I just inherited a new client's plan. The definition of "Actuarial Equivalent" states that the plan uses the applicable mortality table "as defined in Code Section 417(e)." Does this suffice to mean the mortality table prescribed by Rev. Rul. 2001-62, or must the plan specifically reference the table in the Rev. Rul.?

If it must specifically reference the Rev. Rul., is this something that can be fixed under the VCP program since the deadline for amending to comply with Rev. Rul. 2001-62 has passed?

Have an employee who wants to roll SEP into 401k. 401k allows for this rollover.

Does the SEP rollover have to be separately tracked? Once rolled, is it eligible for participant loans, since plan allows for loans using rollover source?

If a participant exceeds the 402(g) limit, say by contributing $10,000 to each of two plans, who, if anyone, has reporting responsibility if the excess is not timely distributed?

I know, or think I know, that the consequence is double taxation. But what about the mechanics? I'm looking at something that seems to indicate a 1099-R is issued, but how does either plan know to do that, without the participant's instructions/decision as to which plan has the excess? Or is this something the participant handles on his personal tax return?

I took a $5,000 rollover from a traditional IRA to my Roth IRA. Prior to adding the $5,000 IRA distribution our MAGI was $99,000 and now it becomes $104,000. Since the $104,00 exceeds the $100,000 limitation do I now have to reconvert the $5,000 to my traditional IRA?

My question is in regards to whether or not distribution codes need to be updated when a participant reaches age 59 1/2? For example, a participant begins receiving a qualified monthly defined benefit payment at age 55. He is set up as a distribution code "2". When he reaches age 59 1/2, would his distribution code need to be updated to a "7"? Or does the participant's distribution code remain "2" if no changes are ever made to his monthly benefit. I looked through the 1099-R instructions and it indicates that "7" is used for a normal retirement. The instructions don't mention anything about updating the code unless the distribution type changes. Is it just assumed by the IRS that a plan administrator will update the codes?

Thank you

When a retirement plan (defers compensation; subject to a vesting schedule) changes its name, I.R.C. Sec. 6057 and its regulations provide some very clear rules about reporting the change. The plan administrator attaches an explanation to Form 5500 filed for the year of the change, and a failure to notify may result in a penalty.

What about a welfare benefit plan that's required to file Form 5500? I can't find any similar rule for reporting a welare benefit plan's name change.

Has anyone ever encountered this situation? I'm guessing that a welfare plan isn't required to report a name change, but that it's probably a really good idea to do so. Would you follow the same procedure as for a retirement plan? Example: the "Schlomo Brothers Health Plan" becomes the "Al & Greg Schlomo Health Plan"; would you attach a statement to Form 5500?

(NOTE. The plan sponsor's name hasn't changed, so Form 5500, Line 4 isn't used.)

A HCE is due to receive an ADP refund as the result of the 1/1/2004 to 12/31/2004 ADP test. The HCE would have turned 50 during the plan year (12/1/04), but died on 11/5/04.

Can the refund be re-classified as catch-up deferral money based on him turning 50 during 2004? Or will the refund will be issued based on being deceased at age 49?

Thanks for any help!

I have a client that wants to exclude a class of employees (about 4 non-HCE's out of a total of 60 non-HCE's) from receiving the safe harbor match. They want to allow them to make salary deferrals and receive profit sharing contributions, if any.

The document we use permits class exclusions in particular money sources, but I fear that by excluding these employees from receiving the match (and thus the safe harbor match), that the Plan would cease to be a true safe harbor plan.

Any thoughts would be appreciated.

A participant in an employer-sponsored health plan obtained medical treatments that were not covered under the employer's health insurance coverage (but is covered under other health plans offered by the insurer).

The participant was directly billed a total of $25,000 plus for the medical expenses by the medical providers. The participant requested the medical providers to submit the claims to the insurance company, which they did. The famous-color insurance company refused to adjudicate the claims, even though it has contracts with the providers that would have reduced the overall billings to approximately $11,000.

The insurance company orally represents that its policy is not to adjudicate claims that it "knows" are not covered. The participant believes that the insurer has a duty to adjudicate claims under the health plan, and that failure to do so is a violation of ERISA fiduciary duties. (The employer agrees with the participant.)

Does the participant have a right to be a third-party beneficiary of the insurer's contracts with the medical providers? Should I advise the client to sue the insurance company. Is he likely to prevail?

Is the employer stock held by an ESOP(non-leveraged) considered for purposes of ownership determination for highly compenasted and key employee consideration?

Thanks

padmin

How can I determine if an employer has ever filed a form 5500? Is there a simple way to do this?

401(k) plan has a match formula that matches 100% up to the first 3% of compensation deferred. They calculate the match per pay. They have not been limiting the compensation to the annual limit under 401(a)(17). So for the 2004 plan year, an HCE that made $300,000 ended up with match of $9,000 instead of 3% of 205,000 equaling $6,150. My understanding is that they can match on each pay but need to limit the overall match to the 3% of the compensation limit for the plan year. Has anyone had experience with this.

Also, had an issue with recordkeeping system where HCE that was eligible to defer did not start deferring until 7/1. When we tried to do the match calculation on the system, it would not give him match since his salary from 1/1 - 7/1 exceeded 205,000. So they said he had already exceeded the compensation limit and was not eligible for match over the 205,000 - even though he had not deferred on that match. Pursuing this with the recordkeeping system people.

If a doctor has prescribed a health club for an individual, can this in any way be considered an eligible expense through an FSA Plan?

Thanks,

Joe

We have a small S-corp client with one HCE and several NHCEs. The client has had a SEP for several years.

He made timely SEP contributions for his NHCEs for 2003, but made only 75% of his own SEP contribution. His accountant assumed the full amount had been paid in and deducted it on his tax return. The client is usually very good about making the deposits; he probably just made a mistake in depositing less the required total for himself.

He made additional contributions in December 2004 (for the 2004 year). Can those be applied to the shortfall on the 2003 contributions? We're talking about $5,000 that wasn't deposited on time.

What are his options for making this right?

Thanks for your help!

My employer has bought a company - effective sale date 3.1.05. What are the legal requirements for benefits? Do we have to have identical benefits are both companies? If yes, from day one? Our 401K company needs 90 days to integrate them into the 401K plan. What benefit issues should I be working on first; what is most critical? We are wondering about the health, dental, life, disability in addition to the retirement plans.

I apologize if this is a stupid question.

I've combed the web and read a book... But no one (that I've found) seems to say what to do with the money that you can place into the Roth IRA.

I'm 24 (so I have a while to go - let's hope) and I already have a litte invested in mutual funds and stocks.

I did a search of the forum here and somone described the IRA as a briefcase (i think) that you put whatever you want into as an investment to avoid it being taxed upon withdrawl (i beleive I am oversimplifying here).

So could I then just invest the 2500 for the last year (2004 before the tax deadline) in an index or mutual fund?

Also, I was looking into Scottrade for my Roth. Is this a good idea, or has anyone heard anything bad about them? I also have a full service broker that I could use, but there are fees involved.

I also appreciate any additional advice anyone here can offer me. I know your time is very valuable and I appreciate your responses.

Thank you,

Kevin

I have a client who wishes to "upgrade" to 401(k) Plan from a SIMPLE IRA. Can they implement the 401(k) in 2005 even thought they have already had dedcutions in the SIMPLE IRA for 2005? Can the SIRA have a short plan year?

I have a client who wishes to "upgrade" to 401(k) Plan from a SIMPLE IRA. Can they implement the 401(k) in 2005 even thought they have already had dedcutions in the SIMPLE IRA for 2005? Can the SIRA have a short plan year?

My understanding is now that the 411(d) regs. are final, participants do not have to be notified prior to the elimination of a distribution option from a DC Plan as long as there is an otherwise identical lump sum available. Is this correct ?

I know it is good PR and the SPD / SMM requirements are still in place, but I just want to be sure I understand the minimum required.

Thanks.

I've got a doctor who worked with his accountant to withdraw money from his PS plan several times last year. In each instance, instead of withholding 20% and remitting it through normal channels (and never mind filling out distribution forms!), he figured what the effect of the distribution would be on his total 2004 taxes and then sent in estimated taxes accordingly.

[For example, if he's in a 30% tax bracket, and he took $40,000, he would have sent in $12,000. If the next distribution of $60,000 put him at at 40% tax bracket, he would have sent in $24,000.]

Yeah, I had to pick my jaw up off the floor, too.

And of course, I first learn of this on 2/7, and am asked to prepare the 1099-R, etc.

So I will reflect the gross distributions in Box 1 of the 1099-R. And all taxable, since they were all cash payments. For withholding, I suppose that it would be the total of these amounts that were calculated, even though it will be more than 20%. And since he's 58 and termed, he meets the Code 2 exceptions for Box 7, so at least there's no additional 10% penalty.

The questions I have are:

1. Is there a problem in general with withholding MORE than 20%? I can't imagine that the IRS would be upset with getting more money sooner.

2. How in the world is the money already sent to the IRS (presumably under the doctor's SSN and not the employer's EIN) going to get matched up? There's going to be an issue with the 945 showing a payment under the employer's EIN, but it not being there, and I expect it will only get resolved when the IRS sends a notice and really looks into it.

3. Assuming that this all did really happen on the accountant's advice, can I somehow justify grievous bodily harm to said accountant? Mental anguish or something?

Thanks for all your replies.