I'm driving myself crazy with this. For non group term insurance paid by the employer for the benefit of the employee and his/her beneficiaries, I know this is taxable to the employee. I believe the amount the employer paid for the premium is the amount to be included. The instructions to the w-2 don't tell you where to include it. What should I do. I realize that I don't get the benefit of the $50,000 exclusion.

I have a client that wants to allow his union employees to be eligible for the plan but does not want to give them a matching contribution as he does for everyone else now. Is this allowed and how do we go about doing this. Should we have 2 seperate plans one for reg employees and one for union members. How does this affect testing.

If an employer is paying compensation in lieu of the notice requirements (payments stop the earlier of 60 days after notice should have been provided or the employee find another job), are these payments to be treated as severance payments for retirement plan purposes? I feel that they are, but if someone could clarify or refute my logic, please do so. Thanks

I am interested to know how employers have structured award programs to avoid potential constructive receipt of income by employees. For example, a program in which employees accumulate points towards awards such as gift certificates or even items that otherwise might constitute a de minimis or working condition fringe. Thanks.

The 401(a)(17) Limit says that for year 2005, the most compensation that can be taken into account is $210,000. The Sec 415 limit is one-fifth or $42,000.

The Sec 402(g) limit is $14,000.

Can someone work for four employers

ER(1) for Jan to Mar

ER(2) for Apr to Jun

ER(3) for Jul to Sep

ER(4) for Oct to Dec

and

1) get $56,000 worth of elective deferrals for year 2005?

An employer wants to start a safe harbor 401k plan, but also wants to include union (collectively bargained) employees in the plan. For these union people, the employer wants to give them a fixed contribution, but they want it to be something less than the 3% non-elective for all non-union people. Is this allowed in a safe harbor plan and if so, does it affect the 401k test in anyway?

Thank you

It seems as though the DOL has changed the determination for "lost earnings" on late deposit of deferrals under VFC. Rather than the "greater of ..." method, the IRS deficiency rate under 6621 is to be used - as built into their VFC online calculator.

Is this an acceptable correction of lost earnings to the IRS? Late deposit of deferrals is also an operational error and if corrected under EPCRS and the principle is to essentially to put the plan (participants) in the position it should have been in had the error not occurred, it seems the adjustment for earnings just based on 6621 may not do that.

Is there a disconnect between what the DOL allows and what the IRS requires? How are others calculating earnings on these late deposits?

An employee submitted a medically necessary travel expense claim which includes a tip for the taxi driver. My research hasn't turned up anything that specifically addresses the tip portion of the expense as allowable or not allowable. Anyone know if there is something out there in writing, or have any guidance regarding this issue? Thanks in advance.

Darla

Help! I am new to this forum and need some advice quickly. My wife and I make a combined AGI of $140,000. I contribute to my 401K at work and also contribute to a Roth IRA. My wife, though, has profit-sharing at work and I want to get her setup with either a regular IRA or a Roth IRA---I need to know which way to go.

Can she contribute to a Roth IRA if I have maxed out my Roth IRA contribution?

If we need to get her on a tax deductible IRA, what is the max contribution she can make?

Thanks for your help!

If you file for an extension and later find out there are under 100 participants for the plan year, does that effect anything??? Meaning there was an extension filed but NO 5500??? Also, when do you NOT file a 5500 for a Flexible Plan?

I haven't seen any discussion of the proposed 415 regs on these boards. Am I alone in thinking that the IRS has taken negative and as far as I can see an unchallenged interpretation on compensation which has the effect of reducing the high-3 average (under prior regs) by now basing it only on years of participation (vs. prior service) and also applying the 401(a)(17) comp limit to it. Isn't it funny that the clarifying and simplifying regs always try to curtail the small business owner which is most likely to be impacted. I presume since these are proposed regs we do have the opportunity to comment on them to the IRS. I would hope ASPA or someone might also take up the cause. I think the loss of pre-participation compensation is especially hurtful since most small business owners don't have the income to both take high compensation and make large DB contributions so it could significantly reduce their contributions (no doubt that's what the IRS is hoping for) since they can't rely upon pre-participation comp to get them up to or near the 415 dollar limit.

An owner of a company wants to use his self directed IRA to purchase stock in the company he owns. The stock is not publicly traded. I'm worried about the prohibited transaction rules. Does this sound do-able?

Under State law, X and Y a male and female who have co-habitated for at least three years and who have held themselves out as husband and wife are considered married. Under Federal income tax law, they may not file a joint income tax return but must file as "single" or "unmarried head of household" because they are not "legally married". For puposes of Internal Revenue Code Section 401(a) is X considered to be Y's spouse?

This is a question of how to properly complete Schedule T for a unique situation. The plan is a Defined Benefit plan that was established to cover employees that are collectively bargained (within the meaning of Treasury Reg Section 1.410(b)-6(d)(2)), as well as employees that are not collectively bargained.

Effective 12/31/2003, the plan became frozen with respect to the employees that are not collectively bargained. The plan remains active for collectively bargained employees. Therefore, collectively bargained employees benefited under the plan in 2004, but employees that are not collectively bargained have not accrued additional benefits since 2003.

Under the mandatory disaggregation rules, the portion of the plan that benefits collectively bargained employees is treated as a separate plan from the portion of the same plan that benefits noncollectively bargained employees. Under the Schedule T instructions, it states that if a plan is disaggregated solely because it benefits both collectively bargained employees and noncollectively bargained employees, to complete the Schedule T with respect to the portion of the plan that benefits noncollectively bargained employees. It also states that no information is required for the part of the plan that benefits collectively bargained employees.

For 2003 and prior years, Schedule T was correctly completed for the portion of the plan that benefited noncollectively bargained employees. The portion of the plan that benefited bargaining employees was not reflected on Schedule T. For 2004, how should one complete Schedule T?

1. Since no noncollectively bargained employees benefited under the plan in 2004, do we ignore the mandatory disaggregation rules (for bargaining and nonbargaining) since this plan does not benefit employees that are noncollectively bargained? Would we treat this as a plan that benefited only bargaining employees and mark Line 3c only?

2. Do we continue to view this as a plan that is subject to mandatory disaggregation for the collectively bargained and noncollectively bargained portions? If so, is it correct to complete the Schedule T with respect to the noncollectively bargained employees? If so, would it then be correct to mark Line 3b (No HCEs benefited) because that is a true statement if no employees accrued a benefit in 2004 (because of the 12/31/2003 freeze date)?

3. Would it ever be correct to mark both Lines 3b (with respect to the nonbargaining employees) and Line 3c (with respect to the bargaining employees)?

I am working with an employer who has a standardized prototype document. The prototype sponsor has adopted the amendment to comply with the automatic rollover provisions on behalf of the employer. I believe this is acceptable. The plan however has a 6/30 year-end so the rollover amendment has to be adopted by 6/30/05. If the prototype sponsor is permitted to adopt the amendment on behalf of the employer how do I show that the Plan timely adopted the amendment?

I hope this makes some sense and someone has some guidance. THANKS!

I'm looking at a Schedule H for a large employer H&W plan (including health, disability and life insurance) where the amount in Line 2(e)(1) is 3 times the amount in Line 2(e)(2). Is it possible there are any employer health care expenses in this line? My assumption is that there are Section 125 reimbursements here, plus life and disability payments to employees? Am I missing anything?

Is a reimbursement account type of cafeteria plan the same as a Flexible Spending Arrangement (as defined under Prop. Regs. 1.125-2 Q&A-7©)?

Thanks,

Ken Davis

Univ. of South Alabama

the employee is terminating before 59 1/2 and will receive a lump sum distribution. with respect to lump sum distributions of employer stock, the code says that the employee is not taxed on the NUA. in that case do they have to pay the 10% penalty and if so would it only be on the basis portion of the distribution?

I believe the thread below relates to and answers my question, but was hoping for confirmation since my situation is a little different.

http://benefitslink.com/boards/index.php?showtopic=25657&hl=

Briefly, in April, 2005, company X is bought by company Y. X has a 401k and Y has a SIMPLE 401k. Normally, there can be no other retirement plan in place when a SIMPLE exists. But I believe the transition rule that applies to acquisitions allows both X and Y to maintain their separate plans for 2005 and 2006. Is this correct?

Also, I think the intention is for X's 401k to be terminated and for the SIMPLE 401k to remain as the only plan. As long as the 401k is term'd before 12/31/06 (calendar year plans), there will not be a problem?

Finally, would anything change if this involved a SIMPLE-IRA rather than a SIMPLE-401k?

Thank you

Our firm would like to offer special benefits to our employees such as discounts on entertainment, cell phones, health clubs, yoga, etc. It should be at no cost to the employer. Does anyone know where I can look for such services?