Late deposits - what will happen to my client if I put on attachment 4a - corrected outside of VFCP? Is there a 100% correlation between a DOL audit and enterring in that field?

I have a case in conversion where the prior tpa enterred an amount as being deposited late. The DOL sent a packet to the client and told them they can elect to submit to VFCP by May 10. What is likely to happen to the client if they don't submit and write a letter detailing the correction (the alternative listed in the letter)?

How difficult is it to submit an application to the VFCP?

I just found out that a client had an owner (10%) who turned 70 1/2 in June 2002. This partiicpant should have received a distribution by April 1, 2003 but did not. We need to give him back RMD's, correct? So I need to calculate on e based on his 12/31/01 bal (for 2002), his 12/31/02 bal (for 2003) and his 12/31/03 bal (for 2004). Can this be corrected thru VCP? Penalties?

Thanks for your help.

Where a controlled group employs individuals in multiple countries, should the plan use the general rule set out in the code to determine US source income or may the plan rely on the applicable treaties?

I.e., do you treat non-resident aliens as excludable if (a) the portion of their compensation attributable to services performed in the US exceeds $3000 (the Code answer), (b) if they work in the US more than the number of days specified in the treaty (the answer under most treaties), or © they are not US citizens or you know that are resident aliens (ignoring the US source income portion of the exclusion)?

A client wants to implement a negative enrollment feature in their existing plan. Does the commonwealth of PA require written authorization from an employee in order to withhold from their earnings? If so, how does this impact a sponsor's ability to implement negative enrollment?

Also, if anyone has experience with negative enrollment, what deferral rates are being used?

I attended a conference that said 2% is the norm.

I have found the annuities institute at Annuities Institute to be very helpful and informative. Hope you find this helpful as well.

Frank Carlucci

Is there any solution for an employee who enrolled in a dependent care reimbursement account in anticipation of a birth, and then there was a misscarriage? Could this be a correctable error and the plan allow the amounts paid to be refunded without violating the tax benefits of the plan?

My wife's uncle passed away and left her with three IRA's. She is 49, and will be 50 in January. I know we have three options: 1) take all the money now, 2) do a five year plan, or 3) do a stretch plan. My questions is, will she have to pay the 10% penalty for taking the money..

We are drafting a relocation policy and are wondering if anyone is able to share their relocation policy to assist us with this process.

Only one loan allowed. Plan sponsor allowed participant to take more than 50% of his vested account balance. Loan was for $2,500 and done back in July 2004. The plan document and the loan policy do not have the $10,000 minimum langauge.

Based on my research, I believe the excess over the 50% of vested account balance is a deemed distribution at the time the loan was issued. It also appears that this would be a prohibited transaction since it would not meet the prohibited transaction exemption since the loan was not adequately secured.

Anyone know a way around this? Can I rely on the 10,000 miniumum under 72(p) even if it is not in the document or loan policy?

I'm having a debate w/my insurance carrier. On line 1(e) of the Schedule A, it's persons covered. Is that employees covered or employees and their dependents that are covered? Thanks.

Does anyone know who are the "big players" or "best players" in the non-qualified deferred compensation plan record keeping arena?

If a plan had late deferrals in 2004 wich were all deposited by the end of 2004 but the lost earnings were not corrected until 2005, what amount would you put schedule I line 4a.

Can you reimburse a redemption fee? Would the reimbursement be considered a deemed contribution to the plan? Would this constitute a prohibited transaction under ERISA?

For purposes of measuring the 60-day SMM distribution requirement if there has been a material reduction in benefits, the regs state that the distribution must take place no later than "60 days after the date of adoption of the modification or change." Does this mean that if I sign an amendment reducing medical benefits on October 1, 2005, effective January 1, 2006 that the 60 day starts to tick on January 1, 2006 since that is the effective date? Or October 1, 2006 since that is the date the amendment was signed approving the reduction?

Thanks,

In a PS/401k Plan the policy is owned by the plan, but who should be named as the Beneficiary in the policy? It would appear to me that the plan should be named as the beneficiary and then the trustee would pay out the benefit in accordance with the Beneficiary Designation form for the plan. If it is not done this way is the Life Insurance Company responsible or capable of preparing the 1099R forms correctly? Is there a higher risk that the plan beneficiary and the policy beneficiary will not match?

I have a Participant that is eligible for UNREDUCED early retirement but is continuing to work. We have assumptions for early retirement under the plan. The DRO reads that the AP will recieve $2,000/mo from the plan and may commence at any time that the participant is eligible for early retirement. With this language she would probably commence immediately. Does this constitute an increase in the "expected actuarial value" that increased becuase of the QDRO? If so, then I would have to reduce the monthly pension of the participant.

The opposing position would be that the participant could also retire immediately as well which would simply be an "experience loss". Could a possible (likely) early commencement by the AP be viewed similarly as an experience loss?

A profit sharing plan provides for prevailing wage contributions and a discretionary profit sharing contribution. The profit sharing formula is a new comp. formula with multiple contribution groups.

For 410(b) purposes, the nonelective contribution component consists of the prevailing wage/profit sharing contribution. In order to receive a prevailing wage contribution, a participant only has to work on a prevailing wage job. In order to receive a profit sharing contribution, a participant must be employed on the last day of the plan year and work 1,000 hours during the plan year.

For 401(a)(4) purposes, it is not clear to us who must receive the minimum gateway contribution. For example, must an individual who receives 50% of their wage as prevailing wage (and therefore receives a prevailing wage contribution) and 50% of their wage as nonprevailing wage have to receive the minimum gateway contribution even if they (1) do not work 1,000 hours during the plan year or (2) terminate during the plan year?

Thanks in advance for any help!

Assuming no 409(p) problems with the S Corporation ESOP, it literally looks like an S Corp ESOP with only non-voting shares would be subject to UBIT on all of its earnings because the shares are not QES under 409(l) because it can't meet the exception in 512(e)(3).

Is it really that clear? Anyway else to interpret the 512 exception?

If that is true, you could never really use nonvoting stock in an S Corp ESOP, correct?

Assume an LLC that normally has a negative net K1, can the owner still have a 401(k) Plan and put in deferrals and still receive a match?

If there is a negative K1, can the partner still defer on his draw even if there is a negative K1?

Agree. BRF issue that passes because both are NHCEs. Not a good precedent though. How you going to explain this in the SPD?

The attachment below is a test and is unrelated to this thread!

ADPACPCL.RPT