We are considering reducing our Automatic Rollover Benefits limit from $5000 down to $1000 per the new regulations. If we later decide to amend the plan back because it makes more sense for some of our plans to utilize the $5000 benefits limit and applicable IRPs for automatic cashouts, would it be a 411(d)(6) violation. Provided all parties are made aware of the limits (SMM) and all notices to terminated employees are adjusted to reflect the limits accordingly.

Can I buy Stock and sell it for a profit in my roth and then use the profit to buy more stock in my roth account? I don't want to distribute any many just buy and sell.

The early version of the PWBA (now EBSA) forms prohibit use of an Adobe pdf format file in creating the form sent as the official filing. The EBSA web site stated that the postscript language did not produce a proper 2-dimensional scan.

Now I see some mail that TPAs can create their 5500 forms in PDF format and send it to the client for signature. I don't remember the source of this advice.

Either the rules have changed, the Adobe programs have been adapted, the EBSA software has changed, or maybe some practitioners are wrong.

What did I miss?

an HCE received a corrective distribution prior to 3/15/05 and wants to put this in an IRA. i beleive this is a no no. she is single and her income from this employer was 100,000 for 2004.

first she would have to pay taxes on the distro via 1099r. couldnt she possibly make a nondeductible contribution to it, better yet establish a ROTH IRA and deposit into it?

thanks.

In early February Corbel realeased sample amendments/SMMs etc for the auto rollover issue and then they disappeared from the website. The packet for volume submitters is out there. Any ideas?

Thanks

Top-heavy 401(k) cross-tested plan PYE 6/30/04 has no age or service requirements and dual entry dates: first of the month following date of hire for salary deferrals; and January 1 or July 1st following date of hire for profit sharing.

The plan's definition of compensation excludes compensation prior to a participant's entry date.

Employee A was hired 10/1/03, enters the plan for salary deferral purposes on 10/1/03, and enters the plan for profit sharing purposes on 1/1/04.

Employee B was hired on 5/28/04, enters the plan for salary deferral purposes on 6/1/04, and does not enter the plan for profit sharing purposes until 7/1/04, the first day of the following plan year.

Assume that trying to treat the excludables as being in a separate plan does not work, because we need these short-service employees to pass cross-testing.

Both Employee A and Employee B need to be given a top-heavy minimum contribution of 3%, and since we can't pass testing on a separate plans basis, we also need to give A and B the gateway minimum 5% contribution.

5% of what? What plan compensation are we allowed to use? For Employee B there is only one choice: 6/1/04 to 6/30/04, the period during which B participates for salary deferral puposes.

Employee A is the question: Must we use 10/1/03 to 6/30/04, or can we use 1/1/04 to 6/30/04 as the period of plan participation?

Existing plan has its first restricted distribution for an HCE. Given this is the first restriction in the history of the plan obviously no prior method or pattern for determining current liabilities and assets have been established pursuant to Treas. Reg. 1.401(a)(4)-5(b)(3).

Is there a "consistent and reasonable" approach that would allow for this calculation to be performed ONLY annually (e.g., Jan. 1st of each year) that would apply to all subsequent HCE terminations for that plan year ? Or am I stuck re-doing this calculation multiple times during a given year at different dates if more than one HCE terminates and requests a distribution ? Thanks in advance for any opinions/thoughts.

Maybe my brain isn't working too well today, but I'm having a hard time figuring out exactly what is meant by one part of the IRS' Februrary 16 News Flash on the IRA rollover provisions.

The News Flash says:

"Many plan sponsors have indicated a wish to comply with section 401(a)(31)(B) by reducing the mandatory cash-out amount to $1,000 (or $200) or by completely eliminating mandatory distribution provisions. . . . Plan sponsors are reminded that, under Notice 2005-5, amounts attributable to rollover contributions are included in determining whether a participant's accrued benefit is less than $1,000 for purposes of the automatic rollover requirement of section 401(a)(31) even though those amounts are not taken into account under section 411(a)(11) in determining whether mandatory distributions ar permitted."

As an example, let's say an employer amends its plan to reduce the cash-out amount to $1,000, and the plan provides that rollover contributions are not taken into account in determining whether a cash-out will be made. Assume a participant terminates employment with a balance of $4,000, $3,500 of which is attributable to rollovers. Under the plan, he can be cashed out without consent. Is the News Flash saying that if the participant doesn't make a rollover election and doesn't elect to receive it directly, it must be rolled into an IRA? Would it make any difference if the account balance was $10,000, and $9,500 of it was attributable to rollovers?

I have some questions about how early payroll deductions can start in relation to the effective date of the coverage the deduction is paying for. Looking at the regulations, it appears to me that payroll deductions should not start in advance of the effective date of coverage, but I am being told that "the industry" does not always operate that way. Is it permissable to collect payroll deductions for 30 or 60 days in advance of when coverage under the policy will commence? If so, is that only true for certain types of policies? Are there any regulations covering this specific issue beyond such things as only amounts not yet earned can be committed to paying premiums (at the time of election of coverage) and no retroactive coverage?

Thanks for any insight you can offer.

I know very little about SARSEPs, but have been asked to research the following:

Client has existing SARSEP. Original documentation was signed with ABC investment company. That documentation has no requirement that all assets be invested with ABC Company. Broker recently adds investments from XYZ Investments as an option. XYZ requires company to fill out new documentation through them. Company complies, using original effective date.

Is this all okay? Does the new document supercede the old? This seems too obvious to me, but I was asked to find an answer.

Thank you.

Are mandatory employee contributions to a defined benefit plan always considered after-tax contributions?

Thanks to one and all.

Does anyone know if there has ever been a court judgemnent made againt an employer, fiduciary or trustee for excessive fees in a plan??? If so, do you know where I can look to read about it??? What's the Case Name??? Where was it brought???

Participants' pension plan failed to make timely RMDs (i.e., "age 70½" distributions). Thus, participants must pay the 50% excise tax imposed by Code § 4974. They will attach the letter (outlining the mistake and the reasonable steps being taken to correct it and begging for a waiver) to their Forms 5329. Does anybody know how tough the IRS is on such requests?

Thanks.

We got a small DB plan using individual aggregate funding. The owner has accrued his full benefit. Last year, before the Plan was frozen, He was just three years from NRD, and his unfunded liability was amortized over those three years. Now that the plan is frozen, it is the actuary's understanding that the IRS expects you to change to Unit Credit funding for frozen plans. In which case we would in effect be amortizing the owners unfunded liability over 10 years instead of two. Doesn't seem to make much sense. The unfunded liability of the others is insignificant.

For a startup 401 plan effective 01-01-2005, are non-owner employees earning greater than $100,000 HCEs? Or would they first be considered HCEs for the 2006 Plan Year? Thanx.

Since I'm not versed in the Roth IRA product, can you rollover distributions from a traditional 401K plan to a Roth IRA? I know you can roll from a traditional IRA to a Roth, but not sure of 401K plans. Thanks for your help.

Dad and Son are owners in a closely held business. They each have their own IRAs. They invest in stock of the closely held business.

Is it possible for Son's IRA to buy family business stock from Dad's IRA?

I'm not even sure where to start to look for this in the regs???

Giving an enhanced match (100% up to 4%) to satisfy ADP/ACP safe harbor. It is in done by payroll method written in document. Looking over what has been put in, it looks like a few people have received slightly more than 4%, roughly 4.2%. The regs regarding payroll period method match deposits only talk of not having to 'true up' the match contribution at year end due to changes in deferral elections, etc. I can't find anything about having to 'true down' the match contribuiton. I don't really see anything wrong with leaving this money in the plan allocated to these participants, does anyone else? I mean, if by virtue of electing to use the payroll period method you can get away with not giving someone the full match amount, why would there be a problem with allocating an extra $50, which is what it turns out to be for most of the affected people.

My employer has changed computer systems and will now receive premium payments from health plan participants after the month for which the coverage applies (e.g., participant makes payment on March 1 for insurance coverage received in February). Consequently, if a participant terminates employment in the middle of a month, the employer must bill the employee for the premiums for the weeks of coverage he/she received during that month (e.g., employee terminates employment May 18; employer must bill the terminated employee for premiums owed for May). So, the employer may have trouble getting paid.

My employer is worried about losing a lot of money after employees leave. The employer realizes that they cut checks for accrued but unused vacation to employees when they terminate. To ensure payment of the the health plan premiums, the employer wants to withhold the vacation payout checks until the terminated employee pays the premiums owed. Or the employer wants to deduct the the premiums owed from the vacation payout check before the check is mailed to the terminated employee.

Withholding checks for this reason may violate state law. Reducing vacation payouts by the premiums owed just seems sticky to me. These appear to be separate things and shouldn't be combined. Does anyone know if the Fair Labor Standards Act addresses anything like this? Or the DOL? Can reducing the amount of the vacation payout checks really be permitted?

Anyone have any thoughts?

Thanks for your help.

Question:

Can an S Corp (a bank) offer its own stock as an investment option in its 401(k) plan? If so, are there any issues to be worried about?

Facts:

* Non-publicly traded.

* Not an ESOP.

Thanks!