What is it?

Is this a Controlled Group?

Joe Smith owns 100% of company A.

Company A owns 75% of Company B

Joe Smiths kid age 23 owns 10% of Company B

Joe Smiths brother owns 15% of Company B.

We have been using Relius for about 10 years, and are considering a change. The bottom line is that it's more than we need.

We are a CPA firm, and plan administration is a "boutique" service for some of our clients who want to keep everything under one roof. Our client base is relatively small and likely to stay that way. We work with defined contribution plans only and generally provide balance-forward administration and/or compliance services.

I would like suggestions regarding software packages that we should evaluate.

Thanks!

I'm working on a plan that has been underfunded and frozen since late 70s. It contains no substantial owners, no key employees, no HCEs. Just a few long service employees. It is < 100 participants, so the AFC's don't apply.

The funding ratio is around 50%, although they have never missed a required contribution. We have been using unit credit method w/ relatively conservative assumptions (6%), but due to a large credit balance, there hasn't been a required contribution for years. Since it they aren't required, the employer isn't putting anything in and the funding levels continue to drop each time someone is paid out. (It does pay lump sums.)

All of the remaining participants are now approaching retirement age, but the plan doesn't contain enough money to pay them all.

Is there anything that would force the employer to make a contribution before the credit balance is used up? What if it runs out of money? Is there a Reg that would force them to make a contribution to cover the benefit? Plan document doesn't really address it. The employer is solvent, although they aren't rolling in cash.

Does anyone have an SPD for an HSA? The only one I have seen is for a combination PPO/HSA, but I'm supposed to come up with and HSA only.

Assuming that there is a 409A violation and that the additional 20% income tax is imposed, would this additional income tax be witheld by payroll, or would it need to be paid/resolved by the employee when they file their tax return? I was unable to locate any guidance that addresses this issue. Thanks.

If an individual files his return on a fiscal year- say June to May, does he have until September 15 to make his 2004 IRA contribution?

Thanks in advance

(Also posted on the IRA section- )

If an individual files his return on a fiscal year- say June to May, does he have until September 15 to make his 2004 IRA contribution?

Thanks in advance

A plan passes ADP/ACP by making safe harbor matching contributions on a payroll basis (providing all appropriate notices).

The plan provides that employees are eligible to make unmatched contributions on their date of hire and become eligible for their safe harbor match on the entry date following 1 YOS (and age 21). Until the IRS announced its new interpretation of the rule of parity for 401(k) plans, the plan had applied the rule of parity for rehired participants who had not been vested in their non-401(k) benefits.

Based on the prior interpretation, a rehired participant who had been unvested in non-401(k) benefits had been treated as a new hire and was offered the opportunity to defer on an unmatched basis on his date of rehire (and elected 0% deferral). The plan now wants to "correct" for the "improper" exclusion for people rehired after 12/31/2004.

Rev Proc 2003-44 would imply that the rehired employee must be given a contribution equal to the ADP + ACP for their class. Since the plan is a safe harbor, it does not run the ADP / ACP test.

Are the options for correction methodology:

(1) perform the ADP and ACP tests and then credit the employee with both a deferral and match (plus earnings) based on the results;

(2) provide the match only (since he had not been excluded from making deferrals):

2a) calculate the match based on the ACP test results;

2b) calculate the match based on the deferral elected at rehire by the participant (noting that the employee may have elected a different level upon becoming match eligible) but only with IRS blessing through VCP;

(3) some other option

Any suggestions are welcome.

can an employer exclude employees from plan based on duration of service. for example the employer wants to allow only lawyers with the firm for 5 years to participate in the plan. the eligibility will not be 5 years. just for this class they cant participate unless they have a certain seniority.

i am trying to determine a method to value a serp benefit subject to a floor. this is a plan under 457f such that a minimum benefit will be paid each month to the retiree. however, the benefit is subject to upwartd adjustment depending upon the investment performance of the investment media. the benfit is reset at the beginning of each year following retirement. we are trying to determine how much to plan for in terms of income tax liability at time of vesting.

Are employee deferrals and/or vested employer contributions made to a 457(f) plan subject to FICA withholding at the time made (prior to a non-forfeitable right)? I thought not, since the money does not belong to the employee. However, my boss said that the money is subject to FICA as made and as it vests (for employer contributions).

Also, where can I get some basic information for 457(f) plans? I seem to be able to get all the information I ever wanted on eligible 457(b) plans, but I can't seem to find guidance on non-qualified arrangements.

Thanks!

Is it possible to apply the statutory exclusion rules to participant counts? (participants with less than 1 year of service, age 21)

If an employer participates in a Multiple Employer Plan with a PEO and withdraws from the multiple employer plan, is this considered a plan termination to the employer withdrawing participation?

Also, if the employer that withdraws sets up a new plan that they alone sponsor, do the succesor plan rules apply in this situation or is this considered a new plan?

We have a takeover that was originally a profit sharing plan. The prior plan administrator was in the process of converting to a Safe Harbor 401(k). Safe Harbor notices were provided to employees just 2 weeks ago. All eligible employees signed Safe Harbor notices. The employer now has cold feet and wishes to not go forward with the Safe Harbor 401(k). Can they withdraw the safe harbor aspect of the plan and just remain as a PSP?

Thanks much.

Anyone have any comments about IRS Notice 2005-42? Isn't this important news? Doesn't it help FSAs quite a bit in comparison to HRAs and HSAs?

Hello -- we have a health plan that currently does not impose a lifetime maximum. We want to start imposing a lifetime maximum. I know that we will avoid any nondiscrimination issues if we make the effective date the first day of the first plan year after the amendment is adopted. But can we then include expenses in prior years to determine when the participant hits the lifetime maximum? Or do we have to start everyone at $0 next plan year for determining when the lifetime maximum is hit?

Thanks.

Under a bona fide wellness program, an employer provides a group health plan premium discount to employees for either not smoking or, as a reasonable alternative, attending a smoking cessation program. If an employee reports that they are a non-smoker and then subsequently begins smoking, lets say that the plan provides that the discount can be removed prospectively. Alternatively, lets say that someone begins the plan year as a smoker, but subsequently participates in the smoking cessation program and the plan provides that the discount will apply prospectively for that person. Also assume that the cafeteria plan used to pay premiums provides for automatic cost changes to elections under the cafeteria plan. Would this kind of increase or decrease in the premiums be considered to fall within the automatic cost changes as contemplated by the regulations. It seems that it could apply and I have not seen any authority to the contrary. Does anyone have any thoughts on this?

If an employer sponsoring a group health plan sets up a non-smoker premium discount under the proposed HIPAA regs on BFWPs, the employer must also provide a "reasonable alternative standard" for those participants who cannot stop smoking due to an addiction to nicotine. This requirement is can presumably be met by the employer allowing such participants to complete a smoking cessation program as an alternative way of qualifying for the discount. The regulations themselves do not explicitly require that the employer provide such a reaonable alternative at the employer's expense, indeed it seems as though the language only requires that the employer provide the standard. However, the preambles, to the proposed regulations imply that the employer will incur the expense for the reasonable alternatives. The EBSA FAQs on BFWPs do not suggest that the employer must bear the cost of the alternatives, but only that the employer must provide the standard. I have seen others on this message board suggest that they have utilized a "modest subsidy" for employee participation in a smoking cessation program. What does everyone think? Must the employer pay for the smoking cessation course? If it is inexpensive for participants, does that make it a reasonable alternative?

On a side note, if someone declares themselves a non-smoker at open enrollment and then takes up smoking during the year, and the employer's program requires that the employee loses the discount, does that premium cost increase trigger, assuming the plan terms provide for it, the ability to make a corresponding change in the participants 125 election under the cafeteria plan regulations? what do you think?

Employee takes a hardship dist in 9/04 to purchase primary residence. ER does not suspend deferrals. I believe that you are to distribute the deferrals plus interest back to the employee.

1. How do you code the 1099-R?

2. Do you have to reduce deferrals?

I will add a third question. Told client that they may have to return money to ee. Client doesn't want to return money to ee. Suggestions?

Thanks