Facts (names changed to protect the innocent)

--John owns Corporation A- 100 %- no employees

---Jim owns Corporation B- 100%- 1 employee who works more than 1,000 hours and had been with company for five years

---John and Tom owns Partnership-C- 50% each

---John established a profit sharing plan for Company A

Questions.

1) Must Jim be included in the profit sharing plan established by John for company A?

2) Must the employees of Company B be included in the profit sharing plan established by John for company A?

...if yes-any exceptions?

Thanks very much

Jane

Must an on-going plan always have one of its entry dates as the first day of the plan year?

Thanks.

Employer intends to terminate leveraged ESOP on June 30 and make final distributions upon receipt of IRS determination letter. Employer would like to make a principal prepayment prior to terminating the Plan. Is it necessary to prorate both the Section 401(a)(17) comp limit and the 415 limit when testing for excess annual additions? My research indicates that it is necessary to prorate comp under 401(a)(17) but not the 415 limit, but I would appreciate some further guidance. Thank you.

Client has a New Comp plan... has an EE who wants a hardship dist. Are hardship distributions only allowed from K plans?

The Employer deposited $125,000 in excess of the 415 limits into the ESOP a couple of years ago. This amount was never deducted on the Corporate 1120 and was never "allocated" to participants. It is just sitting in the ESOP. This is excess contribution subject to 10% excise tax, correct? Also, can the ER remove this money?

Okay, no one yell at me. I have had a bad day, and I have searched high and low, and I am not lazy!

If we have an ee sign a deferral for 401k participation, and mid year the ee receieves an increase; would the ee need to sign a new 401k deferral/ reduction agreement because the % is a new dollar amount?

Thanks.

We are the TPA for a plan in which a participant took out a participant loan a couple of years ago, but never made any payments on it. In addition to being taxable, does this now become a prohibited transaction, because it no longer complies with 72(p)? Or is that determined at the time the loan is taken? Major disagreement in the office, expensive lunch riding on the answer!

The scenario: An employer maintains a fairly standard 401(k) plan with a 100% match on deferrals up to 4% of compensation. Matching is done on a payroll period basis, and there is no true-up provision. The plan permits both percentage deferrals and specified dollar amount deferrals (each per pay period).

Question: How much of an obligation should the employer feel to explain to participants the fact that by front-loading their deferrals and/or making changes to their deferral percentages or discontinuing their deferrals during the year, they may end up with a total match that is less than 4% of their annual compensation? That there is no true-up provision?

Employer currently provides retiree medical coverage, but would like to remove the liability from its financial statements. One option being considered is offering a lump-sum payment to retirees to "buy-out" their medical coverage. In other words, for $X retiree agrees to waive the right to continued employer-provided medical coverage.

Has anyone seen such an arrangement? I can't think of any reason why the employer couldn't implement this proposal. I understand there are other options and that there are many nits that must be picked to proceed. At this point, I'm just trying to identify major roadblocks, not speed bumps.

Thanks.

I don't regularly work with 403(b) plans, but came across a situation facing a client....

Teacher is getting ready to retire and district will purchase 25% of unused

sick leave. He would like to defer this payment into his 403(b) annuity. (He

is absolutely positive that it will not force him over the deferral limits.)

My reading of the regs suggests this is not possible. Under 1.403(b)-1(b)(3) an employee is only allowed to enter into a single deferral agreement per year. In this person's case, he defers roughly 10% of his salary. My take is that the final

severance payment would be subject to the same 10% deferral already in place.

Am I correct???

The Governmental Plans Answer Book published by Aspen Publishers states that federal law permits rollovers among 401(a), 403(b), 457 plans, and IRAs for any participant who has had a severance from employment with the transferring employer and who is performing services for the entity maintaining the receiving plan.

Is that right? Are rollovers only allowed into the accounts of "active" members in the plan? If federal law doesn't permit inactive members from rolling over money into the plan, please provide a cite. Thanks in advance.

The Governmental Plans Answer Book published by Aspen Publishers states that federal law permits rollovers among 401(a), 403(b), 457 plans, and IRAs for any participant who has had a severance from employment with the transferring employer and is performing services for the entity maintaining the receiving plan.

Is that right? Are rollovers only allowed into the accounts of "active" members in the plan? If federal law doesn't permit inactive members from rolling over money into the plan, please provide a cite. Thanks in advance.

Company has a PSP. Started a 401(k) in 04 with another administrator that we did not know about at the time. When we found out about the new 401(k) plan, suggested they merge the PSP into the 401(k). Became aware the PSP is top heavy (on its own). Therefore, top heavy will be an issue for 04 and 05 for the 401(k) if any keys are deferring and since both plans are in effect - but if PSP were to be terminated, rather than merged, distributed by the end of 05 and no one's account rolled in to the new 401(k), how long does top heavy remain an issue on distributed money (mainly for keys)? Is timing any different than a distribution with a active/ongoing plan - one year?

We have a 401(k) plan that was originally established on a prototype by a controlled group of real estate companies. Due to a change in ownership, 2 of the companies are no longer part of the controlled group.

Do I have other options besides treating the plan as a multiple employer plan requiring a change to a volume submitter document and testing separately for nondiscrimination requirements? Or establish separate single employer plans for the 2 companies that were formerly part of the controlled group?

Is it possible real estate companies can be classified as professional service corps for affiliated service purposes?

I have a takeover plan with a couple of active employees that are past NRA and, as allowed by the prototype doc, took a lump sum distribution at some point after attaining NRA. The plan's late ret. benefit definition is the standard "additional accruals are the greater of continued accruals or the AE of the prior year AB". The continued accruals are based on the average comp and service as of the date of determination.

In the case of these participants that have already received a lump sum in some prior year, the prior actuary was putting an actuarial adjustment on the accrued benefit that was paid out in a lump sum and comparing that to the currently accrued benefit. In this case that will always completely offset any additional accruals. That does not seem right, there should be no actuarial adjustment on the benefit that was paid out. An actuarial adjustment reflects the fact that payments have not been received. I would say that the calculation should be: the current AB minus [the AB at date of LS payment] and then compare that to the AE of the prior year end AB, and take the greater of the two.

I want to know if I am overlooking anything or if there is another way to consider this. Thanks.

Can total contributions including catch-up exceed 415 compensation? For example, participant's compensation is $10k, receives $2k profit sharing in 2005, can he defer $10k?

I am working with a nonprofit entity that is setting up a top-hat 457(b) plan for (at the moment) one executive employee. Since they don't have any experience in administering a 457 plan (even a pretty simple one), I would feel better if they started off with some sort of a "turn-key" approach that doesn't have a lot of moving parts.

Does anyone have any recommendations? Any vendors to stay away from?

Thanks!

I have a client in a school district that is being offered a choice of taking her severance pay as cash this year, depositing a portion (not to exceed MAC) this year and next year or waiting until next year to do either of those prceeding choices. I believe this constitutes an elective deferral and should not be allowed after this year. Am I wrong and what are the applicable code sections of 402(g) and 403(b) to cite?

What are the main differences between Simple 401(k) Plans and Simple IRA Plans?

Can someone advise, as it seems there are NOT many differences.

1. Currently have a 401(k) plan.

2. Want to switch to a Simple 401(k) or Simple IRA.

3. Can you rollover your current 401(k) into a Simple 401(k) or Simple IRA?

4. Are the distribution requirements different.

5. Filing of 5500?

6. When can you begin a Simple Plan if you currently have a 401(k) plan.

Any thoughts would be appreciated. I have read about both the Simple 401(k) and Simple IRA Plans and I just want to make sure I have everything covered before I give a client some advise.

Thanks

can an esop which invests in employer stock of a s corporation include a plan term which limits the stock held in a participant's account (e.g., by investing the "excess" in other plan investment options, if the participant's percentage ownership of the deemed-owned esop shares exceeds a certain "ceiling" percentage such as 9%) so that the participant is not and does not become a code section 409(p) disqualified person?