We are drafting a relocation policy and are wondering if anyone is able to share their relocation policy to assist us with this process.

Only one loan allowed. Plan sponsor allowed participant to take more than 50% of his vested account balance. Loan was for $2,500 and done back in July 2004. The plan document and the loan policy do not have the $10,000 minimum langauge.

Based on my research, I believe the excess over the 50% of vested account balance is a deemed distribution at the time the loan was issued. It also appears that this would be a prohibited transaction since it would not meet the prohibited transaction exemption since the loan was not adequately secured.

Anyone know a way around this? Can I rely on the 10,000 miniumum under 72(p) even if it is not in the document or loan policy?

I'm having a debate w/my insurance carrier. On line 1(e) of the Schedule A, it's persons covered. Is that employees covered or employees and their dependents that are covered? Thanks.

Does anyone know who are the "big players" or "best players" in the non-qualified deferred compensation plan record keeping arena?

If a plan had late deferrals in 2004 wich were all deposited by the end of 2004 but the lost earnings were not corrected until 2005, what amount would you put schedule I line 4a.

Can you reimburse a redemption fee? Would the reimbursement be considered a deemed contribution to the plan? Would this constitute a prohibited transaction under ERISA?

For purposes of measuring the 60-day SMM distribution requirement if there has been a material reduction in benefits, the regs state that the distribution must take place no later than "60 days after the date of adoption of the modification or change." Does this mean that if I sign an amendment reducing medical benefits on October 1, 2005, effective January 1, 2006 that the 60 day starts to tick on January 1, 2006 since that is the effective date? Or October 1, 2006 since that is the date the amendment was signed approving the reduction?

Thanks,

In a PS/401k Plan the policy is owned by the plan, but who should be named as the Beneficiary in the policy? It would appear to me that the plan should be named as the beneficiary and then the trustee would pay out the benefit in accordance with the Beneficiary Designation form for the plan. If it is not done this way is the Life Insurance Company responsible or capable of preparing the 1099R forms correctly? Is there a higher risk that the plan beneficiary and the policy beneficiary will not match?

I have a Participant that is eligible for UNREDUCED early retirement but is continuing to work. We have assumptions for early retirement under the plan. The DRO reads that the AP will recieve $2,000/mo from the plan and may commence at any time that the participant is eligible for early retirement. With this language she would probably commence immediately. Does this constitute an increase in the "expected actuarial value" that increased becuase of the QDRO? If so, then I would have to reduce the monthly pension of the participant.

The opposing position would be that the participant could also retire immediately as well which would simply be an "experience loss". Could a possible (likely) early commencement by the AP be viewed similarly as an experience loss?

A profit sharing plan provides for prevailing wage contributions and a discretionary profit sharing contribution. The profit sharing formula is a new comp. formula with multiple contribution groups.

For 410(b) purposes, the nonelective contribution component consists of the prevailing wage/profit sharing contribution. In order to receive a prevailing wage contribution, a participant only has to work on a prevailing wage job. In order to receive a profit sharing contribution, a participant must be employed on the last day of the plan year and work 1,000 hours during the plan year.

For 401(a)(4) purposes, it is not clear to us who must receive the minimum gateway contribution. For example, must an individual who receives 50% of their wage as prevailing wage (and therefore receives a prevailing wage contribution) and 50% of their wage as nonprevailing wage have to receive the minimum gateway contribution even if they (1) do not work 1,000 hours during the plan year or (2) terminate during the plan year?

Thanks in advance for any help!

Assuming no 409(p) problems with the S Corporation ESOP, it literally looks like an S Corp ESOP with only non-voting shares would be subject to UBIT on all of its earnings because the shares are not QES under 409(l) because it can't meet the exception in 512(e)(3).

Is it really that clear? Anyway else to interpret the 512 exception?

If that is true, you could never really use nonvoting stock in an S Corp ESOP, correct?

Assume an LLC that normally has a negative net K1, can the owner still have a 401(k) Plan and put in deferrals and still receive a match?

If there is a negative K1, can the partner still defer on his draw even if there is a negative K1?

Agree. BRF issue that passes because both are NHCEs. Not a good precedent though. How you going to explain this in the SPD?

The attachment below is a test and is unrelated to this thread!

ADPACPCL.RPT

The automatic rollover requirement (of mandatory distributions between 1,000 and 5,000) does not make an exception for after-tax distributions as far as I can tell.

Consider an extreme case where a terminated participant is entitled to a lump sum of $1,050 consisting of $1,000 of his own after-tax contributions and $50 of taxable interest. If the employer wants to force a cash-out, the entire distribution would be subject to the automatic rollover rules. Or is there some exception?

I'm sure this has been asked before, but I'm new.... Company wants to require employees currently with family coverage, who have working spouses with available medical coverage from their employers, to elect the other coverage as primary coverage for the spouse. Is this legal?

I have a question on this as it relates to new mandatory rollover rules.

In a conversation with someone who handles 1099 reporting, it appears that the IRS imposes a penalty of $50.00 if a 1099 has an incorrect address. I'd like to explore how this relates to the new mandatory rollover rules.

Suppose a Plan Administrator sends a distribution kit to the last known address of a terminated participant. Everything is done correctly, SPD's disclose mandatory rollover rules, 402(f) notice, etc....

After 30 days, or whatever "reasonable" period PA has selected has gone by, the PA processes a mandatory rollover to First National Bank of East Overshoe in the name of the participant. Everything has been done in accordance with the IRC, and the DOL safe harbor regulations.

Now the PA does the 1099. But it turns out the address of record is incorrect. Not an unlikely occurrence in these situations. It appears PA is fined $50.00 when the IRS does its annual "audit" or whatever it is called.

1. Is this true, or am I misunderstanding?

2. Does the PA have any recourse? I am given to understand that they do not.

3. Can this expense be reasonably charged to the plan? Seems difficult if the participant's account has already been completely liquidated - I'd say no.

And as an editorial comment, if the above scenario is correct, it really stinks if the PA is following the law and DOL safe harbor, and still gets fined.

Comments or discussion? Thanks!

If a redemption fee is created as a transaction and it is incorrect is it a prohibited transaction to refund or reverse the transaction.

Partnership A is owned equally by Corporation B and Corporation C.

X is 100% owner of Corporation B.

Y is 100% owner of Corporation C.

It has been determined that an Affiliated Service Group exists.

What is used as compensation for the partner-owners (X and Y)? Does the ordinary business income from the partnership (which X and Y materially participated in) get added together with the W-2 received from the corporation?

I have some questions concerning what happens if a SIMPLE IRA provider decides to cut some expense and close out accounts <$100 that have been open for more than a year. The SIMPLE IRA provider is forcing the closing of these accounts. Participants are not voluntarily closing their own accounts.

1. When the provider sends a check for the balance of the account (<$100) to the address of record how is this reported on the 1099-R.

2. Is the distribution cosidered premature with exception? Does the participant have to pay a 10% premature penalty, or 25% penatly if they have not contributed to the SIMPLE for more than 2 years.

3. Is there a $ threshold that a distribution can be under, and not have to be reported?

If anyone can point me to an IRS publication or notice that can help clear up these questions it would be greatly appreciated.

Thank You

A client has stated that he knows there is a pre-tax plan that "works just like a section 125 cafeteria plan" for mechanics (or auto-mechanics) to set aside pre-tax dollars to purchase tools. He just doesn't know the particulars and wants his company to participate. Anyone have any knowledge of such a plan?