Company A does not have a retirement plan. Company B has a 401(k) profit sharing plan. Company A acquires Company B. Company A does not want to have a retirement plan and wants to terminate Company B's plan. Company B has partcipants with outstanding participant loans. All Company B employees will become employees of Company A.

Can Company A terminate Company B's plan and what would happen to the outstanding loans?

a 403(b) which currently runs 7-1 through 6-30 will be amending the plan to a calendar year effective 1-1-06. for the short plan year(7-1 through 12-31) will participant deferrals be limited to 402(g) based on deferrals from 1-1-05 through 12-31-05? or can they put in full 2005 py limit($14,000) since 2005 py will be a short plan year?

It's difficult to find succinct guidance about the various effects of late plan contributions. For example, an employer's income tax return is due on 03/15/05 (no extension) and includes an accrued PSP contribution. Oops...the employer goofs and doesn't make its contribution until May 2005.

1. When it deducted the contribution on its return, the taxpayer made an irrevocable election to pay the amount. The employer can't amend its tax return to rescind the contribution. Even though the contribution's late, the taxpayer still must pay it.

2. Sec. 404. The taxpayer isn't entitled to a 2004 deduction. Doesn't the employer amend its 2004 return to remove the deduction (although not the contribution)? And, doesn't the contribution now have to squeeze into 2005's Sec. 404 limit, based on 2005 compensation?

3. Sec. 415. This deadline (04/15/05) also passed. Aren't the contributions included in the 2005 Sec. 415 limit (not 2004, as had been intended)?

4. Is the employer subject to any excise tax or penalty for the late payment?

Is there an excise tax on excess annual additions? The excess annual additions were comprised of elective deferrals and employee contributions and were returned to the employees in April for a calendar year plan.

Just found out a client of ours had a recent ownership change will now makes them a member of a controlled group. Our client has a 401(k) plan and one of the other members has a SIMPLE IRA plan.

Does the transition rule come into play? Does the member who has the SIMPLE IRA continue to make contributions into that plan? Or can the SIMPLE plan be discontinued and the member adopt the 401 (k) plan?

In June '04, company changed corporate name, address, plan name and EIN - the 401(k) addressed these changes with a Resolution, etc. For the '04 5500 filing, do we just put all the new information on the actual form and attach a note giving prior co. name/plan name/address and EIN? Thank you in advance.

Recently took over the admin for a DB plan ; the sister PS plan is administered elsewhere - there are 10 benefiting HCE's , 6 benefiting NHCE's , & 24 excluded by virtue of job description - the entire group of 24 is covered under the PS plan - there are no statutorially excludables ; the benefit formula is safe harbor .

Participation is passed ( i.e. 401(a)(26) ) since 40% of 40 is 16.

Coverage (410(b) ) is satisfied under ratio percentage by aggregating the plans and treating them as one.

Question: In order to aggregate plans I thought comparability of the plans had to be demonstrated using something like the principles under Rev. Rul. 81-202 , for example. However, regulation 1.410(b)-7(d)(1) doesn't seem to require comparability ??

I have a plan that allows participants to start receiving monthly benefits upon attainment of normal retirement age (age 65) while remaining employed on a full time basis. I was hoping someone can help me with the calculation of the subsequent accrued benefit.

Plan year = 3/1 - 2/28

Actuarial Equivalence = UP84 at 5.5% (pre and post retirement mortality)

John reached NR on 6/1/2004 and began receiving monthly benefits in the form of a life annuity in the amount of $1,684 per month. I need to calculate John's accrued benefit as of 3/1/2005.

The document says that "At the close of each Plan Year prior to the Participant's Actual Retirement Date, a Participant shall be entitled to a retirement benefit equal to the greater of (1) the Actuarial Equivalent of the monthly retirement benefit such participant was entitled to at the close of the prior Plan Year, or (2) the Participant's Accrued Benefit determined at the close of the Plan Year. The monthly retirement benefit shall be offset by the actuarial value of the total benefit distributions made by the close of the Plan Year.

How do I calculate the "actuarial value" of the benefits John has received as of 3/1/2005?

Please use actual numbers.

Thanks!

A HCE elected deferral of $5,000 for the year and must now reduce election to $3,000. Can spouse now elect $2,000 under his employer's dca??

Thanks.

Probably a stupid question, but I'll ask anyways. Have a plan that excludes bonuses, overtime and commissions from definition of comp. Do hours worked for overtime still get counted as hours of service towards plan eligibility and vesting? My gut feeling is yes since the doc says that an hour of service is an hour that an ee is directly or indirectly compensated for or entitled to be compensated. I'm getting comments that are making me second guess myself.

Client has a Safe Harbor Plan using the 3% nonelective. Compensation is defined as W-2 compensation plus deferrals. One HCE has auto included and the other has key man insurance included.

Does the compensation for the SH allocation include the auto and insurance? Does the compensation ratio test need to performed?

Has anyone seen a recent analysis of the comparison of the tax credit versus the exclusion for dependent care plans? I am reviewing language on this in an SPD and I want to have up-to-date information. I know Working Families Tax Relief Act changed the dependent definition, and there may have been other credits enacted which could have changed the nature of this determination.

Thanks in advance.

can I withdraw money from my roth ira for home improvements. I had the account since 2001 and I am not 59 1/2. I want to use only $4,000 of the $14,000 I have in the account, is this possible?

I have just read and been confused by IRS Notice 2005-8. It talks about when an hSA is or isn't deductible by an S corp and also if the shareholder can deduct that contribution on her income tax if it has also been imputed as income. Does anyone have a clear explanation?

Also, can you do the following?: An S corp has 5 shareholders, including family members attributed due to Section 318. They have a cafeteria plan for the employees, but of course, cannot participate themselves. They purchase an HSA compatible plan for everyone in the company. For the employees, they contribute $1000 per year into the FSA. For themselves, the owners, they contribute $1000 into the HSA. These contributions are outside the cafeteria plan, because the owners cannot participate. Are these contributions subject to the 35% excise tax because the employees did not receive an HSA contribution? Assuming this is ok, can the S corp consider the $1000 per owner a business expense and then attribute the income to the shareholder, who then deducts it on the income tax return?

Thank you so much for your help and comments.

Am I allowed to put my social security income into my ROTH?

Are SEP-IRAs and ROTH IRAs considered "pensions"? I ask because I'm trying to meet the qualifications for Connecticut's ConnPace drug assistance program. I won't qualify if I have a "pension". I'm 38 years old and I have a small amount of money in two IRA accounts which I do not draw from yet. Previous to not working, I was always self-employed. The people who answer the phone at ConnPace are kind, but did not know the answer to this simple question.

My husband and I are both 26 and I am starting to do research and learn about Roth Iras but I have a few questions. My father-in-law started a traditional for my husband a number of years ago but we have not invested in it since we got married three years ago. So here are my questions

1) When you file jointly do you open 1 roth account for both of you or seperate

accounts?

2) If you open seperate accounts can my husband have a roth in addition to the

traditional?

3) I am considering converting my husbands traditional into a roth (about $6000). I know that I will have to pay the taxes on doing that and that it should come out of a seperate account so I am not charged a fee for early withdrawl. If I were to do that, do I pay the taxes right then and there, and how does that work or do I pay the taxes with my income tax.

Can someone please explain the very simple basics of roths I have tried to find these answers online but I cant find them. Thank you for any help you can give me or point me in the right direction of where I can find these answers.

Shell

A Participant deferred a total of $7788.24. The deferral source is currently $4,858.26. The participant took a loan a year ago and has been making payments but now needs a hardship.

The outstanding loan balance is $3,987 and was taken originally from the deferral source.

We are now trying to determine the amount available for hardship.

Is it acceptable to assume that the earnings from the deferral source were loaned out so that all that is remaining are deferral contributions and thus the entire deferral balance is available for hardship?

Should at least the interest that has been paid back to date on the loan be subtracted from the deferral balance to determine the amount available for hardship?

Or should the entire outstanding loan balance be added back to the deferral source, subtract out the salary deferrals made of $7788.24 to determine gain or loss, and limit the hardship to the current deferral balance less the gain or loss?

Help!

Will deposit overages be handled differently when the final 401(k) regs become effective? We have previously transferred them to the Forfeiture (Suspense) Account, to be used to reduce future contributions. Will we now have to treat them as nonelective contributions?

This is a kind of basic question....are all vested amounts in an EE's 401(k) eligible to be considered for a loan? I remember reading somewhere that ER non-elective contributions are not, but I cannot find that in any of my sources.

Thanks