Client wants to terminate their 401k plan, do I need to file for a determination letter? What procedures do I need to take in order to terminate a 401k plan? They would like to terminate it this year.

Is it a requirement to have a separate EIN for a pension trust?

employer of 10 whose HCE will make around $250K wants to max out. would a TSA allowing him to defer $14k coupled with a discretionary SEP allowing him to receive the additional $28K be a viable option?

thanks

How are distributions handled when the amount to be distributed is less than the distribution fee?

Client maintains a pooled profit sharing account with Merrill Lynch. The account gets hit with its usually quarterly investment fees. The employer ends up paying back the fees and writing a check to the pooled account to cover the cost. When completing the 5500 and participant statements, should I be showing the fees running through the pooled account and adjusting it through earnings....or should I not show that any fees ran through the plan since the plan fees are being paid by back by the employer.

Any suggestions, I'm hitting heads w/someone in my office on this issue, and frankly I don't even think it should be issue.

A client has top heavy issues and makes only a safe harbor matching contribution (to those who are participating). Does this satisfy the minimum top heavy allocation?

The vesting schedule is accelerated enough.

Q1. Can we file Schedule C for welfare plan if there is no Schedule H?

Q2. Can we file Schedule C for pension plan if there is no Schedule H?

I think No for the second question. Please confirm this.

Kindly suggest for the first question.

I have a client that had a money purchase plan which was merged into an existing profit sharing plan. Now he wants to terminate the profit sharing plan and start a SEP. With the new portability rules, have the successor plan rules changed? Can the assets from the PSP be transferred automatically into the SEP or do we have to go through a distribution/rollover process and get participant and spousal consent for the transfer of assets into the SEP?

Is anyone aware of any guidance that would let a HDHP cover the expenses of a newborn incurred in the period immediately after childbirth until release of the child and mother if a) the newborn's expenses are billed out separately from the mother's and b) the plan has separate deductibles for each family member?

(If the child returns to the hospital, it has to satisfy its separate deductible before coverage.)

On its face, this seems to violate the restriction on coverage before the deductible is met. However, if the charges were instead imposed on the mother and the mother's deductible is met (likely in childbirth), then the expenses could be covered. This result seems based more on form than on what's actually happening. Any thoughts?

If we establish a Simple IRA this year, but determine prior to November 1 of this year that a 401(k) will be a better option, can we switch the plan to a 401(k) after only one year of having the simple open? The participants would maintain the Simple IRA's as IRA's for a min of 2 years. please advise

One of our clients has formed a company in the US Virgin Islands and wants to know if they could be added as a participating employer in their 401k plan.

Is this possible and does it raise any issues (for example because of particpant's

ss#). It is my understanding that the Virgin Islands tax laws operate as a mirror image of the IRS tax code. Virtually all of the same rules apply. That said, I don't know if elective deferrals are exempt from the local income tax, or what other issues might arise.

Client has prototype document that it failed to timely amend (complete and execute) for GUST and EGTRRA. Under Rev. Proc. 2003-44, would there have to be a contemporaneous determination letter filing even if this plan is a prototype document? Section 6.04 appears to provide that correction by plan amendment by adoption of a prototype would not require the determination letter filing, but I wanted to make sure.

Do any of the Canadian provinces require that you offer continuation of health coverage to terminated employees, employees going on long-term disability, etc. similar to the COBRA requirements in the U.S.? If so, do you know where I can learn more?

Father owns 2 shares of 51 in company; wife owns 3 shares of 51; children own the balance of shares; Father just turned 70 1/2 and is still receiving comp as an employee. Does the father have to take RMD from the 401k since he is less than a 5% owner, or does family attribution apply since his wife also owns 3 shares. He would like to not have to take a distribution at this time.

Where can I find an IRS code section or ruling that discusses what does and does not qualify as a plan expense that can be paid for out of plan assets, such as the forfeiture account? Do expenses related to participant education, specifically the hard-dollar fee charged by the education advisor, qualify?

Suppose you have an LLC, taxed as a partnership. Therefore, the pension contribution is calculated based upon the earned income. This would normally be the line 14a on the Schedule K-1, and then you take the 1/2 SE tax reduction, and perform the reduced earned income deduction.

A question came up on this, and since I don't do tax filings, I'd like to solicit opinions. Apparently, the CPA is saying that the contribution (let's say 40,000) on behalf of the partners should be on Line 13, and therefore the line 14a figure is already reduced by the 40,000. For example, if the earned income after the 1/2 SE tax reduction is 180,000, and the partner will receive a 40,000 contribution, the CPA is saying that the Line 14a should be 140,000, not 180,000.

This doesn't seem right to me. As I read the Schedule K-1 instructions for line 13, yes, it does seem that the 40,000 should be reported here, but this is so the partner can deduct the 40,000 on his 1040. It does NOT seem to me that it should reduce the Line 14a amount.

Any thoughts on this? Thanks!

I cannot seem to find a straight answer on this anywhere...does the 2004 compensation limit of $205,000 apply in determining the contribution for both employee elective deferral AND employer matching contributions, or just for the match?

I have a client for whom several participants had only 6% elective deferral for 2004 - going by the $205,000, the max contribution should have been only $12,300, however they went to the $13,000 limit. For the employer match, however, which is max of 3%, that was correctly capped at $6,150 (3% of $205,000).

Hi, two questions:

1. We have a 403(b) Plan. We have decided to change vendors. Our new vendor is putting in place a new plan document, which we will execute. Our HR department is getting calls from financial planners saying that their clients (a few of our employees) have the right to immediately roll over their account balance. The financial planners claim that by executing a new plan with a new vendor, we are basically terminating the old 403(b) plan. I am not aware of a permissible rollover unless a participant terminates. Does anyone know?

2. So when we adopt the new plan, participant account balances are still sitting with the old vendor. The old vendor told us they have a new product coming out. However, for employees to take advantage of it, they have to roll over their account balances. It is strange to me that a participant, with money with that vendor, would have to roll money over. Any thoughts?

Any clue on these questions is appreciated.

Hi, two questions:

1. We have a 403(b) Plan. We have decided to change vendors. Our new vendor is putting in place a new plan document, which we will execute. Our HR department is getting calls from financial planners saying that their clients (a few of our employees) have the right to immediately roll over their account balance. The financial planners claim that by executing a new plan with a new vendor, we are basically terminating the old 403(b) plan. I am not aware of a permissible rollover unless a participant terminates. Does anyone know?

2. So when we adopt the new plan, participant account balances are still sitting with the old vendor. The old vendor told us they have a new product coming out. However, for employees to take advantage of it, they have to roll over their account balances. It is strange to me that a participant, with money with that vendor, would have to roll money over. Any thoughts?

Any clue on these questions is appreciated.

We are planning on re-doing our Dependent Eligibility Status Forms for dependents on our benefit plans that are over age 19 - and FT students under 25

Does anyone have a sample form that you could share with me?

Also any comments about how often you send them out - monthly, twice a year?

Thanks