I've determined that a stock option plan is subject to 409A and will be subject to the additional 20% tax. Does it have to be reported to the IRS? When does it have to be reported? Also, are there reporting requirements for the employer? Notice 2005-1 covers these topics but I'm having a hard time interpreting them and applying them to an actual situation. Any help would be appreciated.

Plan imposes a deferral limit for the year. Participant defers less than that limit during a portion of the year. Can this participant contribute a higher percentage than the plan imposed limit for the remaining portion of the year so that the total deferrals for the year in the aggregate do not exceed the plan imposed limit as a % of total compensation?

I just wanted to get some opinions about something. Plan has immediate eligibility with 1st of the month following hire date entry date. Person was hired 10/29/04 so entry date is 11/01/04. Enrollment forms were completed on or a day or two after hire date and returned to HR. First deduction did not occur for employee until first December payroll due to administrative reasons. These reasons are having to notify payroll to start deductions on next payroll run and getting enroll info to record keeper. Question: Is there are any requirement to go back and do retroactive withholding for this employee since he missed out on 2 payrolls in November before his deductions started? There was no administrative oversight and the HR people followed policy and procedure for enrolling this person. Meaning that all employees are treated the same and enrolled over the same time frame.

I do not work much with health & welfare plans, but I was asked a question, as to whether it is correct to include accumulated eligibility credits as a liability on Schedule H of the 5500. Any help with this? Any pros or cons?

Thanks

This may belong under the 5500's sections, but I'll try here as well. I do not work much with health & welfare plans, but I was asked a question, as to whether it is correct to include accumulated eligibility credits as a liability on Schedule H of the 5500. Any help with this?

Thanks

If a participant designates part of their elective deferrals as before-tax and part Roth 401(k) and there is an excess ADP, do you think the Plan can designate which source the excess comes from? Or do you think it has to be a participant election?

1.401(k)-2 of the proposed regs state a plan "may" permit an HCE to elect ... Do you take that to mean the plan can do it? And would the same be true as far as a 402(g) excess?

Any thoughts on what you may be doing? Allow participants to choose when they originally designate before-tax/Roth 401(k)? Or simply make it a fiduciary/plan decision?

I am working on a proposal for a DB and 401k PSP carve out. All employees are highly compensated anesthesiologists. The combined plans are top heavy. Do the participants in the 401k PSP need to get a 3% top heavy minimum or a higher top heavy minimum since there is a DB plan. There are no overlapping participants.

Is NUA treatment available on stock distributions out of an ESOP?

I have a client who is 74 years old and has a 403b plan with TIAA-CREF and Fidelity. She is planning to keep on working for a couple more years and wants to be able to delay taking her RMDs until she retires. My company is not an approved vendor for the college she works for. If I have her 90-24 transfer her accounts to a TSCA with me would she still be able to delay her RMDs? The plans do allow for transfers out. Thanks for any help with this.

Say a plan sponsor makes a PT of $100,000 to the corporation on 7/1/04 (calendar year plan year/tax year).

Say the corporation pays the plan the $100,000 on 12/31/2005.

Is the PT for 2004 = .15 * 100,000 * 1/2 = 7,500?

And the PT for 2005 = .15*100,000 = 15,000?

Or would it be based on just the use of the money, thus using some rate of interest like 1% per month, resulting in a PT for 2004 of:

.15*.01*100,000*6 (6 months in 2004) = $750 for 2004

And $1,500 for 2005 since for 12 months?

Or lastly, perhaps it is based on the first set of calculations until the plan is reimbursed and then it is recalculated based on the second set of calculations?

Any knowledge out there on this calculation?

The Pension Answer Book was somewhat misleading to me on this.

If an employee with a $1,000 check elects 10% Roth 401(k), is the Roth contribution to the plan $100 or $100 minus the federal income taxes?

Participant loan exceeds the $50,000.00 limit. What steps need to be taken to correct?

Say we have a calendar year 2005 valuation. The corporate bond weighted average interest rate at 1/05 was 6.10%. 90 percent of that rate is 5.49%. Let's say that for 412 purposes, 6.10% is used to calculate current liability.

What is the permissible range of interest rates for calculating current liability under 404? Must the rate be the same as for 412? Does it matter if the size of the plan is less than or greater than 100 participants?

This is one of those instances where "I see how you're doing it, but I can't find a citation that says you can do it that way."

Thanks.

We have a plan currently in for review on plan termination. Our case has a 100% owner and his two kids as the sole participants. Plan was underfunded on a termination basis so we had the owner execute a waiver (I know, not the correct language, more like agreement to not take full benefits) as we have on other cases in the past without question.

The IRS reviewer (we in MA, IRS in CA) came back recently and said that there had been a "sea change" on the part of the IRS with regards to these waivers. She was requesting that the waiver be rescinded and in its place that the plan document be amended (her language) to "provide that rank and file participants be paid in full prior to the owner". Note that she was NOT stating that the IRS would no longer go along with the concept, rather that the plan be formally amended rather than the waiver be executed.

Has anyone else been running into this recently? Not sure where to start on their amendment as her language doesn't look entirely appropriate (what is a "rank and file" employee under the Code - what about HCE nonowners). Any guidance would be appreciated (BTW, turnaround time on these term DL apps has been recently running over 12 months before initial contact).

If a participant in a DB Plan is 100% vested in a $10,000 accrued beneft in the DB plan and the participant rolled an additional $90,000 from either an IRA or a DC plan into he DB plan, is the participant able to borrow $50,000 from the DB plan?

I think the answer is yes, but I didn't see any authority on this.

Thanks in advance.

Ed

Attorney/client has come to us with the idea of moving existing real estate he has in plan into an LLC. He thinks that will (1) eliminate the requirement to have an annual appraisal/valuation and (2) provide a means for the recordkeeper/custodian to include it as an asset on their daily platform.

I know that a valuation will still be required, but can you reference a site or documentation on this so that I can provide to him? Also, any thoughts on a way to accomodate this type of asset on a "daily" platform?

Thanks in advance for any advice or comments.

A question was just posed to me which I have no idea what the answer is. Can anyone suggest a resource where I could obtain the answer? The question is:

What is the expected number of retirees in the private sector over the next five to ten years?

I was recently told the following about Section 125 Premium Only Plans (125 POP ).

I was informed by a payroll company that they do not even perform non-discrimination testing on 125 POP plans. The representative I spoke to, said that the IRS is essentially turning a blind eye towards the plans because there are very limited areas for abuse.

After doing some basic research on Section 125 Premium Only Plans, it seems that the IRC does in fact call for a form of modified testing when the plan is used only for group health benefits. I'm not an expert on 125 plans, nor do I wish to be.

I'd like to know if anyone has heard the same thing about non-discrimination testing for such plans. Do you know exactly what testing is needed? I read conflicting information on this as well.

Personally, I think it would be rather difficult for the IRS to determine, since there is no 5500 required for small 125 POP plans. I personally don't see them going out to look for this. However, I'm not ready to advise a client about them, based on what a salesman from a payroll company told me.

Does anyone know what the user fee is to submit a 457 Plan to IRS and where did it come from?

thnks

On 12.31.04, the 4 Key Employees of ABC Corp had a balance of $ 100,000. One had a contribution rate of 5%.

The three active non key employees had a balance of $ 38,000. There was an additional non key employee who took a $12,000 distribution on 5/15/04 and terminated on 5/15/02.

When doing the top heavy test for the 12.31.04 determination date,

1. Can the $12,000 distribution still be used due to the one-year look back because it was still in the plan on 1.1.04?

2. When is the top heavy contribution due?

Just checking my skills.

Thanks