My husband has a Roth account which we got through our bank through Frankling Templeton. It is 4 funds, Growth (Franklin capitol growth fund), Value (Mutual shares fund), Global (Templeton growth fund) and Blend (Franklin growth fund). These are all Class B it says. The total value is 2,534 which 1.000 was invested in 2003 and 1000 in 2004.

We are getting charged a yearly fee of 15 per fund which with such a small amount invested not sure if we should keep it there.

We got a letter from Franklin stating that no longer do they accept money straight from us for class B funds and that we would have to go a financial advisor.

We called the advisor which we saw one time in 2003 and he told us that we have to buy different funds and we should do it ourselves or he would have to charge us.

We are wanting to put 3000 in a Roth soon.

What should we do? We have thought about E Trade with getting emailed our asset summary.

By the way he is 38 and we are looking at long term, we are not going to touch this money until retirement if ever, it may be given to the kids. We are looking at putting 3000 in each year, maybe the 4000 but 3 this year so far.

Thank you so much ahead of time!

Linda and Chris

We recently had yet another one of our clients audited by the IRS. Seems to be a lot of audit activity in the Southeast area lately. Fortunately, the plan was a nice, clean Safe Harbor Match 401(k) plan with no potential issues that we were aware of. It was a very small plan with less than 15 participants with very good participation.

The auditor insisted on handling the audit at the workplace so our involvement was somewhat limited. After nit-picking some irrelevant issues related to the 1120, he took issue with 2 things. (1) He noted $245 in the forfeiture account at year-end. He stated that such accounts are not permitted by the IRS and should never be established or maintained. The forfeiture was generated by old PSP monies subject to a vesting schedule. Although the document clearly stated that forfeitures would be used to reduce matching contributions, the forfeiture was in fact "swept" in the first month following the plan year end when the safe harbor match was funded, the auditor was not satisfied and considers the issue "open". I don't know how any plan in the country that has a vesting schedule could possibly operate without a temporary holding account for forfeitures.

(2) And this is even more ridiculous......the plan was top heavy, solely safe harbor, and there was one participant who did not defer and therefore did not benefit. Auditor continues to claim that this participant should receive a top heavy minimum even after being referred to the EGTRRA amendment. Even if the auditor wasn't quite "up to speed" with EGTRRA, you would think he would have required top heavy minimums for all since prior to EGTRRA, matching contributions could not be used to satisfy top heavy. And, the icing on the cake, and what makes this whole thing really pathetic is that his BOSS from the regional office was present for the audit!

All in all, my client and his assistant lost 3.5 days of valuable business time and were left with a very bad taste in their mouth. They don't know who to believe, me or the auditor. His general feeling was that it didn't appear that the IRS wanted him to have a plan at all. I am left with having to address these 2 issues again, and doing so somehow without insulting the auditor for his obvious inexperience and incompetence.

Just thought I might share this experience with others.

A client received a nonelective contribution to her 403(b) account for this year. However, she is no longer working for the employer- she received no compensation from the employer for this year, and the contribution is based on past year’s services. Does this contribution affect her $42,000 limit for this year sicne it is based on past year's service ? She wants to do Solo 401(k) for this year .

Thanks in advance

Jane

My organization provides technical support for medical software databases. I feel PHI is of passed around in emails freely for trouble shooting client systems. Does anyone have a suggestion for remediation other than using S/MIME or PGP?

Here is a quote from the support supervisor, "I think the main point of HIPAA is to use 'some means' of protecting PHI so even a password protected zip file will suffice. However it may be easier to just not allow any PHI in emails."

Any ideas on changing this train of thought?

Does anyone have experience with filing the 5500 for a Master Trust? We are considering an arrangement for multiple employers to invest in one and are not familiar with the level of reporting on the separate Form 5500 required. I'm just looking for feedback on a personal experience more than anything.

Thanks in advance.

Participant has $1,010 account balance. Participant accounts are charged $20 for distributions. Is that a cashout or automatic rollover?

I'm curious if other TPA firms will maintain an annual summary of accounts when this information is already provided by the investment company.

It takes so much time!! And client's don't care (the vast majority anyway)!!

If a Sole Proproietor has a SEP plan established but dies before funding it for the current year, can a contribution be made by the estate?

My gut reaction is "no" but can't seem to find anything in writing to back up my position (checked the Answer Book, ERISA Outline Book and IRS Pub 560).

Would the same hold true for a sole proprietor who sponsors a profit sharing plan?

Thanks in advance

Bob

I have a matching safe harbor plan - 100% on the first 3% and then 50% on the next 2%. The TPA said that I have to true up the contributions based on annual deferrals and annual compensation at year end.

Question: Is this how most of your plans are done in your firm ? Is it possible to only match as you go per pay period without the year end true up ? Which is better ?

A participant makes a TEFRA election to delay his minimum distributions from the DC plan. The participant has now died. How do we calculate the MRD for the participant/beneficiary? What account balance do we use - only benefits accrued prior to the TEFRA election?

Somebody please tell me I'm missing something...

The DOL/EBSA faqs on the VFCP, found here:

http://www.dol.gov/ebsa/faqs/faq_vfcp2.html

give an example where deferrals for the first week of June 2000 were not deposited until October 2000. They say that the correct rate, the federal underpayment rate under 6621, is 8%.

Yet, when I go to the most recent chart of rates, here:

http://www.irs.gov/pub/irs-drop/rr-05-15.pdf

it looks to me like the rate should be 9%.

Am I misreading the table or did they pick up the wrong rate?

A calendar year corporate profit-sharing plan has a matching contribution through 6/30/2004. Then, effective 7/1/2004, it eliminates the match and replaces the match with a nonelective contribution. Let's say you have someone who makes $150,000 in the first half of the year and $250,000 in the second half. Let's say the plan document doesn't address this, either. Do they get the matching contribution based on compensation of $150,000 or on $102,500? Do they get the nonelective contribution on $55,000; $102,500; or $205,000?

Am I correct in that the maximum for this plan is $42,000? Thank you for your input.

In a controlled group situation where 2 of the 3 entities adopt a single nonstandardized 401(k) plan, for contribution allocation purposes would you have to consider compensation from all three entities for employees who receive compensation from more than one entity?

My experience is almost primarily with DB plans to this point, but have a couple of fundamental points I would like to verify regarding a 401(k) plan that I am working with.

Background - This plan has only provided profit sharing allocations and 401(k) elective deferrals. The plan has 1 owner/HCE and 18 NHCEs.

Questions for verification -

1. Is it correct that the profit sharing allocations are tested for non-discrimination under 401(a)(4) and the 401(k) elective deferrals are tested under the ADP test? That is tested separately and independently of one another based on their respective testing procedures.

2. Can the profit sharing allocations section be amended to provide an allocation to a few groups where one of the groups has the names of 3 specific NHCE individuals?

Thanks.

Does anyone know if it is possible to obtain a listing of who the SSA currently has as being due benefits from a pension plan (as reported on Schedule SSA)? Can the plan administrator request that information from the SSA?

Sure, living on Earth is expensive, but it does include a free trip around the sun every year.

I have 2 clients-both declared bankruptcy in January 2005. Both companies were then purchased by another company effective March 1 in an asset only sale. The companies had an affiliation but were not in a controlled group. Both maintained separate 401(k) plans.

Company #1 is top heavy. For 2004, the 2 key employees had deferrals and match. These are the only contributions to the plan. The match for other employees was not enough to cover the required top heavy minimum, so an additional contribution of about $4,000 is required. I suggested that the 2 key employees be refunded their 2004 and 2005 deferrals and forfeit their match so that no top heavy minimum would be required for 2004 or 2005. The bankruptcy attorney said their is no money to make the top heavy contribution and endorsed that solution, but, surprise, surprise, the 2 key employees were not happy about it. Can anyone think of another solution? The plan has fewer than 10 participants and the goal is to terminate the plan ASAP.

Company #2 is not top heavy. The plan contributions are deferrals only. The new company has said that they can continue to maintain the 401(k) plan, but the cost to the new company must be $0. The new company has not formally agreed to assume sponsorship at this point, but their formal approval is being sought. The matter should be resolved in the next month or so. Apparently, the fate of the plan was not a part of the purchase agreement. My question-should deferrals continue to be withheld from employees while the plan is in limbo? What are the possible ramifications if the new company decides to terminate the plan? What else should I be considering in a situation like this? I have not dealt much with bankruptcies and am interested in learning what to look out for.

A plan that we administer is top heavy. The client makes a 3% Non Elective contribution and also makes a profit sharing contribution. Will the 3% still satisfy the top heavy min even though a profit sharing contribution is made?

What is the correction method if an employer does not stop taking mandatory contributions when an employee's compensation reaches $205,000 (for 2004)?

This is a 403(b) plan with a 2% mandatory contribution (mandatory as condition of employment). Since mandatory contributions are generally treated as employer contributions, can any excess be forfeited and then paid as additional compensation outside of the plan? Cites?