Please let me know if I am crazy on this one:

We have two agreements. One signed on 12.1996 and one on 12.2004 (different people).

Once signed in 1996 - ex-exec signed it, company took deduction, ex-exec included full amount in income tax (payments last for 10 years). We are taking the position that this entire agreement is grandfathered out of 409A.

Second agreement signed in 12.2004, ex-exec included full amount in income tax for 2004 (and the benefit is payable over ten years); however, this appears to be a material modification after 10.3.2005 - but is it a no-harm, no foul b/c he paid the tax? Do we have to do anything further at this point (amend the plan, etc.)? There is a non-complete (which I understand is generally ok - but there is also a confidentiality provision).

Thank you for any assistance on this. They will not let me call legal and I want to make sure we do not make a mess out of all of this. I won't hold you to any response, just want to see if we are going the wrong way on this.

Does anyone copy the state when filing 5500's? A CPA insists it is required. We have never copied the Plan's state income tax division on a 5500. Does anyone else do that?

Thanx,

Rene

Interesting question (I think) because nothing seems to address it directly.

A participant has the following compensation history:

Year Salary Hours

2004 15000 1000

2003 14000 1000

2002 1000 500

2001 10000 1000

The participant did NOT receive accrual credit for the 2002 plan year and therefore the compensation is not included for benefit averaging purposes.

What is their 415 compensation limit??

a) 15000 + 14000 + 1000 = 10,000.00

b) 15000 + 14000 + 10000 = 13,000.00

I was under the impression that no year of compensation is ignored for 415 purposes regardless of whether accrual credit was received.

Any and all thoughts are appreciated.

Has anyone run up against a situation where the State law (i.e Constitution, etc.)

regarding a State pension plan differs from the Internal revenue Code? If so, what is the result...does the plan not qualifiy as a "qualified plan", which seems to be a harsh result.

I have been investing in my roth ira for approx. 3 1/2 yrs, I am 33 years old & I contribute the max each year. I have noticed that the only increase in my roth is the monthly contribution I am putting in. I had a financial advisor who gave me poor advice & I am looking for advice on how I can get my roth ira to grow.

Thanks!

Lisa

The gains in our flex account continue to accumulate each year and we are thinking about refunding some to participants. Each year we refund ourselves for the admin fees, and even after that we should have over $5k left over. If we do choose to make a taxable refund to participants, should it be done equally to each, or proportional to their annual election? Also since this past years experience gains include experience gains from previous years, is it proper to just refund based on the most current participants or should participants from all years with gains be included? Is it permissible to split the gains between health and dependent care based on actual experience, or does it all have to be lumped together?

A participant dies before receiving his minimum distribution from a defined contribution plan in 2005. Spouse, who is 68 years old, is sole beneficiary. I know the RMD is not subject to rollover, but to whom does it get paid, beneficiary (spouse) or the estate?

Is this plan top heavy by virtue of forming a multiple Employer Plan.

Company A is not TH. Joe from Company A goes to Company B. Company B adopts A's plan to form a multiple employer plan. They are not a CG.

Since Joe has 100% of B's plan assets on the first day of Co. b's plan year are they a Top Heavy Plan?

Do we include Joe's account balance from Co. A in Co. B's TH test?

Any thoughts on what is standard practice with individually designed SEPs on whether to apply for an IRS ruling or not?

I'm working with an individually designed SEP that has a non-standard definition of compensation, but I'm confident the definition satisfies Code § 414(s) & regulations. Of course, an IRS ruling on it (& the plan) would be the most conservative route. Before I discuss with the employer whether to spend the money on a ruling, though, I'd like to know what other individually designed plans are doing.

I've seen a few articles lately that reference the aggressive combo of automatic enrollments (or negative elections) and deferral step-ups. The first part (withholding deferrals from an participant's paycheck unless they say no) has been talked about at length for the past few years, but this is the first time I've heard of the step-up feature.

Somewhere (presumably the SPD, but maybe also the document), the participant's are notified that at the beginning of each plan year, their deferral percentage will automatically be raised (the articles I saw didn't make it clear if the participant could opt out of the increase, though I presume a participant could change their withholding percentage at the next appropriate time) by 1/2% or 1% or whatever.

There were very few details, so I was wondering if this is something that is just gaining momentum, or maybe I haven't found the articles against it yet. Has anybody heard about this, or actually implemented it? Obviously, this would be a great help to the non-safe harbor 401(k) plans, but I'm not wild about being the first on the block to recommend it! Thanks for your input.

A friend called me and asked about self-insuring his company’s (180 employees) workman’s comp program.

He wanted me to determine some sort of funding schedule.

Does anyone know much about this subject?

A simple perspective would be to get a pertinent body of data based on the claims, amount of claims, coverage, etc. do an analysis and arrive at a funding plan. And put in caveats explaining the breadth of the study and its limitations.

Curious to know thoughts.

Thanks.

Gary

For December 31 plan year ends, when is the "best" time to amend the plan? Just wait until later in the year?

Thank you,

Sherry

I'm pursuing the QKA designation, and am about ready to order course materials for its last two required courses, DC-1 and DC-2 (NOT C-3 and C-4, which are for the CPC designation). The deadline for taking spring exams is May 31. If I devoted a few hours each day to studying, is it reasonable to think I could be ready for the exams in two months and pass them by that date? I realize I could take one or both exams later in the year (next window is Nov-Dec), but I'm trying to finish and receive the designation ASAP. Need to decide now, as the deadline for registering for spring exams is March 31.

Any insights greatly appreciated!!

Employee was disabled for several months in 2004. Employer has a disability pay program where employer pays all premiums, ins company pays money to employer, and employer pays the disabled individual. This "compensation" is reported by the employer on a W-2.

Plan defines compensation as W-2. Question was, can this be used toward deferrals in a 401(k) plan, and toward the employer discretionary contribution?

Not sure on this. Rightly or wrongly, since the plan definition is W-2, then it seems it must be considered. But, it seems odd. Any opinions? Thanks.

Can I make more than one contribution to a roth IRA account up to the $3000 max before april 15 2005? For instance could I contribute $2000 on march 15 2005 and another $1000 on march 25?

Contributed $3000 to a Roth IRA in 2004. Through a automatic investment plan, also contributed $1000 to a traditional IRA. My TurboTax s/w is telling me I must adjust my Roth IRA by either withdrawing $1000 and any earnings attributed to it, or recharacterize $1000 of the Roth IRA as a tradional IRA. Can I recharacterize it? Is $3000 the total amount I can invest in either of these IRA's? If I recaharacterize, the total amount I've invested is still $4000. A bit confused by this.

TIA

Al

I have a client who has a new comparability profit sharing plan and files based on a calendar year. The filing for 2004 is on extension and the company wishes to change the allocation percentages for all participants (HCE and NHCE) for the 2004 plan year. The employer made quarterly PS contributions throughout the year and has yet to make the 4th quarter contribution. Can the employer change the allocation percentages and then reallocate contributions that were already deposited into participant accounts throughout the year to reflect this new allocation formula?

What Makes 100%? What does it mean to give MORE than 100%? Ever wonder about those people who say they are giving more than 100%? We have all been to those meetings where someone wants you to give over 100%. How about achieving 103%? What makes up 100% in life?

Here's a little mathematical formula that might help you answer these questions:

If:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z is represented as:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26.

Then:

H-A-R-D-W-O-R-K

8+1+18+4+23+15+18+11 = 98%

And

K-N-O-W-L-E-D-G-E

11+14+15+23+12+5+4+7+5 = 96%

But,

A-T-T-I-T-U-D-E

1+20+20+9+20+21+4+5 = 100%

And,

B-U-L-L-$-H-I-T

2+21+12+12+19+8! +9+20 = 103%

AND, look how far a** kissing will take you.

A-$-$-K-I-S-S-I-N-G

1+19+19+11+9+19+19+9+14+7 = 118%

So, one can conclude with mathematical certainty that while HARD WORK and KNOWLEDGE will get you close, and ATTITUDE will get you there, it's the B*S* and A** KISSING that will put you over the top.

I have recently had the misfortune of getting another Service Contract Act fringe benefit issue dumped in my lap, and I wondered if anyone has had any practical experience with this one. I suspect I know the answer to my own question, but I have a luke-warm opinion of counsel from another law firm and the likely absence of any black-letter rules to overcome.

Background: A federal contractor subject to the SCA sets up various benefit plans (401(k), health, LTD, etc.) for the employees working on the contract. The DOL issues a wage determination about the appropriate hourly rate for fringe benefits. Contractor incorporates a special provision in the K plan whereby any shortfalls in the fringe benefit contributions deriving from employee elections (i.e., if the employee doesn't elect enough fringe benefits to "use up" the full hourly fringe benefit contribution by the contractor) are trued-up on a quarterly basis via additional non-elective contributions.

The question: Although the non-elective contributions are fully vested at present, the contractor would like to subject them to a vesting schedule. Can these contributions--which are essentially part of the hourly fringe benefit allocation required by the wage determination--be subject to forfeiture?

Discussion: Contractor has an opinion of counsel from a decent law firm that indicates that because the non-elective contributions cannot revert per ERISA and the Code, the fact that they are forfeited doesn't offend the SCA and the wage determination. The argument goes that even though particular employees might forfeit money, the overall group of employees will receive the fringe benefit contributions required by the wage determination.

I know that under the Davis Bacon Act, there is an annualization requirement for non-vested K plan contributions that are not fully vested when made. There does not seem to be a similar rule for the SCA, however. I have heard (thanks to Mr. Maldonado) that the Wage & Hour folks at DOL have raised issues with the use-it-or-lose-it rule for 125 plans where employer contributions are not used up at the end of a year. The SCA rules seem to be concerned with ensuring that individual employees receive the minimum fringe benefit allocation based on their hours worked. If a contribution has significant strings attached or is subject to forfeiture, I am having a hard time believing that the DOL would count that towards the minimum fringe benefit contribution required by a wage order.

There is not, so far as I am aware, a formal rule one way or the other on this.

Any thoughts?

Does anyone know if there is a reg that states that participants who have retired, are disabled or deceased during the plan year are entitled to the profit sharing contribution for that plan year?

We have a client disputing this with us. There document states the usual 1,000 hours and active on last day of plan year but not the above exceptions. This is how we have always processed profit sharing plans.

Their attorney is away for a week so if anyone can help I'd appreciate it.

Thanks