This question was posed to me today:

Re: Changing the Vesting Schedule

You would not be able to keep the prior vesting schedule for the monies deposited before their desired vesting schedule change, while having monies deposited after this change subject to a differing vesting schedule.

Since you are proposing an accelerated vesting schedule, we needn't be concerned with protecting a participant's vesting percentage as required per IRC §411(a)(10)(A). However, the IRS interpretation of IRC §411(a)(10)(A) can be used to help explain why you can't have 2 vesting schedules apply to the same contribution(s).

The IRS interprets the code to indicate a participant's vesting percentage rather than account balance must be protected in the event of a vesting schedule change. It would stand to reason then that the IRS would view a change to the vesting schedule as applying to ALL contributions (rather than just the contributions after the effective date of the change) since the participant is now 100% vested.

What we are saying is if you changed to a 100% immediate vesting schedule, you would need to apply this to all monies--not just new funds.

I think the question being posed to my office is that this is employer money that is currently on a six year graded schedule, and as of 1/1/06, the company wants to change the schedule to 100% immediate, but only to moneys that go into the plan after 1/1/06. So all er money in the plan before 1/1/06 would stay at the old schedule.

We are contacting Datair to see if the plan doc allows for this crazyness, but if it does, I would imagine that the monies would need to be segregated.

My boss just told me that this is a 401(k) Profit Sharing plan, but we are not sure if the source in discussion is P/S or match. Thanks for your thoughts and opinions!

I'm 23 years old and I'll be getting married in about a month.

A short term goal of mine is to get set up with a ROTH IRA.

Is there any benefit to making this happen before I am married? Is there any benefit to waiting until after I am married to get started with a ROTH?

FYI - I already contribute to my 401(k) so I've got long term savings started already, I'm just looking for more.

Any help would be appreciated.

Thanks

Does anyone have or know where I may retrieve a generic notification and a waiver that could be distributed to employees. Im looking for the correct language that must be in a notification.

I have a SEP-IRA my company contributes to each year on my behalf, approx $10K - $15K. None of the money that goes into the SEP is my own, it's all company money. I was told by our company's financial advisor that I could open a Roth IRA and contribute to that on my own, but cannot contribute to a Traditional IRA -- is that correct?

I do have a Traditional IRA set up at Vanguard which I have periodically rolled over funds from the SEP-IRA into. The company SEP-IRA is at the evil Putnam Funds, so I try to move the money out of there as fast as possible. I assume these rollovers do not count as "contributions" to the Traditional IRA -- at least that's what Vanguard reps led me to beleive.

I'm single, make $80K year, 40 years old.

Thanks.

Here is a very interesting situation:

Business owner realizes belatedly she should have started filing 5500-ez last year as the total value of her two plans crossed well in excess of 100,000 at year end 2003. So, on her own, she filed for 2004 this year (two forms) but 'accidentally' showed an opening balance on one of the plans that brings he total opening lower than 100,000 when indeed it should have been higher to apparently avoid a letter and potential penalties for 2003. Her reasoning was that once she started submitting 5500-EZs in full compliance, her 'start up' error would fly under the radar of the IRS.

Clearly the right advice is (and was) for her to amend her return and submit returns for the two plans for 2003 as well, a concept that is tough medicine for her. To help make the case for doing the right thing to her, is there a std practice of auditing the balances reported against the 5500-EZs? Is her 'let sleeping dogs lie' scenario at high risk of being found out?

CA court issues judgment awarding AP an interest in plan. AP moves to the east coast, assuming all is well. Of course, all is not well, and the participant really isn't in a position to help her out (he's dead). The attorney who handled her divorce retired, and the attorney who took over his office will not return her calls. There is a benefit payable, but she does not have an enforceable order.

Does anyone have any guidance on how to deal with far-flung potential APs, beyond, of course, too bad you moved so far away.

Catchup eligible HCE made the following deferrals

1/1/03 -12/31/03 $0

1/1/04 - 6/30/04 $5,000

7/1/04 - 12/31/04 $11,000

1/1/05 - 6/30/05 $18,000

I need to test for 6/30/05 PYE

Total deferrals for PYE are $28,000. I believe I test $24,000. (Sal's book suggests that for testing purposes $3,000 is classed a catchup for 2004 and $1,000 is classed as catch up for 2005).

Of course the plan fails the ADP test. $15,000 needs to be returned to correct the test. Can an additional $3,000 be classified as catch due to ADP failure (presumably the remaining unused 2005 catch up of $3,000) and only $12,000 actually returned? That means effectively, $7,000 is catch up over the 2 calendar years, but it all seems to happen in one plan year. Is this correct?

(Who wrote these rules!?!)

Thanks.

Tom

Under what circumstances would a company have to apply for a number for a Nonqualified plan? and

Under what, if any, circumstances would there be backup withholding for a rabbi trust?

The IRS gave relief as to returns and minimum funding. does the same relief apply to the deadline for making profit sharing contributions?

Company has signifigant foreign operations employing ex pats. They would like to add an after tax provision to existing 401k plan ( 401k contributions are not viable as most of the income earned overseas not subject to American taxation up to a certain limit). Would it not be better to just add the Roth 401k? Does anyone have any experience with this type of arrangment?

I just don't know where to look to find this answer. If an employer provides health insurance to all employee on a non-contributory basis (the employer pays 100% of the premium), can the employees decline the coverage? If so, is there any discrimination issue for the employer since all employees would not be getting the same level of benefits and would also not be getting any cash in return for the rejected benefits?

(And I also want to know how to get a job with this employer!)

This client is a family owned business. Two shareholders, each owning 19%, are retired and receiving W-2 wages of $20,000 for consulting. However, there are no hours reported and they are not deferring.

This plan is failing the ADP test and if these two shareholders are included, the test will pass. One owner retired in 2000. The service requirement for eligibility is 6 months with no prorated hours requirement.

Any suggestions?

A common-law employee (non-owner) in a qualifed plan who is age 51 has been receiving SEPP's for less than five years. Now the employer sponsoring the plan has retired and wants to terminate the plan and disburse remaining assets to participants for direct rollover's, cash-outs, etc.

What impact will the possible plan termination have on the SEPP's already in progress with this employee? Will the plan termination be disallowed by IRS because of the SEPPs in progress or will the employee face retoactive IRS disqualification becasue the SEPP schedule is interrupted for reasons out of their control. OR can the SEPP's continue in the new IRA or plan receivng these assets to avoid possible disqualification.

Need some help in coordinating the proper course of events to be followed by both the employer wishing to terminate the plan and the employee facing this possiblity.

I have also posted on 'Sec 72(t) on the Net' as well.

Thanks in advance.

David

In this FAE DB plan, there is an incapacity retirement that provides an unreduced age 65 annuity (sla or J and S options--no lump sum) if one is at least age 40 with 10 or more years of service and meets one of the two methods of being deemed incapacitated at the date of termination. These two methods are 1) a SSA disability award indicates that the person was disabled on a date prior to termination or 2) the person meets/met the "plan" definition of incapacity at termination.

It would appear that it would consistent with the aforementioned final regulations to eliminate this type of retirement or alter the methods of being deemed incapacitated (remove the plan definition method and rely solely on the non-discretionary SSA method) if we amended the plan to do so by the end of this year.

We would like to do so but want to feel that such is consistent with the relevant regulatory guidance.

Trying to figure out how this "feature" of the plan is or is not an ancillary benefit that is otherwise not protected by the anti-cutback rule or is or is not a unpredictable contingent event benefit (as is a shutdown benefit) and thus potentially amendable out of the plan if done on or before 12-31-05 has been difficult.

ok, so there are some duplicates, but as my brother says, who really cares.

this one has 72 movies to identify.

for those that haven't downloaded #1, these are snapshots from different movies. the 'bodies' are missing (the clothes are still there). I guess you would describe it as The invisible man effect.

Besides, what else are you going to do on the weekend besieds watch football.

(well, ok ladies, but then 'WDIK' - I never married - oh wait, I don't watch that much football either - never mind)

Assume 2 separate employers, Subsidiary 1 and Subsidiary 2. Sub 1 and Sub 2 are wholly-owed subsidiaries of Parent and, therefore, are members of a controlled group.

Sub 1 and Sub 2 have adopted the same 401(k) plan. Sub 1 has a match, Sub 2 does not.

Sub 2 can't qualify as a SLOB because it has less than 50 employees.

My question is: Is there any way to treat Sub 1 and Sub 2 as separate plans for ADP/ACP testing? Both Sub 1 and Sub 2 can separately pass 410(b).

I'm pretty sure I know the answer is no . . . but it seems like we ought to be able to do this. Here's why: If Sub 2 did not adopt the Plan (i.e., Sub 2 had no plan), Sub 1 -- because Sub 1 can pass 410(b) on its own -- could go merrily on its way. But, because Sub 2 has in fact adopted the Plan and because Sub 2 has poor participation among its eligible employees, the HCEs are Sub 1 are going to cut-back in the amount they can defer. Thus, Sub 1 employees are in effect punished because eligibility under the Plan was extended to Sub 2 employees. File this under "no good deed goes unpunished".

Will appreciate your thoughts.

Thanks.

Can a health care provider provide health information about a patient to the patient's employer? The employer claims that it needs the employee/patient's information in connection with a first report of injury. I would appreciate all thoughts and thanks!

Participant under profit sharing plan owns life insurance policy in his individual account. Policy is whole life and has a cash surrender value. Participant designates spouse as beneficiary under insurance policy and under the plan. Participant dies; death benefit under policy is payable to the spouse.

Can the spouse rollover the death benefit to her IRA?

FAB 2004-02 gives administrators some relief in getting a missing participant's benefits out of a terminated dc plan. My question is whether the plan document has to specifically permit these kinds of distributions, or can a fiduciary rely completely on the FAB?

Hypothetical situation to make the question clear:

Top Heavy Plan has 100% match up to 3% of pay. All rank & file EEs defer 3% or more so the match satisfies their Top Heavy min.

There is one HCE (non-Key) who does not defer. He has to get a 3% Profit Sharing as a Top Heavy Min.

Does that then create a requirement to fund rank & file an additional Profit Sharing 3% since the 3% to HCE only would not pass coverage and non-discrimination on the Profit Sharing as a stand alone "piece"?

Thanks