If I were looking for materials on NQDC including executive compensation - what would be the best resource(s) to purchase-including the new 409A guidance and suggestions, etc.? Any help would be greatly appreciated!

I have DB plan that drafted by someone else that was not amended for EGTRRA. Would it be permissable to simply adopt the amendments the IRS issued as good faith amendments in 2001-57? There is no way i would be able to amend the plan properly since it is customized. The plan is terminating and it needs to be in compliance.

Under the SCP, if an employer has to make a corrective distribution, can they use forfeitures? The Plan provides that forfeitures are used to reduce future employer contributions. I know that I need to make the distributions, I know the amount, and I know that I have to adjust for earnings, I just want to make sure that I can use past forfeitures to do so.

Advice please: we have a 10pp company and are in the process of offering health insurance benefits for the first time. We plan to pay 70% across the board for all full time employees and their families with two options of health plans. One employee (single status) claims that offering 70% across the board would be discrimination to those without familes and is requesting equal compensation. Ideas, comments, suggestions? Many Thanks

How are disability benefits taxed from a qualified DB plan - if paid from the plan?

Is the plan considered employer paid benefits?

And lastly, can the participant opt out of federal tax withholding?

Small Profit Sharing Plan currently holds a life insurance policy (whole life, I think) for the benefit of owner (sound familiar?).

Owner is replacing the current policy with a "flexible variable" policy. First, am I correct in assuming that the "cumulative premium" is now subject to the "25% of cumulative contributions" incidental benefit rule?

Second - and here's where it gets interesting - the agent would like the participant to make a one-time "non-1035 non-repeating premium" of $10,000 to the Plan (I am a TPA - so have NO idea of what that means or entails.).

Could the participant direct $10,000 of his existing account to the new policy - in addition to the initial annual premium - subject, of course, to the "incidental benefit" rules?

[Also wonder if this approach (i.e., flexible variable policy vs. whole life) isn't a somewhat roundabout way of allowing the owner to self-direct a portion of his account (via the policy "sub-accounts")...]

Am almost completely "in the dark" here, so would appreciate any and all comments.

Thanks!

After substantial review of pension plan loans I have uncertainty as to how to administer the plan in relation to the affected plan participant after the loan is considered a deemed distribution.

Say a participant takes a $50,000 loan on 7/1/2002 and does not pay off the loan in compliance with the level amortization payment by not making his first required payment(s).

Therefore, as of 7/1/2002 the participant should be charged with a deemed distribution for $50,000.

After this occurs and the participant decides to pay back the loan say at 6/1/2005, then it would seem that the amount to pay back would be $50,000 plus interest at the loan interest rate. Say it turns out to be $75,000. Then it would appear that the participant would have basis in the benefit in the amount of $75,000.

So that if say the participant were to take a lump sum of $200,000 at termination date of 1/1/2008, then $75,000 would not be subject to tax and not be eligible for rollover, but the remaining $125,000 would be subject to tax and eligible for a direct rollover.

Is this analysis correct?

And finally say the participant never pays back the loan and terminates at 1/1/2008 with a lump sum value of his accrued benefit of $200,000.

How would this transaction be handled?

SHould the value of the deemed distribution be increased with interest until 1/1/2008 (to say an amount like $100,000 for example purposes) and then such amount be basis that is offset to the $200,000, where then $100,000 is either distributed or rolled over?

Thanks.

Here's the background - I have a state governmental tax-exempt client that wants to adopt a generous qualified DB plan effective 1/1/2005 granting many years of past service. Problem is that for those HCE's near retirement, their benefits are severely limited by 415 (due to the years of participation in a plan). In addition, the effects of the 415 limits decrease significantly as they stay in the plan. So we need to create a nonqualified arrangement that replaces the benefits lost by the 415 limits.

Can we create a 457(f) plan with a schedule of benefits that is dependent on year? For example, if participant separates service in 2008, their stream of payments is “xyz”. If the participant waits until 2009 to terminate, the stream of payments is now “rst”, and so on. Essentially, we are trying to fit a true excess nonqualified arrangement into the 457(f) provisions without the picking a definite retirement date and amount.

Any thoughts? Thanks

Employer adopted a DBP effective 1/1/05, executed in February. Due to financial emergencies with the Employer, it would like to either postpone the effective date or rescind the adoption of the plan entirely. The plan has not yet been submitted to the Service, nor has an SPD been distributed.

Two of 35 employees completed 1000 hours in 2005 for a year of benefit accrual. There is a component in the benefit formula that takes into consideration years of benefit accrual completed prior to effective date of plan.

Is there a way to reverse these actions and end up with no plan, or at least a deferred effective date?

Has anyone had an account balance left in a plan due to a deported illegal alien? Is there any special handling? Plan sponsor wants to distribute his account balance, but can't locate him in Mexico. Thanks.

Questions regarding the allowance of pre-participation past service credit have been raised and I need some assistance to supplement what I have found.

For purposes of this email, we will assume the corp sponsoring the pension is either a 1 participant plan or a plan with 2 employees.

1. If a corp forms a pension it seems clear that service prior to the plan inception can be included for accrual purposes

2. If a sole prop changes to a corp (and then forms a pension at the same time), it also seems that service with the sole prop prior to plan inception can be included for accrual purposes.

The next few situations are to uncover potential limitations on this matter.

3. Say a person forms his own corp (and plan), can past service be counted from another company he owned if a) same line of work? b) different line of work?

4. Say a person owns a corp and establishes a plan, can he provide his past service with the same corp if it is in another line of work?

5. Say a person has a company that provides a service, then he is an employee of a newly created company (in addition to the other company just mentioned) that he runs and manages in its entirety (president), but does not own, can past service from the original company be counted for accrual purposes?

Items 3 and 5 seem a little dicey to me, but curious to hear opinions.

Thanks

A one life (sole prop) DB plan, end of year val. Client wishes to terminate and roll money into IRA before end of 2005, but expects considerable income and would like to use income and make a contribution for 2005. Since self employment income is considered earned on 12/31, is there a way to terminate the plan prior to 12/31, but still use the 2005 income?? Thanks.

A plan sponsor is switching from a Final Average Pay Plan to a Career Average Pay Plan in the middle of a Plan Year (5/31 for a calendar year plan). My question pertains to the 401(a)(17) compensation cap. Is it permissible to use the following approach:

Final Average Pay Benefit = Use full $210,000 comp cap but employees would only be credited with 5/12 of a year of service (service completed before amendment). So an HCE over the comp cap would receive $210,000 X benefit formula X 5/12.

Career Average Benefit = Prorate $210,000 comp cap to 7/12 for partial year. So an HCE over the comp cap would receive $122,500 ($210,000 X 7/12) X plan formula

Is there any guidance on this type of situation or would a private letter ruling be the only method by which to obtain comfort?

Dr. A is 100% owner of Company A (no other employees)

Dr. B is 100% owner of Company B

Both doctors are 50% owners each of Company C

They have a SEP for the employees of Company C. Can Dr. A have a uni-(k) for himself in Company A? As a side note, he currently is benefitting from Company C's SEP.

during the late 90's when you could use gatt or pbgc rates the employer did not do gatt either timely or correctly. is there any way to still use the gatt rates? thanks

i am not a pension professional so please bear with me. back in the late 90's when there was a voluntary period in which you could use gatt or use pbgc rates fpor db termination a plan did not do the gatt amendment correctly or timely.

there has been no distributions to date9its a long story) is ther any way that the plan can now be terminated at gatt rates/ thanks

My husbands company has a 401K plan set up with Lincoln Retirement in the form of an annuity. Expensive and not very good. The company does not match, but has a seperat account for profit sharing.

Which would be better for us?

Keep investing into the 401K to keep our taxes lower?

Stop adding to the 401K, but invest the same monthly amount into a taxable mutual fund?

We both fully fund our Roth IRA.

Any help would be appreciated.

In the absence of participant election, do the automatic rollover rules apply to plan termination lump sum distributions regardless if the plan has amended to the $1,000 threshold limit to eliminate the need for automatic rollovers?

The only reason I ask is because we subscribe to Accudraft for our document provider and our most recent document updates included the following statement regarding an update to the automatic rollover amendment...

"A consensus has now developed in the pension community that the automatic rollover rules of Internal Revenue Code Section 401(a)(31)(B) apply in the case of a plan termination even if the plan has been amended in such a manner that the automatic rollover rules do not apply while the plan is in operation (e.g., by reducing the cash-out threshold to $1,000 or less)."

This is the first I have heard of this. I thought if there was truly a "consensus" that someone out there would have heard this.

Has anyone?

Quick question (and I tried to search if this had been covered - because I imagined it had, but could not find it - so here goes):

We have an all insured LTD plan (established in 1998) and we never filed a Form 5500 for it because we were always under 100 participants (separate plan document, SPD, etc. numbered 504).

On January 1, 2003 (first day of plan year) we went over the 100 mark to 104 participants.

Question: How does the 80/120 rule work with this?

Can we file the same form as last year because we are not over 120 (which was no filing at all) or do we have to enter the DFVC program starting with the 2003 filing and file on time for 2004?

I seem to remember under the pre-1999 forms we could not file - but I am no expert and my be wayyyyy off base.

Sorry if this is a repeat - but I'm not sure where to go.

Company A purchases company B. Both cos. have a qualified plan. Company B runs separate from Co. A for a yr. In yr two the assets from co. B are transferred to Co. A's plan. Would this be considered to be a related rollover or unrelated rollover?