EZ to P.O. Box 7043 instead of the P.O. Box 7042 in Lawrence. We won't know for sure until our return receipt postcard comes back, which may not be for a week or two. This is a PYE 12/31/04 not on extension, due on the 31st / 1st.

I suggested that we mail a photocopy of the original filing to the correct address, and attach a memo stating that it may be a duplicate filing, or it may have been mailed to the incorrect address but that we are not sure. I would rather not put the return on extension at this point.

Any thoughts?

Thanks for your input.

LiP

Hello all,

I've found this board to be very helpful in the past, so I'm hoping to try my luck again today.

I'm relatively new to DB plans. I was asked to do some research regarding a small overpayment in a calendar year one participant DB for 2004 (approximately $500.00). The funding was made based on estimates from the actuary, but turned up lower than the expected at year end with actual information.

I've read prior posts and came across one that referenced the full funding limitation and irc 4973 (if I remember correctly). From what I've read, IRC 4973 states an exception to the DB funding where the employer can elect not to include contributions except above the calculated full funding limitation.

Would anyone be so kind as to help me with the following:

1. How to calculate the full funding limitation (hope this isnt asking too much)

2. Explanation of the exception/is my understanding correct?

3. How would this affect the corporate return for the client - I'm assuming if the contribution is limited to above the full funding that is all they can expense on their return?

Thanks in advance,

Vicki

If electing to take the 28%subsidy. How will your company Price their Retiree Medical plans for Medicare part D?

I have a participant who has re-financed two loans that he has in the plan. The maximum number of loans allowed is 2. He is now asking that we re-finance one of his loans again. Is this possible? Should we have even re-financed the second loan? Thanks.....

Articles and studies about plans providing automatic enrollment and automatic deferral increases are constant. Legislation is pending addressing these issues.

Automatic enrollment has been around for a while and is an option in most prototype documents. But automatic deferral increases is a fairly new thought and not contemplated when most prototypes were amended for GUST, etc.

Question - in order for an employer to utilize the automatic deferral increases, do you feel the plan document must specifically permit these increases? Or do you think if it's included in an annual notice (perhaps in the annual auto enroll notice if that too is being used) and in the SPD, that would suffice?

For those who may have employers using the automatic deferral increases, what have you/sponsors been doing?

Husband owns 100% of small business.

Wife is Husband's sole beneficiary.

Husband has daughter (now over 18) from previous marriage.

Wife has never legally adopted Husband's daughter.

Husband dies in car wreck.

Subsequently, Wife is now 100% owner of small business.

Husband's daughter works at small business.

Q: Is Husband's daughter Key, HCE, etc?

Can an office manager that is not an officer of the company sign the front page of the 5500 for the Plan Administrator or the Employer? This is a single company 401K. She is a trustee of the Plan. And I do mean signing her own name.

The new bankruptcy law appears to exempt participant loans from the bankruptcy process. I read the changes to state that the filing of a bankruptcy petition should not stop an employer from withholding loan payments from an employee's compensation (exempt from automatic stay). I also read it to state that a bankruptcy plan cannot alter the terms of a loan from a 401(a) plan and that compensation used to pay such a loan cannot be considered disposable income. Ultimately, it appears as though an employer should not have to do anything (with respect to a participant loan) when an employee files for bankruptcy.

An attorney recently drafted a new bankruptcy provision for a participant loan policy that says that the employer should cease withholding loan payments from an employee's compensation: (1) at the request of a participant in bankruptcy; or (2) on request by court order. Although I would not advise an employer to violate a court order, neither situation appears to warrant a stay under the new Act. Anyone care to comment?

The following question is so elementary, that it can get overlooked.

Say a client establishes a pension plan.

When setting up the pension account, clients run into difficulty, and financial institutions don't know how to handle the question "can you open a pension account for me?"

They respond with all sorts of forms (irrelevant or inapplicable) or that they can't do it, etc. Many banks, etc. think that they are being asked if they can provide the plan documents, administrative tools, etc. and thus get confused or say they don't do it.

My belief (and what I did for myself) is that all you need to do is establish an account called say The ABC Company, Inc. DBPP, give them the trust ID #, and Corp EIN if necessary and deposit and invest money.

When I told this to a very newvous client, he kept asking is that it are you a hundred %, and so on.

So my question is "Is this absolutely all that is needed to communicate to a client or should anything else be addressed?"

Thanks.

The subject company has an operating SIMPLE IRA plan established through Nopain-Nogain Mutual Funds. I haven't read the plan document, but I am assuming it designates Nopain-Nogain as the only financial institution that can accept IRA contributions. The employer would like to offer increased investment options to their employees by opening the plan up to include investments from BrandX Mutual Funds too.

Section Section 219(g) describes the types of plans which an employer cannot make contributions to during the same year they make contributions to a SIMPLE plan. The plans listed in Section 219(g) include SIMPLE plans, therefore it appears an employer cannot have two SIMPLE plans during the same year.

So, I am concluding that the only way to acheive what the employer wants is to wait until the end of the year, terminate the current SIMPLE plan with the designated financial institution, and adopt a new plan without a designated financial institution effective January 1st. (And providing at least 60 days advance notice of the change) This will open the plan up so that the employees will be able to direct their IRA's be placed anywhere, and not just limited to Nopain-Nogain and BrandX. Is there any way to limit the plan to just these two investment sources (who are competitors)?

Here's a fun one (at least fun for us benefit geeks). Is an employer responsible for computing and reporting the additional interest? Also, is an employer obligated to report and withhold the penalty amount. We have a situation where an employee will recieve an amount which will be subject to both the additional interest and penalty amount. I just don't know how to handle it. I would appreciate any feedback from anyone that has come across this situation or has a better handle on it than me. Thanks.

My eyes have glazed over reading the final regs. Three things:

Item #1------ 1.401(k)-1(a)(4)(ii) - "Treatment of Elective Contributions as Employer Contributions" - states that deferrals are treated as employer contributions under IRC 404. I thought EGTRRA changed this. How is this applied?

Item #2------ Same cite says deferrals are treated as employer contributions under IRC 411. Some comments say this means that a participant who is zero vested in Employer contributions but has made deferrals is not treated as non-vested for purposes of rule of parity for vesting. Even if this is so, does this also apply for rule of parity for eligiblity as well?

Item #3------- Taking this further to the deemed cashout provision, is this to be interpreted that in the case of an employee who has deferred, but is zero vested in Employer contributions, such employee's non-vested Employer contributions may not be forfeited immediately upon termination if the deferrals remain in the plan?

Thanks for any help in sorting this out.

Here's what should be a simple question, but the question has thrown me. Can a health care FSA be offered to retirees? I know a cafeteria plan must be for employees and cannot be created just for retirees. But the definition of "employee" includes present and former employees. So, doesn't that mean that an FSA can be offered to retirees as long as its also available to active employees? Or am I missing some other provision of the rules?

I have a situation where a new plan would like to seperate certain HCE's and allocate a different %. Is it acceptable to define the following:

Non-partner Physicians (they happen to be HCE's)

Other Highly Compensated Participants

Thanks.

I would like a plan to provide that upon the death of a participant, the spouse (or elected beneficiary) could decide at the time of benefit distribution, what form to receive the pension (the death benefit is at least equal to the QPSA and fully subsidized).

For eg. the plan allows for a lump sum payment as an alternate option.

So if a participant were to decease while actively employed and the spouse were the benny, the plan would of course allow the benny to commence pension at time participant would have been elig for early ret (as QPSA), but could the plan allow the benny to choose an option after death (at the time of ben commence), eg. receive an equiv. lump sum at any date after death? So since the plan provides a death ben equal to full PVAB, could it be paid as lump sum at any date after death. Bottom line is that these provisions are more liberal than statutory requirements.

Thanks.

For audit purposes, would Lincoln Life be considered a party in interest if they are the fund entity sponsor and the fund is called LL Balanced fund? (other example – John Hancock entity sponsor and John Hancock Conservative Portfolio).

A 401(k) plan was filed with the IRS for a determination letter application in October of last year. The IRS reviewing agent recently asked for a copy of the 401(a)(9) amendment. That amendment was never prepared. The document filed indicated that the plan would follow the proposed regulations under Code section 401(a)(9). Any thoughts on available options.

BTW, this oversight occurred prior to my joining the firm.

Thanks in advance.

Ed

Party in Interest question- For audit purposes, would Lincoln Life be considered a party in interest if they are the fund entity sponsor and the fund is called Lincoln Life Balanced fund? (other example – John Hancock entity sponsor and John Hancock Conservative Portfolio). Thanks.

Has anyone had any experience with VCP, or audit CAP (please specify which) in a situation like this:

Client (small employer Doctor practice) has a money purchase plan that provides for the maximum 415 contribution for the owner and amount necessary to satisfy integration for other employees (unusual but not my issue). Client adopts a DB plan. The Client is now subject to the 25% deduction limit. Advisor tells Client to reduce MPP contributions to the 25% limit (this happens for several years). The problem is that the plan does not provide for a reduction in contributions. Under the MPP, the Client was required to make the contributions as provided under the formula. The MPP did provide, however, that any contributions that were not deductible would be returned to the employer.

My take is that the IRS may require payment of the excise taxes, but should permit the employer to get a refund of the contributions (at least for the owner). Any ideas?

A question we're debating in the office here: is there any requirement to have the participants update their elections annually (or some other frequency, I suppose)? We're considering things like an election to not purchase life insurance, 401(k) deferral percentage, investment election, beneficiary designation, etc. Most of us believe that such things are in force until changed by the participant. I can't find anything on it for or against, so I'm willing to take the silence as a "no"...