Here is the situation:

You currently have Schedule C income, sponsor a SEP plan and contribute 42000 for the year to it (sole proprietor - income substantiates contribution).

Now, you form an LLC (still single member) and are advised by a bank that you can open a Solo(k) and contribute another 42000 to this plan.

Is this correct? Referencing section 415, it limits the annual contribution to 42000 for all plans the "employer" sponsors during the year. Perhaps this is a situation of "who's the employer" where the LLC that is formed is considered a new employer, thus making the second maximum contribution possible?

(I'm thinking no - just a change in entity, not employer).

Your thoughts (and code references) are appreciated!

*Note - the LLC and Sole Proprietorship offer the same services.

I have heard that the DOL will be issuing new rules this summer on the timing of depositing employee contributions and loan repayments. It is rumored that the new rules will contain a deposit safe harbor.

It is almost the end of the summer and I have not seen anything from the DOL. Does anyone know when the DOL will be publishing the new rules?

Thanks.

Our document defines "Total and Permanent Disability" to mean "a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders such Participant incapable of continuing any gainful occupation and which condition constitutes total disability under the federal Social Security Acts."

In my opinion, this definition does not specify who must make the determination as to whether or not the participants condition constitutes total disability under the SSA (unless this is specified explicitly in the Act, which I haven't found). Should the Plan Administrator rely solely on the approval letter from SSA or would a letter from a licensed physician that states a participant's condition constitutes total disability under the SSA also be acceptable.

I would be liberal in the interpretation of this definition and not rely only on the SSA letter but am curious as to how others interpret the definition.

A single 501c3 organization splits into two organizations with a common board. The board wants to make contributions based on each units profitability. One organization is very profitable and the other is not profitable. There are only a few HCEs but they are in the profitable organization. Must they be tested as a controlled group? Is there a general rule of thumb to determine if a plan would past testing? If the test fails what are the remedies.

Thanks, Shadebeads

lump sum on the QDRO is $$$$$$$$$$$$$$$$$$$$$$$$$$$. well, certainly more than I will see in my lifetime.

since the owner is in the top 25 HCEs, is the lump sum under the QDRO restricted because the owner couldn't get a lump sum?

I have a client that wants to roll an old SEP-IRA into his DB plan that he is actively funding at high levels. His main motive for doing this is to invest in a broader range of investments than can easily be done through an IRA (yes, I'm aware of some of the self-directed IRAs out there but he wants to do it this way). Some of the investments he wants to do from the SEP rollover seem to have high return potential and if that occurs I don't want the investment performance to impact the DB funding which I believe it would if I just used a "pooled" approach and allocated earnings pro-rata. Is this a good situation for a 414k account where the SEP-IRA rollover funds get separately tracked and investment returns tied specifically to that account ? I do realize we could put in a new frozen MP plan and maybe roll into that and accomplish the same thing.

i have a client who distributed a participants account balance prior to the final matching contribution being deposited. under a 401k plan, i understand that it would be simple to deposit the contribution, then reprocess the distribution. however, the provider in this instance is indicating that they cannot simply reopen the account without collecting the initial distribution.

does this argument make sense to anyone? i apologize for my ignorance relative to 403(b) annuity contracts.

if it does make sense, what other option does the employer have in this instance? i assume they cant simply run it through payroll....

Company B buys all assets of Company A. Both companies have 401(k) plans. Purchase was effective 3/1/2005.

Company B wants to assume sponsorship of Company A's plan and then terminate the plan. I don't know why Company A just doesn't terminate the plan, but this is the situation with which we have been presented. To further muddy the water, some of the employees of Company A have gone to work for Company B. They continued to have deferrals taken from their pay but the deferrals have been deposited to Company A's plan.

1. Is it okay for Company B to assume sponsorship of A's plan and then turn around and terminate it? If so, does this action have any impact on the A employees who have gone to work for B?

2. Does anything have to be done about the deposits to the A plan from wages of employees who now work for B?

Can anyone tell me when the 15 yr os service catch up was allowed in 403(b)s?

Many US companies have illegal aliens working, but their illegal status is not known to the employer for quite some time. These workers become "eligible" to participate in the plan because of age and service, but choose to not participate in the plan, for obvious reasons. When the employer discovers their illigal status, these employees are terminated. Should these illegal aliens be excluded from the ADP/ACP testing?

I've lurked here in the forum for a while now and finally screwed up the courage to post a topic.

I've recently taken some work with a management company covering several thousand employees in a self funded benefit plan.

The participants are all FT employees of the plan sponsor, however, many of the physical locations are owned by the plan sponsors clients. the plan sponsor allows owners to choose from a number of different contribution schemes to support the plan. some owners contribute 50%, some contribute 70%. the end result is that similarly situated employees of the same employer end up paying different amounts to participate in the same plan. My little brain cannot get around the apparently discriminatory appearance of this arrangement.

Before we start the meter with our erisa counsel, does anyone have an opinion regarding this arrangement ?

Help! My husband worked for an extremely large telecommuications company. I had sent his benefits department an e-mail requesting COBRA rates. My husband was considering another job where there were no benefits; however, we could pick up COBRA for the 18 months and then pick up a plan through the AICPA. He paid over $200 a month into his benefits for family coverage.

So I got the e-mail back with the rates and felt it was beneficial to take the other job and pick up the COBRA as it wasn't that horribly expensive.

However, once we got the official paperwork, the rates were $600 more a month than what the e-mail had said. When I contacted the benefits department, they stated that they quoted me lay-off rates as they didn't have a reason for my requesting the rates. They automatically assumed he was being laid off. No where in the e-mail that they sent to me did it say that the rates were just a sample or subject to change based on termination reason. We used the rates that we were given in our determination. I feel that they should honor those rates. The company said they always use the lay-off rates.

Is there anything that I can do about this? I have all the documentation. I have all the e-mails, etc.

Thank you.

Plan sponsor wants to terminate a non-PBGC plan and pay out participants in 2005. Benefit accruals have been frozen since 12/31/02. Using a funding interest assumption of 5%, the PYB 1/1/05 valuation has a $0 maximum deductible contribution. But when we calculate the lump sums payable at 4.86% (Dec. 2004 GATT rate), the plan's assets will come up short by about $30,000. There is a single HCE with a lump sum benefit of $355,000 (nowhere close to his 415 limit).

Is there any way to make a "just-in-time" deductible contribution in 2005 that is exactly enough to pay all benefits on the planned distribution date of 9/30/05?

Dave Peckham

Anyone aware of an cases where the retirees claim to life time medical coverage was based on lanugage in an asset/stock purchase agreement?

Anyone aware of a lawsuit were retirees claimed their entitlement to life time medical benefits was based on language found in an asset/stock purchase agreement?

Hello,

Can I collect NYS Workers' Compensation & Social Security Disability at the same time?

I am an RN who was injured in 2002 on a previous job.

I currently have an opened Workers' Compensation case. Though I have submitted and been approved for reimbursement of multiple medical bills, I have not yet lost any time from work related to these injuries.

In April 2005, I became medically sick and have not yet returned to work. My medical condition, alone &/or in combination with my WC injuries, will require that I apply for Social Security Disability.

Many thanks in advance for your replies.............BLB

I haven't run into this particular situation before and wanted to see if anyone else had or had any ideas:

In 2004 small plan (plan year end 12/31) discovers late participant contributions from 2003 & 2004. The enter and complete Voluntary Compliance (received final DOL letter). The plan has filed for extension for 2004.

On Schedule I, do they answer yes to late contributions question or not?

If yes, do they complete the Form 5330?

401(k) plan fails ADP in 2003 and no corrective action was taken in 2004. Am now in 2005 and thinking of doing 1 to 1 correction under EPCRS.

One of the HCEs is eligible for catch up and can recharacterize some of his ADP return as catch up.

Question: Can I still re-characterize the ADP failure as catch-up for the HCE even though I am past correction period?

If question 1 is true, can I exclude the $2000 (adp failure recharacterized as catch-up) in calculating the 1-1 return AND the QNEC (with gains/losses up to correction date)?

Or, just wait for the new EPCRS for now?

A 401(k) plan received a QDRO for an active participant's account. The QDRO created a separate interest for ex-spouse under plan of 1/2 of account. Plan divides account after QDRO approved by court. QDRO does not address spouse as surviving spouse or state (in any form) that the ex-spouse waives any other interest in the account other than her 1/2. Four years later, participant dies with a beneficiary designation to the ex-spouse and no contingent beneficiary. Ex-spouse wants $ to go to son of her and participant.

I have already suggested a disclaimer (guess that trust and estates law class was good for something), but, with no contingent beneficiary, it is unclear where the account would go. Plan default if no designation is spouse, then estate while state law default is spouse, then children - unsure which would trump the other. I have also told the plan administrator to tell ex-spouse to go talk to a probate attorney.

Why did I think that there was case law on this type of situation?

I am not familiar with Long Term Care. I know the premiums cannot be reimbursed through an FSA. But a question arose regarding age. Can a participant age 60 or over pay for a portion of their LTC with their FSA? If they are 62 or over can the full amount be covered under the FSA? I have never heard of this. Any input would be appreciated. Thanks!!