Our prototype document forces payout with balances under $ 1,000. My question is this, what date do you use in determining this? Termination date? PYE? Date of Distribution?

Thanks

When calculating the current liability, do you apply all of your funding assumptions?

For example, if I am valuing ancillary benefits (termination, early retirement benefits, etc) in my accrued liability, do I also value those in the current liability?

If I am assuming no pre-retirement mortality for funding, is that what I also use in the current liability calculation?

What is the absolute deadline for safe harbor contributions? Assuming a 12-31-04 Plan year end? Thanks!

Company adopts a standardized prototype plan in 1995 (calendar year plan). I don't have the opinion letter but I would assume it is a TRA 86 document. Nothing seems to have been done (document-wise) since then, although the admin, 5500s, distributions, seem to have been handled timely and properly.

The link below answers many questions in this situation:

http://benefitslink.com/boards/index.php?showtopic=26811

I wanted to quantify for the plan sponsor what has been missed with their document. Is saying that GUST amendments, RMD amendment, and involuntary distribution amendment (although still not really late) are needed, catch everything? Secondly, if going through VCP to correct, the user fee is $750 (10 employees). Is there usually other government fees or negotiated settlements that take place in this situation?

Thanks for comments

I am currently working on a situation and need some input. Here are the facts:

Employer A owns 50% of a surgery center (the other 50% is owned by a third party). There is an ASG between the surgery center and Employer A. During the year, the surgery center was sold to another entity, effectively ending the ASG. All employees of the surgery center are now employees of the new owner. Almost all of the surgery center employees had more than 500, but less than 1,000 hours of service. The plan contains a 1000 hour/last day requirement for profit sharing contributions.

I am trying to determine if the 410(b)(6)© transition rule would kick in and allow me to ignore the surgery center employees in coverage testing for this year (and, then, exclude them from the cross-test for the year).

Any thoughts or suggestions?

Is it required the Trustee sign the SAR? or was there ever a time this was a requirement? My employer asked me to research this as he has always had the Trustee sign the SAR prior to distributing to plan participant. I have worked for several TPA's and am not aware of such requirement, nor have I seen a signature on a SAR before. So far I have not found any information documenting this is or ever was a requirement. Any input would be of great help.

Company A is a small S-corporation with an employer-provided medical insurance plan. Company A pays all medical insurance premiums and reimburses its employees for out-of-pocket expenses (for deductible, co-pay, etc) over a certain dollar amount.

The stockholders of Company A are also greater than 2% stockholders in Company B. Is Company B required to provide its employees the same coverage as Company A does?

Both companies have probably half a dozen employees, including the stockholders.

A new pension plan started in 2004 has a 5% owner over age 74.

Assume the beginning accrued benefit is $1,000 per month payable 1/1/2009 on the fifth anniversary of entry, and that the end accrued benefit is $1,200 per month (both for the 2004 plan year)

The beginning date for minimum payments in 2004 is:

1. Nothing, since the plan was signed in December 2004, or

2. Nothing, since there was no prior accrued benefit, or

3. 4/1/2005

If so, is the minimum distribution based on the reduced actuarial equivalent of the future benefit $1,000 accrued benefit or the $1,200 accrued benefit.

Does it matter that the plan is not funded for 2004 until September 2005?

I looked at the new 401a9 regs, and they don't make clear what accrued benefit to consider, nor the required beginning date for this circumstance.

A question that I have been asked a number of times since creation of health savings accounts (HSAs) is whether it is permissible for an employer with a self-insured health plan to set up higher deductible levels for certain of its executives and a lower deductible for other employees. The idea is that by limiting enrollment in the high-dedecutible portion of the health plan to highly-compensated employees, the employer can also limit its HSA contributions to the same group of executives.

On its face, I see no discrimination problems under the HSA rules. Notice 2004-50 provides that contributions to HSAs must be comparable only as to those employees who are eligible for an HSA. Because in the scenario described the non-HCEs would not be allowed to enroll in a high-deductible health plan, they would not be eligible to receive HSA contributions and therefore would not be in the class of eligible employees for testing HSA comparability. Because HSAs are not employer reimbursements, they are are not subject to Section 105(h) discrimination testing.

As for the health plan, under Section 105(h) a self insured plan may not discriminate in favor of HCEs with respect to eligiblity or benefits. The argument from employers though is that, when the health plan is viewed in isolation, separate from the HSA contributions, the HCEs are actually getting less benefits than other employees because the same items are covered by the health plan, yet the HCEs' deductible is higher. While 105(h) also has a facts and circumstances "discriminatory in operation" test, this too is geared towards ensuring that "the plan" is not actually discrimating. For example, prohibited discrimination may occur where the duration of a particular benefit coincides with the period during which a highly compensated individual utilizes the benefit. Since the plan consists only of the self-insured plan, and not the HSA, it could be argued that there is no discrimination in operation either.

Has anybody else had a chance to address this issue?

Our research indicates that qualified retirement plans which use leverage to buy real estate are exempt from the UBTI tax. On the other hand, IRAs that use this same investment strategy are NOT exempt from the UBTI on the related rental income. Is there an explanation as to why these types of plans are treated differently?

In order to qualify for exemption from the PBGC VRP under the "Fully funded plan with fewer than 500 participants", what are the requirements for calculating the vested benefits?

It seems that you have to use the Required Interest Rate, but what mortality table is required (if any)?

Can you use the decrements that are used in the actuarial assumptions for plan funding purposes? Or, is this an interest only calculation?

I have a client who wants to offer an HSA to the employees. Some employees are enrolled in a Health FSA. Can they stop their Health FSA and join the HSA in the middle of the plan year. If so, what happens if they have had more deductions than reimbursements or more reimbursements than deductions?

Please advise

Ownership of P.C.

A = 53%

B = 32%

C = 10%

D = 5% [exactly]

P.C. has employees.

Ownership of LLP

A,B,C and D each own 25%

LLP has no employees nor pays wages, and probably never will.

If P.C. adopts a standardized plan, must LLP be included as a controlled group member? If so, does that make D a key employee and an HCE? My thinking is Yes and Yes, because of the LLP ownership.

If P.C. adopts a nonstandardized plan, the LLP would not have to be a plan sponsor. Thus, under IRC 416(i)©, would this prevent D from being considered a key and highly compensated employee? [iRC 414(q) refers to IRC 416(i) for applying the 5% rule].

Employer wants to terminate their plan beginning with the 2005 plan year...calendar year!! They provide a 3% Safe Harbor, are they still required to make the safe harbor contribution in the year of plan termination? What are the rules with this?

A transfer from a qualified plan to an IRA resulted in a penalty for an annuity held in the qualified plan because it was cashed in prior to the transfer, but one day too soon. Now, the annuity company is willing to take back the original amount, waive the penalty and re-transfer the funds to the IRA.

Question: Do the above transactions require the issuance of 1099R's back and forth or could the original transfer be deemed a mistake? Are there any adverse tax consequences for the QP/IRA owner?

Client currently wishes to terminate SARSEP and establish a SH 401(k) for remainder of year. 5305A-SEP form in use, SARSEP will not meet the 50% participation requirement under IRC 408(k)(6)(ii). We would like to terminate sponsorship of the SARSEP [with notice and resolution] effective 7/15/05 and have the Safe Harbor 401(k) [using the match method] effective 8/1/05 in hopes of avoiding the concurrent plan problem of using the 5305A-SEP.

The 2005 SARSEP contributions I understand will be, due to failing the 50% rule, default to the regular IRA rules for deductibility, etc. My questions:

a) First, is my analysis above correct?

b) Is the sponsor still required to make the top heavy contribution due to partial year sponsorship of the SEP, even though all the 2005 contributions are now deemed IRA contributions rather than SARSEP contributions?

b1) Does the adoption of the Safe Harbor 401(k) eliminate the top heavy requirement for the year? [assume parallel participation]

c) If 'b' is "yes", do we base the 3% on total 2005 compensation or only through the SARSEP's date of termination?

d) If a top heavy contribution is required, can that contributatory requirement be made under the non-elective benefit structure of the (standardized) Safe Harbor plan?

e) If 'd' is "yes", can we subject the top heavy contribution to the graded vesting schedule under the SH plan? [my inkling on this is no, since this would not provide the same contractual benefit as a top heavy contribution under the SARSEP-thus 'd' would probably be "no" also]

f) If 'd' is "yes", The TH required amount I understand may not be reduced by the safe harbor match [iRS Notice 98-52]. What if we used the 3% nonelective safe harbor rather than the match?

g) Assuming 'd' is "no", would it be advised to make the Safe Harbor plan with a non calendar plan year? The concurrance issue with the SARSEP is what's rattling my brain here. Also, would the SH 401(k) plan be considered a 'successor plan' to the SARSEP? The only definition I currently know of a 'successor plan' is under Treas. Reg. 1.401(k)-1(d)(3), which, if applied, would not treat a SARSEP as a successor plan, but this is the flip of that. I believe the SARSEP is not considered a 'plan', but don't have a site.

thanks to any full or partial responders..

Does anyone know whether it's ok to post one notice to interested parties that covers two different plans by the same employer. Our 401k plan and profit sharing plan are separate plans, with the same eligible employee classifications. Everything in the notice is the same except the names of the plans and the plan number. As long as right plan name clearly correspond to the right plan number, I don't see a problem. Does any see a problem with this? Has anyone done this?

Thanks

Can a company terminate their PS plan (1 life) on June 30, 2005 and begin a SIMPLE on 7/1/05?

I'm just full of questions today.

Can a plan the allows a participant to enter the plan after 3 or 6 months also have an hours requirement or am I correct in thinking that an hour requirement is on a 1 year (1,000 hours) provision?

If a company with a leveraged ESOP is sold, I'm assuming the ESOP has to pay back the balance of the note using the proceeeds from the sale. If the ESOP pays back the company, and the company is sold, what happens to the cash? The company is currently owned 56% by one individual and 46% by the ESOP.