Double checking. Am working on a client that adopted a 401(k) with the 100% of first 4% match. Semi-annual entry dates.

New participant comes in mid-year, defers 4% from entry date (until termination date) and gets matched 100%. Plan is Top-Heavy (except for the exception). Because of the Safe Harbor, I'm thinking I get the free ride from the Top-Heavy rules.

If an individual retired and transferred their 401(k), with basis, to their IRA, where is this basis accounted for on the 8606?

It seems TurboTax will not automatically create an 8606 for this transfer, even when block 5 of the 1099-R shows a pretax amount. So would this just be done on the side (out of TT) on the 8606? And where would you enter the after-tax amount....line 1 or 4?

And if so, I'd assume one would need to attach a sheet explaining this entry if the amount of the after-tax transfer exceeds the annual contribution limit...yes?

BruceM

I have been in the business for 29 years and I still come across questions that I consider "basic." I must tell you that the occurrence of such events make me extremely uncomfortable. In any event, allow me to ask a "basic" question.

ERISA §105 and §209 require that the plan administrator to furnish certain benefit information to a participant or beneficiary of a employee pension benefit plan. Basically the statute identifies three types of disclosures:

1)Benefit statement upon request in writing;

2)Automatic disclosure of benefit statement upon termination or break in service;

3)Statement upon filing of a SSA form as part of a Form 5500 filing.

After rereading the ERISA regulations after all these years, I distinctly get the impression that statement # 3 is different from statements #1 and #2. It would seem that statement #3 would be required to be distributed at the time the SSA is filed even thought the participant may have already received a statement upon termination.

I have always thought of statements #2 and #3 as being the same. Now I am having second thoughts.

I ask for your valued opinion. Do you treat statements #2 and #3 as being separate and independent?

John terminates from employment. He and and his wife Jane enroll in COBRA. Jane is having children with a man other than John, (they are still married - for now) can she add the children onto the policy?

My thought is that since Jane is covered under COBRA, then those children can be added to the policy however, they will not be treated as qualified beneficiaries since they are not children of the covered employee. If John and Jane get a divorce after the children are born, since the children are not qb's, would they be entitled to the 36 months of coverage that Jane would be entitled to?

I know an FSA plan is not required to file IRS Form 5500, if less than 50 employees are paricipating in the Health Care Reimbursement portion of the Plan. What are the rules if more than 50 employees participate in the health insurance plan and their premium payments are withheld pre-tax through the FSA Plan? If required to file IRS Form 5500, what attachments are required? Any additional guidance on IRS Form 5500 for FSA plan would be appreciated.

Thanks,

Joe

I contributed $3000 to my ROTH IRA even though I didn't have any income FY2003.

Do I need to do anything, at all?

Can i ask my broker to change that $3000 contribution to be for FY2004 instead of FY2003?

What are my options?

Thanks

A client has a profit sharing receivable of $100,000 for the plan year ending December 31, 2004. On February 1, 2005, the employer contributes $25,000 of the $100,000 receivable. The $25,000 is allocated to participant accounts pro rata based on the portion of the $100,000 receivable they are entitled to receive. The plan permits participant direction of profit sharing contributions. On April 10, 2005, the employer contributes the remainder of the $100,000 receivable (or the additional $75,000). The $75,000 is allocated to participant accounts pro rata based on the portion of the $100,000 receivable they are entitled to receive.

Participant A invested their portion of the $25,000 contribution (say $2,000) in such a way that on April 10, 2005, it is worth $2,100. Participant B invested their portion of the $25,000 contribution (say $1,500) in such a way that on April 10, 2005, it is worth $1,200.

Are partial employer deposits permitted? Participant A is upset because if the entire receivable had been deposited on February 1, 2005, she would have a larger account balance and Participant B is upset because if the entire receivable had been deposited on April 10, 2005, his account would be larger.

Also, is it possible for the employer to simply dump money into the plan, not allocate the money until the entire $100,000 receivable has been paid (under the facts in this case)? I recall reading somewhere that the IRS or DOL does not like unallocated contributions.

Thanks in advance for any comments/suggestions.

In the SEP answer book that is published by ASPEN publishers it mentions that all of an employer's plans including Section 401(a) plans and annuity contracts described in Code Section 403(a) must be included when determing whether the employer's SEP plan is top heavy? I think that 403(b) plans are not 401(a) plans but are 403(b) plans considered annuity contracts described in Code Section 403(a)?

1. Can you terminate a Simple IRA at any time?

2. Can you open a SEP IRA the same year the Simple IRA is terminated?

3. If a SEP IRA is effective 1/1/05, do all employees who have worked the past 3 years become immediately eligible? Or do they have to wait 3 years from the time the SEP was established?

One of our daily valuation plans provides for immediate distribution. The plan also deposits its matching contribution in September following year end. So, participants who terminated in 2004 will receive their matching contribution in September 2005.

If a participant had an account balance >$5k and the match deposited for 2004 will be less than $1,000, can the trustee cash out that balance, or do you always look to the original vested balance?

Also, how long do you honor distribution papework submitted by the participant? If a participant originally elected a rollover in 2004, is that election valid in September 2005 once the matching contribution is deposited, or must we get another form completed?

Our other concern with some of the distributions that occurred in early 2004 is that the terminated participant has possibly closed that IRA account.

Couple of questions. If a QB waives COBRA coverage, and then revokes the waiver, the employer can reinstate coverage on the day coverage is revoked. Is the employer required to administer in this manner, or can we retro-reinstate?

If we did reinstate on day waiver is revoked, this does not extend the end of their COBRA term, right?

Thx.

This may be a dumb question - but when you say that 403(b) deductions are deducted pre-tax - does this include withholding, social security and medicare? Or just withholding?

Hey - I have been out of the retirement admin scene in along time - recently my boss asked if there was a way to provide an array of benefitsd to employees.

right now they have a DB plan(yes, still) 401(k) no match and a fsa.

I am thinking that a cafe, with a 401(k)/Match combines the best alternative.

Sorry - was not always the best alternative in the past - has that changed?

if we ditch the db (seems likely) can we do a crosstested ps separate and apart from the cafeteria plan?

I am very up to speed on the tech side - but haven't had to do this type of plan proposition in a while.

any help would be greatly appreciated!!

Plan has no age/service reqt. There are 2 part timers who were in the plan in 2003 but decided I guess not to pick up any hours during 2004 and therefore did not work and have no salary. One of them did officially terminate employment during the year but the other did not so she could resume working at some point in time. Question is how should these 2 be classified? Technically they are active ee's with no salary. But if they are listed that way they are included in testing which can't be right since they would have 0% deferral rate. Or should they be listed as ineligible since they have no compensation to receive benefits on anyway? Technically if they did not work any hours then they had a break in service and should be listed as inactive anyways I think? Plan uses 1 year break rules.

Does anyone know of the significance of Schedule D matching up with Schedules A and I. Specifically, what values shoud be reported on the D? The data that we get from the Insurance Company about the PSA's is normally on a cash basis. However, the ending balance on Schedule I is normally on an accrual basis. The same goes for Schedule A. Does the D have to match the A? Because the Schedule A data is often reported on an accrual basis. I have never received any notices from the DOL about the different balances reported on the schedules not matching up. Has anyone else run into this problem?

Dental ins. carrier is not issuing Schedule A for 2004. Says new legislation is holding it up. Anyone aware of this?

Following is the situation I'm looking at regarding newly acquired companies:

Owners of Company 1 (Owner A - 80.03%, Owner B - 19.97%) buy 4 new companies. In the end, each owner owns the same percentage in all 5 companies. Company 1 maintains a PS plan with a 09/30 plan year end.

Company 2 was purchased 12/2001; had an existing PS plan

Company 3 was purchased 06/2003; new PS plan adopted 10/04

Company 4 was purchased 03/2004; new PS plan adopted 11/04

Company 5 was purchased 06/2004; had an existing PS plan

Due to the transition period allowed for acquisitions is the following correct regarding the Company 1 coverage test?

09/30/04 PYE - include Company 2

09/30/05 PYE - include Companies 2 and 3

09/30/06 PYE - include Companies 2, 3, 4 and 5

I am somewhat confused if there is no coverage testing at all for the transition period or if coverage testing is still needed for the existing controlled group and only excluding the newly acquired company is allowed.

Any help would be appreciated. Thanks!

Can you issue an in kind distribution from a non qualified plan? if so, what is the taxation?

I work in the HR department of a company with about 5,000 employees. We have about 10 people that are in the reserves and take intermittent days throughout the year as unpaid military leave. The days taken are normally a Friday or Monday, and at the most, a week at a time, all for training. Are we to consider this time as military service under USERRA and credit wages that would have otherwise been earned (on the days off) to our pension plan accordingly?

There have been various informal indications in the past from seminars and articles that the IRS was working on a revised model 402(f) distribtuion notice to reflect the new automatic rollover rules. Has anyone heard anything recently at a seminar or otherwise on when the IRS might release the updated safe harbor 402(f) distribution notice? Thanks for any info you might have.