Does a defined benefit plan become a multiple employer plan if it continues to allow service credit and age for employees after such employees leave the controlled group for as long as they are employed by the subsidiary that is sold? This situation involves the sale of a subsidiary where years of service and age will be credited (for early retirement purposes) for as long as the participant continues to be employed by the subsidiary. The subsidiary will not be a sponsor and will not be responsible for any of the benefit accruals. If this does constitute a multiple employer plan, what are the ramifications to the plan sponsor and the subsidiary? Thanks for any input.

Does 409A require participants to make a new deferral election for each year or can a plan provide that their deferral election will continue into the new year if they don’t change it within the election period?

Thanks.

I have a client who will be paying S corp earnings distributions and the ESOP will receive it's pro rata share of these. The client's tax year and plan year are both calendar year end. They want to know if they have to deposit by the 3/15 tax deadline in order for us to include these in the 12/31/04 plan year end allocations. I don't think so because they are not deductible to the S Corp like a contribution would be so I'm sure that they need to be there by that deadline. Any feedback would be appreciated!

Thanks

Cross-tested plan allows for immediate entry into the 401(k) portion and 1 year of service (1,000 hours) for the profit sharing. An employee has worked for the company for at least 5 years but has never satsified the hour requirement to become eligible for the employer contributions.

The plan is top heavy however the minimum gateway being allocated to the eligible participants is 4.50%

Should this participant receive a top heavy minimum of 3% or the higher gateway minimum?

Thank you

As we were doing the accounting we see a large payout. It was to payout the wifeas part of a disolution agreement. Husband and wife were owners of the business. Husband and Wife are both particpants in the defined benefit plan. Her benefit was 207,000. His 350,000. THey agreed that she is to get 545,000. This was in fact paid out. The QRDO (that they just gave us) says that the wife gets 50% of his benefit.

1. Their intent is for her to get 545,000.

2. Would the cleanest way to handle this be to say the 545,000 represents her 207,000 of benefits plus 338,000 of his benefit? If so the Qdro needs to be changed. Agree? Does there need to be a separate QDRO addressing her 207,000?

3. There was no other distribution paperwork signed regarding the distributions. They just transfered the money into an IRA under her name. So, if she took 207,000 prior to being legally divorced he needs to sign off as the spouse. Agree? It's not perfect but obtaining currently dated signatures on the paperwork doesn't hurt. Wife did terminate employment prior to rolling over the monies.

4. Of course no letters were sent by the plan to participant or alternate payee notifing them of the QRDO or its "approval". Husband is a trustee under the plan wife was not. Do we issue the letters currently and note they are "retro active"?

Is this serious enough for a voluntary compliance filing (if applicable)? Any thoughts and comments will be appreciated.

Here's a link to the Batman comic book that featured the Actuary as one of the main characters.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewI...item=6517873256

The Actuary counts cards in Vegas and also works with the Penguin to identify places to commit crimes that have a low probability of being foiled by Batman. This reminds me of some of my past exploits (except for the part about working with the Penguin to fight Batman). This also offers invaluable advice to actuaries about dating.

I have a 401(k) plan with 3 months service eligibility, no hours or age requirement. Entry dates are 1st of the month coinciding with or next following the date on which an employee meets the eligibility requirements.

Here is the situation: I have 6 participants who were hired on 02/02/2004. I always thought they would enter 06/01/2004, but relius is giving them an entry date of 05/01/2004.

I have heard arguments for both, but I wanted to hear some others thoughts. Is there any reg or IRS Q&A that might clear this up? I have looked in The ERISA outline book, but I can't find an example.

Any thoughts would be appreciated.

Thanks,

Carson Vaughan

If a Plan fails the ADP test and is also top-heavy, when do you determine the rate of the top-heavy minimum contribution? Here is a hypothetical. 401(k) profit sharing plan with no employer contributions for the year. Under ADP, HCEs are allowed to defer 1% of pay; however, the HCEs (including the key employees) deferred more. One key employee defers 10%. The Plan fails the ADP test, so refunds are due to the HCEs. Assuming all key employees would be below 3% after the refund, is the top-heavy minimum the lower number or is it 3% because the highest rate for a key was 10% before the refund?

I have never run into this situation. Any thoughts?

What will be IRS action if governmental plan did not timely amend for 401(a)(17) and 401(a)(31). Amendments were due 12/31/1996 and were not made until plan updated for GUST.

I Know self employed business structures (sole props, partnerships LLCs) dont. Are all c and s corps required?

What types of contributions are possible? Cash only? Or are other types of assets allowed? What are the rules?

Are custodians limited to companies with offices in the U.S.?

One of our clients was recently told by their payroll company that he had read that the safe harbor match contribution must be contributed each pay period, as the salary deferrals contribution. This make no sense to us, but my manager asked me to look into it.

Has anyone out there heard of such a requirement?

Thank you.

I am wanting to set up a Roth and would like info on what the "custodian" actually amounts to. I have Scott Trade & Edward Jones accounts, have requested an app from Scot and received info from Legg Mason. What would be the differences in using a broker such as Scot or contributing directly to a fund family such as Legg. (Fees?) Also, can I change custodians at a later date? I am in my mid 50's and will probably work at least 10 more yrs. I'm in a tax-deferred 457 plan and want to start a Roth before April 15 so that my holding period will begin in 2004.

Info will be appreciated. (Including links or reference material.)

Mrcharols

If an owner of a partnership receives regular earnings through payroll that generate a W2 and files a K-1 for his/her share of partnership income, do you add the W2 and K-1 together for plan compensation purposes?

It has been my understanding that a partner in a partnership should not have W2 earnings and it is their earned income from their K-1 that is used for qualified retirement plan purposes. Has anyone come across a partnership, or sole prop for that matter, that receives W2 income? And if so, what amount is used for compensation for plan purposes (i.e. testing, benefit calcs)

Can an Employer sponsoring a cross tested 401(k) PSP that had made quarterly deposits throughout 2004, decide to change their minds now and reduce the employer allocation formula for 2004? Specifically, the client wants to remove ER PS contributions from each Participant's PS source. This is an allocated plan. Bottom line: they feel 7% is too rich of a benefit and they want to scale it back to 3% for 2004 and for future years.

USERRA requires the employer to offer COBRA-like continuation rights to employees going into military service for medical coverage for up to 24 months. Any thoughts on whether this applies to a medical flexible spending account?

If a plan switches to a safe harbor match from a discretionary match and there are discretionary match forfeitures in a suspense account can those be used to offset future safe harbor match contributions?

A participant called and said their electronic filing was rejected because the employer ID did not match to anything in the IRS' records.

This sounds familiar...I think I had one of these last year...don't quite remember the outcome.

Any experience with this? Could it be related to the IRS' program to de-activate numbers that aren't used regularly? (But that shouldn't be the case with this plan, which has had fairly consistent activity.)

A client with a new HR administrator is trying to figure out the history of the company's 403(a) plan. There are records indicating that it used to be a 403(b) plan but was restated as a 403(a) plan in 89. That is before my time, was there some sort of transition relief that made that possible back then? There are other documents that indicate the 403(b) plan was considered terminated, my guess is nothing was documented consistently. Thanks