For a C corp, a person's "compensation" seems basically salary as would be shown on W-2. For a sole proprietor, "compensation" would be net earned income (profit). What about a small corporation with a sub-S election where a business owner has both salary and profit?

Suppose an owner / partner pays himself a base salary of $40,000 and the business has a good year and ends up with a profit of $150,000 allocated to that owner / partner. Would a 3% employer match be calculated as 3% of $40,000 = $1,200 or 3% x $190,000 = $5,700?

Reference?

Any different implications if the company had a SIMPLE 401(k) rather than SIMPLE IRA?

Thanks.

I have an employee who was called to active duty in 2002-2004. Employee has 2 months of earnings in 2002 but none in 03 and 04. Do we need to distribute a revised W-2 if he decides to contribute for 2002. Additionally, is there a certain way we should be coding these contributions. Any guidance would be appreciated.

Thanks,

I've seen conflicting statements regarding what exactly is supposed to go into Code Y of Box 12 on the W-2. A Paychex bulletin states "employees' annual deferrals", Vanguard states to report "all vested amounts deferred during the tax year from all sources", my ERISA attorney states "all current year deferrals, inlcuding earnings on those deferrals", and finally our friends at the IRS state "Include current year deferrals udners a section 409A NQDC plan. Any earnings during the year on current year and prior year deferrals must also be reports here".

I'm going with what my atty and the Service state. However, it looks like I'll need the help of my recordkeeper to determine the earnings on those deferrals.

I'm kind of shocked at the levels of misinterpretation out there. Has anyone else given any thought to this fun little extra step we now need to get done?

Thanks

We have a QDRO that directs the amount to be put in a separate account established under the plan, with language directing that distribution options then be provided to the AP. The plan does allow for payment to AP as a triggering event, but the Participant is over 50 anyway.

Can the AP subsequently rollover the segregated account to an IRA?

Company M offers a SEction 125 plan to its employees. One of the available coverages is long-term disability coverage. Company M pays for the entire premium for LTD coverage equal to X% of pay. Employees may select, during open enrollment, LTD coverage equal to x% of pay, 10+% of pay or 20 + x% of pay with employees paying the pre-tax premiums for coverages exceeding x% of pay. Assuming the coverage is self-insured, can Company M take advantage of Rev. Rul. 2004-55 by having an employee elect to include premiums in gross income, by having Company M impute in employees' gross income the cost of coverage equal to x% of pay with employees continuing to pay the difference but on an after-tax basis? Does it make a difference if the plan is self-insured? The facts of the Rev. Rul and PLR 200527012 were based on an employer buying an insurance policy from a third party carrier.

I've read everywhere (including right down to the code) that the plan can have "qualifying employer real property" in the plan. The IRS website even mentions that this can be mortgaged by the plan (I realize that you have to watch for a PT).

However, what I cannot find are specifics about mortgages in a qualified plan- how much can be mortgaged, specifics of payments, etc.

Can anyone point me in the right direction? I'm looking for specific citations, etc. Also, if anyone knows of any examples it would really help!

Vicki

Do I understand this correctly that small employers who self-administer an HRA are not subject to HIPAA if they have 49 or fewer participants?

And if they have fewer than 20 they are not subject to COBRA?

How would COBRA apply anyway when the employer doesn't have group health insurance but only offers funds the employee can tap to pay for actual out of pocket medical expenses? Does it just mean we have to allow them to deplete their account balance even if they are no longer employed (in order to be COBRA compliant) ?

can a plan be a limited or general partner?

We have a client that wants to offer an HSA and some of the employees are participating in an FSA. Can we ammend the FSA as a Limited Coverage FSA (dental and vision only) for those that want to make the switch in the middle of a plan year?

Recently discovered that a client, who utilized a brokerage house Prototype Plan Document, never had the Plan Document amended for GUST or EGTRRA. Through mergers and change in Brokers, the Amendments were not processed, yet the Plan operated in compliance throughout the years. Would you recommend VCP assistance for this Non-Amender and the resulting Plan Document Failure? What other alternatives can you suggest?

Recently discovered that a client, who utilized a brokerage house Prototype Plan Document, never had the Plan Document amended for GUST or EGTRRA. Through mergers and change in Brokers, the Amendments were not processed, yet the Plan operated in compliance throughout the years. Would you recommend VCP assistance for this Non-Amender and the resulting Plan Document Failure? What other alternatives can you suggest?

I have a 401(k) plan being audited and one of the IRS requests is a copy of the statement under 6057(e).

Would a standard quarterly participant account statement which is provided to the ex-employee suffice? It contains their name and account balance and vested account balance and they continue to get the statement quarterly unitl such time as they take a distribution from the plan.

I'm sure someone has a ready answer for this. I purchased a laptop about 3 years ago when in hindsight, I was better suited for a desk top (and could have saved about 50% on the cost). In fact I am essentially using it as a desktop at this point, and that is where my question comes up. Since I rarely have to move it around, it is plugged in (ac/dc power) almost always. Rarely do I need it to run on battery. Therefore, it is always fully charged. Is this a problem now or will it be one in the future? I've had 2 different friends in high IT places who have provided opposite answers. FWIW, it is a Dell Inspiron 8200.

A client is a partner of a partnership and also has unrelated self employment income reportable on his Schedule C. Can he receive contributions from a SEP established by the partnership and a SEP established by him for his self employment income?? Thanks.

I completed the 2004 annual val for a small plan that uses the prior year testing method. We told the administrator that the sole HCE will need to keep his deferral percentage at 4.71% or less in order to pass the test for 2005. Apparently, he has already contributed that much. We have told them to stop, but is there any way that he can take a correction now, in the 2005 year, or would he have to wait? I feel that it's too late, and I can't find anything in the Erisa Outline book that says he could take a refund now.

Any thoughts? Thanks!

Is anyone aware of any DOL guidance, pronouncements etc. regarding the "reasonableness" of the allocation of administrative expenses among Funds and related entities e.g. union, employer association.

Has anyone seen any calculators out there for Roth 401(k) contributions? I know that there are some out there for Roth IRAs but wanted to use higher contribution limits available in the 401(k) Plan. Thanks

Over 100 participant company ceases operations( sold out in an asset sale) and then very quickly shut down. Prior two years 5500s and audits not complete. If the plan administrator( the company) ceases to exist is there any liability for failure to file?...Personal liability for former officers/trustees?

Does anyone know of an exception (perhaps a one time event) to the discrimination rules permitting a company to provide health insurance to a long-time employee after retirement without having to provide it for all retirees?

Participant is a doctor and is in a 403(b) plan with the hospital.

He also started up his own business, can you maintain a 401(k) and participate is both? If so, what are his limits? Can he maximize himself in both?