Assume IRS has imposed excise tax on fiduciary of plan for prohibited transaction. Can plan sponsor that is exempt org. pay taxes to IRS on behalf of the fiduciary?

Can a new plan provide for full vesting on a change in control?

I work for a church, they have been having financial difficulties for about a year and a half. I have recently found out through another employee and verified it for myself, that they have not made a contribution since December 2003 and have not informed the employees that they are not contributing. The thing is they are still including the amount that the contributions should be on our yearly salary breakdown that we receive in January adding this amount as part of our salary.

A participant files for bankruptcy and has a 401k loan. Are loan repayments disallowed in the bankruptcy and loan is defaulted - deemed distributed (taxable as income and penalty) or something other than the above?

The sponsor of a 401K Profit Sharing Plan with a 12/31/04 plan year end would now like to act on a proposal I did in November 2004 to change the profit sharing allocation method from non-integrated to cross-tested. Is it too late to amend the Plan to have a cross-tested allocation, or any other different allocation method, for 2004? Thanx.

I am aware of the DOL rulings that say if an EAP provides any counselling it is an ERISA plan. I am also aware that many employers do not treat their EAPs as ERISA plans. Does anyone have any other straight-face arguments for not treating an EAP as an ERISA plan (e.g., not maintained by employer, not providing ERISA benefits).

Unfortunately this one provides some counselling and is 100% employer paid by insurance through APS healthcare.

If a nonworking spouse is over 50 and the working spouse is not yet 50, can they make the $500 catchup contribution to the spousal IRA?

Company stock was distriubted to a terminated participant by the ESOP in 2004. The ESOP is repurchasing the stock from the participant over a 3 year period, with interest. Is the total distribution taxable to the participant in 2004 or taxable over the 3 year period as installment payments are received?

An employee became disabled in March, 2003. While

not entitled to Social Security disability, he can no

longer work as a pipefitter.

The Plan has extended health coverage at no cost

to the employee for the past 22 months. This ends

in March, 2005.

My question is whether this employee would have COBRA

election rights in March? He was never given an

election form in 2003, but the plan has covered him

longer than the 18 month continuation period.

Thanks for the input.

I'm preparing letters to locate missing participants in a terminated plan using the IRS Program for 49 individuals or fewer. I was not provided the last known address, but it asks for it on the program instructions.

Does anyone know if this is a required component of your letter? It seems like a moot point to me since the address of record is incorrect.....

Thanks!

Vicki

Is changing the IRC 402(h) exclusion limit of 25% (that is still based on "includable" compensation) all that is needed to allow contributions of 25% (or greater) to SARSEP plans? If I wanted to ask my Congressman to make this fix, exactly what should I propose to bring this type of plan to parity with a 401(k)?

A married participant becomes disabled and submits a retirement

application in June. (His benefits would have been payable

July 1). Fund office sends the benefit election notice to

the participant. (Disability benefit is auxiliary, but paid in

the form of a QJSA). He dies 3 days after the notice is

sent.

Trustees would like to give the spouse the 50% QJSA now

rather than wait for her to reach his early retirement age.

Given the fact that the participant submitted all necessary paperwork

besides the election form, it seems the spouse should be entitled

to the 50% QJSA.

Agree? Any other issues to consider?

I am trying to get up to speed about the participant's use of a debit card. A prospective employer's communication material indicates that when using a debit card, the partipant can "spend" up to the amount that he has contributed to the FSA at that point in time.

Granted, I have not followed FSA's for a few years, but previously the employer had to be "at risk" by reimbursing the participant up to the amount he elected to contribute for the plan year.

Has something changed via Regs. that treats the "at risk" concept differently for debit cards?

I've heard practitioners advise participants to elect lump-sum distribution at time of deferral since you can always change to installments at a later date. However, there seeems to me to be a major problem. An example.....

A DC plan defines a payment only in the event of separation from service, death or hardship. If a plan participant elects lump sum distribution at separation from service, and 1 year before separation from service elects a switch to installments, it appears that the first installment would begin 5 years after the separation from service. The only exceptions to the 5 year delay are distributions in the event of death, disability and hardship. Do you agree?

If true, this seems punative, as the election is not acceleration (in fact, lengthening the payment period). It takes away an opportunity for effective income/tax planning on the part of a participant.

Do you know of communication with Treasury that addresses this issue?

Hi

I have a question regarding IRA contributions. Hopefully some one can help me.

I contributeto my Roth IRA monthly by dollar cost averaging. In 2004 I contributed $1500. I have since came into a bit of cash and would like to top up my 2004 contribution to the $3,000 maximum.

Can I still do this in the 2005 calander year and if so what would be the drop dead date to do this.

I also plan on maxing out my 2005 Roth limit.

Your help would be appreciated!

Plan has an effective date of 10/1/1996 and runs off-calendar (10/1 - 9/30 plan year).

The plan received an initial letter of determination in 1998. The plan was timely restated for GUST, however it was not submitted until after the RAP period ended for the volume submitter we use. The RAP ended 12/31/2003 and the plan was submitted on 1/30/2004 (just made it, I know). We submitted with the User Fee.

The IRS has just now responded indicating that it appears the plan may be eligible for a refund of the User Fee as provided in Notice 2002-1.

I was pretty sure that if you were past the RAP than you had to pay.

Notice 2003-49 indicates that the plan is only eligible for elimination of the User Fee for EGTRRA if it was first in existence after 1/1/1997, which this was not as noted above.

I would love for our client to get back their User Fee but am not sure if it is really applicable. Would really appreciate anyone's thoughts.

Thanks!

According to 409A, deferral elections are based on services performed over a period of at least 12 months. My question is this:

Hypothetical Situation: An employee begins in August 2005. Employee receives a bonus on December 31st 2005 and the bonus is considered earned and vested on December 31, 2005. How would an election be handled?

Must employee make an election by June 2006 for that bonus and any bonus received on December 31, 2006? Or, as a new employee, could employee make an election for the 2005 bonus compensation within the 30 day initial election window.

Any and all guidance is appreciated!!

Let's say a plan has no NHCE's for 1/1/2003 to 12/31/2003. They are deemed to satisfy the ADP test.

They hire a NHCE in 2004, and must now complete an ADP test for 1/1/2004 to 12/31/2004. If they use the Prior Year Testing method, what 2003 NHCE average would they use?

My question if anyone can help is:

1)Do I need to file a 5330 for the employer over the late deposit issue? It seems everything I have read says untimely deposits are prohibited transactions and a 15% excise tax should be paid on the full amount of late deposits.

2)Can this be self corrected by depositing lost earnings for all affected participants? If so would that wave the excise tax from being paid?

A sponsor of a DB plan wants to amend the plan so that participants who terminate employment for reasons other than death, disability, or retirement, will have to wait until either early or normal retirement age in order to be paid out. Right now, the document allows for immediate distribution upon any termination of employment. Would amending the plan to delay the distribution availibility be a protected benefit violation?

Thanks