Does anyone have a better feel of the IRS position of swithing testing methods from current to prior / prior to current either

1. before the plan year begins

2. before the end of the plan year

3. after the plan year within 12 month correction period.

I was just wondering what is being done in practice - I try to avoid amending after year is over because I've heard IRS say it should not be done. Just wondering.

ASPPA 2005 edition ERISA Outline book states following -

"Timing of amendment: Once the plan document reflects the testing method, what will be the deadline for making an amendment to change that method?

The IRS has not established a time frame for making such an amendment. There is a reasonable argument that the employer could adopt an amendment at any time before the deadline for correcting a violation of the ADP test (i.e., 12 months after the close of the plan year). In other words, the IRS should treat the choice of testing method as one of the corrective techniques in the administrator’s "arsenal," that should be available to help the test pass or to reduce the margin of failure. This is supportable by the restrictive rules for switching between methods after the GUST remedial amendment period ends.

2004 regulations do not address issue/IRS comments indicate narrow rule is contemplated.

The 401(k) regulations issued on December 29, 2004, do not address the issue of whether amendments changing the plan year must be adopted. It should be noted that, at the ASPPA Summer Conference in Irvine, California (July 29, 2003), representatives from the IRS and the Treasury were not enamored with the idea of making plan amendments to change the testing method after the close of the plan year. In fact, they indicated that the internal debate at the government is whether the amendment should be adopted by the first day of the plan year for which the amendment is effective or by the last day of such year. However, they seemed open to comments arguing a more liberal amendment rule. In the absence of guidance, plan sponsors (or their advisors) will have to decide for themselves what they believe is a reasonable interpretation of the law."

I feel silly for even asking this, but what do the numbers mean on Revenue rulings? For example, IRS 2002-45. Does this mean that this is the 45th revenue ruling issued by the IRS in 2002?

We recordkeep an ESOP where there has been a significant decline in the stock value, and hence employee balances.

Some employees who qualify for a partial distribution under the terms of the plan now have total account balances that are less than their December 31, 1986 account balances - even with the allocation of additional shares since 12/31/1986.

Should I adjust the 12/31/1986 shares for the current stock price, or do these employees not receive any distribution amount until they qualify for the remainder of the ESOP (12/31/1986 balance) upon attainment of age 65?

Thanks.

Does anyone know if canned language is available (or will be) for the new grace period that offers some relief from the use it or lose it rule? We'd rather not reinvent the wheel if we don't have to.

I am tired of key punching huge batch of separated participants in Scheule SSA. Does anyone know any method of importing data in Sch SSA from spreadsheet or adobe file or any other method. Please suggest.

Thanks

Amit Nagpal

Need help with the following example

X made $100,000 in 2004, $110,000 in 2005 and retired on 12/31/2005.

For the 2005 determination year, X is an HCE and is ranked 22 for the restricted HCE rule using $100.000. There are no ties in the top 25 group. If X had not retired, his $110,000 would have ranked 23 for the 2006 determination year.

For the 2006, determination year, X is now a former HCE. What is the right pay to use to rank X in 2006?

The regulations are not clear. I would like to argue that $100.000 is the proper pay amount. It is the pay used for his HCE determination in the last year he was an HCE. When he became an FHCE, the lookback concept for HCE determination does not apply. Therefore you look to the highest compensation used when he was an active employee.

Any comments or cites are much appreciated.

Does anyone have a good summary of ligitation history on retiree medical plans?

spouse (age 48) inherited trad. ira. must take mandatory distribution this year from father's acct. I am considering converting my own trad. ira to a roth. Have read, beginning this year, that mandatory distributions do not count against $100k income limit for eligibility for conversion. Primary question is whether exclusion only applies to persons age 70 1/2 or older, or does it apply to an inherited mandatory distribution as well.

Can anyone provide me with a link to the BNA 80 page summary of the bill?

Thanks,

Tony

I am looking for insight on the interaction of installment payments and funding waivers. Assume an employer is required to make quarterly installment payments but misses a payment during the year. A lien in favor of the plan arises as soon as the installment payment is missed. If the employer eventually receives a funding waiver for the year, presumably the waiver will retroactively cure any installment payments that were missed during the year. However, the employer may already have suffered adverse consequences resulting from the lien (e.g., violation of a financial covenant). Is there any way to prevent the lien in this situation (other than payment of the quarterly installment)?

Its always (to me) been an open question whether high-three-year-comp was "as an employee" vs "as a participant". The Code and Regs are at logger-heads. Now, the proposed new regs make it clear that its comp while a participant.

I've got a plan where benefits are based on high 3 year employee comp vs participant comp (pre-effective date). Think there'll be a grandfather?

An employee who terminated in Jan 2004 was paid out in 2004 and 20% tax was withheld. Since the Plan is Safe Harbor, he received a $47 contribution which was deposited to his account in March 2005. Is 20% withholding required on his second distribution since it's less than $200?

Spousal beneficiaries are allowed to rollover funds received from a deceased spouse. If money is kept in the orginial plan the spousal beneficiary must start a distribution by the time the participant would have turned 70 1/2. If the money is rolled out is this no longer true? Or is it no longer true in either case now that rollovers are permited?

We have just aquired a large block of PCRA plans through a takover. However, since we are a balance forward shop, this is very new to use. I think our biggest question is how to use the trading functions (Through the trans module). Does anyone out there process PCRA plans using the Schwab link in Relius? Your guidence, input would be great!

Quick question: Are CDSC charges entered as an expense item on Schedule H?

CAP

We have an attorney who is self employeed, files a schedule C and maximizes his contribution. There are no ohter employees on his schedule C. In December of 2003 he purchased a 100% interest of a settlement corporation (C corp) that sponsors a 401k plan in which he deferred 7% in 2004.

Questions:

1. Is he required to make the same contribution to the 401k plan that he made for his schedule C plan?

2. Is a self employeed individual allowed to participate in a SEP and a separate plan?

3. Are there any other issued I need to be aware?

If it's not too difficult please provide references for me to provide my client.

Is the plan audit part of the Form 5500 that must be given to a participant upon request? I'm thinking yes - since it is an attachment to the filing - but haven't been able to confirm.

Also, since Schedule E and SSA are not part of the public record I'm assuming they are not available to participants upon request.

Thanks much.

Michele

A business associate wants to have one BA agreement with its clients. Is it possible for the client (employer) as plan sponsor to execute one BA agreement with the BA that will cover all activities between BA and the various plans of the client?

I am finding difficulty finding anything that says I cannot do this.

thanks for any thoughts.

It is my understanding that the term cost of the death benefit can only be part of the funding, if the plan is at least partially funded by life insurance. However I am taking over a plan that had no life insurance, but added to the normal cost the term cost of the death benefit. The death benefit in the plan is the present value of the accrued benefit. There was no pre-retirement mortality factor in the assumptions. The sole participant is 100% vested. Do you agree that the prior year valuation was incorrect?

Do you report aggregate groups of employees, rather than individual employees by name, on Schedule C?

One of my clients has a legal opinion recommending this approach. The opinion is based on information provided by two DOL employees who spoke at a pension/benefits conference. Both of the DOL employees said that Schedule C's purpose is to report significant payments to service providers, not to list such very personal information on a publicly-disclosed document. Conference attendees were instructed to take employees with reportable compensation, lump them together in broad categories such as "administrative" or "executive", and report the aggregate amounts on Schedule C.

The Schedule C instructions certainly don't suggest this approach. In fact, the instructions say to use the employer's EIN (rather than individual social security numbers) when reporting employee compensation; this instruction suggests that each employee gets reported separately. And, since when is DOL so concerned about confidentiality? Form LM-2, another publicly-disclosed DOL form, reports some very explicity information about employee compensation.

On the other hand, the IRS prepares the Schedule C instructions, and the DOL could have a very different postion.

Has anyone else encountered this issue?