I have a plan that allows participants to start receiving monthly benefits upon attainment of normal retirement age (age 65) while remaining employed on a full time basis. I was hoping someone can help me with the calculation of the subsequent accrued benefit.

Plan year = 3/1 - 2/28

Actuarial Equivalence = UP84 at 5.5% (pre and post retirement mortality)

John reached NR on 6/1/2004 and began receiving monthly benefits in the form of a life annuity in the amount of $1,684 per month. I need to calculate John's accrued benefit as of 3/1/2005.

The document says that "At the close of each Plan Year prior to the Participant's Actual Retirement Date, a Participant shall be entitled to a retirement benefit equal to the greater of (1) the Actuarial Equivalent of the monthly retirement benefit such participant was entitled to at the close of the prior Plan Year, or (2) the Participant's Accrued Benefit determined at the close of the Plan Year. The monthly retirement benefit shall be offset by the actuarial value of the total benefit distributions made by the close of the Plan Year.

How do I calculate the "actuarial value" of the benefits John has received as of 3/1/2005?

Please use actual numbers.

Thanks!

A HCE elected deferral of $5,000 for the year and must now reduce election to $3,000. Can spouse now elect $2,000 under his employer's dca??

Thanks.

Probably a stupid question, but I'll ask anyways. Have a plan that excludes bonuses, overtime and commissions from definition of comp. Do hours worked for overtime still get counted as hours of service towards plan eligibility and vesting? My gut feeling is yes since the doc says that an hour of service is an hour that an ee is directly or indirectly compensated for or entitled to be compensated. I'm getting comments that are making me second guess myself.

Client has a Safe Harbor Plan using the 3% nonelective. Compensation is defined as W-2 compensation plus deferrals. One HCE has auto included and the other has key man insurance included.

Does the compensation for the SH allocation include the auto and insurance? Does the compensation ratio test need to performed?

Has anyone seen a recent analysis of the comparison of the tax credit versus the exclusion for dependent care plans? I am reviewing language on this in an SPD and I want to have up-to-date information. I know Working Families Tax Relief Act changed the dependent definition, and there may have been other credits enacted which could have changed the nature of this determination.

Thanks in advance.

can I withdraw money from my roth ira for home improvements. I had the account since 2001 and I am not 59 1/2. I want to use only $4,000 of the $14,000 I have in the account, is this possible?

I have just read and been confused by IRS Notice 2005-8. It talks about when an hSA is or isn't deductible by an S corp and also if the shareholder can deduct that contribution on her income tax if it has also been imputed as income. Does anyone have a clear explanation?

Also, can you do the following?: An S corp has 5 shareholders, including family members attributed due to Section 318. They have a cafeteria plan for the employees, but of course, cannot participate themselves. They purchase an HSA compatible plan for everyone in the company. For the employees, they contribute $1000 per year into the FSA. For themselves, the owners, they contribute $1000 into the HSA. These contributions are outside the cafeteria plan, because the owners cannot participate. Are these contributions subject to the 35% excise tax because the employees did not receive an HSA contribution? Assuming this is ok, can the S corp consider the $1000 per owner a business expense and then attribute the income to the shareholder, who then deducts it on the income tax return?

Thank you so much for your help and comments.

Am I allowed to put my social security income into my ROTH?

Are SEP-IRAs and ROTH IRAs considered "pensions"? I ask because I'm trying to meet the qualifications for Connecticut's ConnPace drug assistance program. I won't qualify if I have a "pension". I'm 38 years old and I have a small amount of money in two IRA accounts which I do not draw from yet. Previous to not working, I was always self-employed. The people who answer the phone at ConnPace are kind, but did not know the answer to this simple question.

My husband and I are both 26 and I am starting to do research and learn about Roth Iras but I have a few questions. My father-in-law started a traditional for my husband a number of years ago but we have not invested in it since we got married three years ago. So here are my questions

1) When you file jointly do you open 1 roth account for both of you or seperate

accounts?

2) If you open seperate accounts can my husband have a roth in addition to the

traditional?

3) I am considering converting my husbands traditional into a roth (about $6000). I know that I will have to pay the taxes on doing that and that it should come out of a seperate account so I am not charged a fee for early withdrawl. If I were to do that, do I pay the taxes right then and there, and how does that work or do I pay the taxes with my income tax.

Can someone please explain the very simple basics of roths I have tried to find these answers online but I cant find them. Thank you for any help you can give me or point me in the right direction of where I can find these answers.

Shell

A Participant deferred a total of $7788.24. The deferral source is currently $4,858.26. The participant took a loan a year ago and has been making payments but now needs a hardship.

The outstanding loan balance is $3,987 and was taken originally from the deferral source.

We are now trying to determine the amount available for hardship.

Is it acceptable to assume that the earnings from the deferral source were loaned out so that all that is remaining are deferral contributions and thus the entire deferral balance is available for hardship?

Should at least the interest that has been paid back to date on the loan be subtracted from the deferral balance to determine the amount available for hardship?

Or should the entire outstanding loan balance be added back to the deferral source, subtract out the salary deferrals made of $7788.24 to determine gain or loss, and limit the hardship to the current deferral balance less the gain or loss?

Help!

Will deposit overages be handled differently when the final 401(k) regs become effective? We have previously transferred them to the Forfeiture (Suspense) Account, to be used to reduce future contributions. Will we now have to treat them as nonelective contributions?

This is a kind of basic question....are all vested amounts in an EE's 401(k) eligible to be considered for a loan? I remember reading somewhere that ER non-elective contributions are not, but I cannot find that in any of my sources.

Thanks

A client has called regarding their SARSEP that has been in place since 1977. In the adoption agreement, they selected an option to limit eligibility to employees who worked at least 30 hours per week. (I didn't know there was ever an eligibility option for hours of service, only a compensation threshold and the 3-of-five years provision.)

Is anyone familiar enough with the history of SEPs and SARSEPs to know when the hours-of-service provision went away?

The client would like to do what's right to bring the plan in compliance. Does any one have suggestions on how far back they have to go in order to do that?

Thanks for any help!

Client has elected to comply with the EGTRRA autorollover rules by reducing the mandatory cash-out limit from $5,000 to $1,000 or less.

What is the rule for counting rollover accounts for purposes of determining whether the $1,000 threshold is met? I know you don't count them for purposes of the $5,000 autorollover.

Some advisors are saying that you must count rollover contributions for purposes of cash-out, but I think Code Section 411(a)(11) (referenced in 401(a)(31)(B)(ii)) indicates that a plan can be drafted to exclude rollover contributions from the definition of "nonforfeitable accrued benefit" and thereby exclude rollovers from the determination of whether the cash-out threshhold is reached. Furthermore, Q/A 14 of Notice uses the word "if" which suggests to me that a plan can be drafted differently.

If I am right, what are some reasons to include rollovers in the nonforfeitable accrued benefit? (There is no vesting in this plan--all contributions are vested.)

I am on the board of a nonprofit. Can we legally reimburse a staff member for her portion of the health insurance premium paid by her spouse? We increased the staff member's hours in order to make her eligible for health benefits and PTO. However, her share of the premium for coverage under her spouse's plan is less than the premium in our small group plan. It wouldn't make sense for her to change providers. This would be a policy change so we would like to ensure it is legal and done properly. The thought would be to give staff the choice of either signing up for the group plan or reimbursing the staff for a health insurance policy obtained on their own - the maximum reimbursement being what the premium would be if the came in under the group plan.

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I recall seeing somewhere that corrective distributions (ie to comply with nondiscrimination rules) are not eligible for rollover, but as inelligble rollover distributions, they are not subject to the 20% penalty and the 10% early distribution penalty can be avoided. Is this at all correct?

The next part to my question is how this applies to top-heavy corrective distributions. A plan failed to make top heavy contributions in certain years, some former participants have distributions coming in excess of $1,000 and they may want to roll them into the same IRA or plan into which they rolled their initial distribution.

Anyone care to share a letter, to be sent to a HCE, explaining why they are getting a refund of deferrals because of a failed ADP test. Looking for something in layman's terms, but having a tough time because I'm too technical.

Plan excludes union employees. A participant has recently changed to union. The Plan provides matching contributions on a per payroll basis and a year-end profit sharing allocation with an employed on last day of Plan Year, 1000 hours condition. Plan year ends 6/30.

With respect to the non-union plan, I realize the person immediately becomes ineligible upon change to union and the plan must stop deferrals and discontinue matching contributions. However, I'm not sure whether the participant will be eligible for the 6/30/05 year-end profit sharing allocation and if so, what the compensation figure is.

The document (Corbel doc) says compensation is counted as of date person becomes ineligible. Hours of service definition counts all service. And, this person would be considered employed on the last day regardless of whether a member of the eligible class.