1. If a new business (first year of operations) wants to make a SEP contribution for its employees, does it need to put special eligibility requirements in its Form 5305-SEP (or adoption agreement or plan document)? The 3-years-out-of-5-years rule is simple enough to understand. So, if a new business would like to make a SEP contribution for Year 1, doesn't it have to adopt less restrictive eligibility requirements (i.e. 0-years-out-of-5-years).

2. If I'm correct in #1, is there any problem with the business amending its eligibility requirement each year, until it hits the 3-years-out-of-5-years standard? The employer's goal is to provide a benefit to its start-up workers, not to give special treatment to everyone hired in subsequent years.

I seldomly run across SEPs and don't have much of a background working with them. Thank you, in advance, for your insights.

In '98 I converted a Traditional IRA to a Roth IRA. Taxes were paid on a conversion of $17K. I have made no contributions since and it is now valued at $10K. Can I withdraw since it has been over 5 years, transfer the Roth to another broker and write off the loss?

Does anybody know of any site, other than here at BenefitsLink, that posts jobs in the benefits industry?

Company X maintains a 401(k) plan for its employees. Assume the following scenarios.

Assume employee A is a commissioned salesperson and sells a product to a customer for which s/he would be entitled to a commission. Customer has 30-day period in which to cancel sale. Assume customer cancels sale. A has had 401(k) and matching contributions allocated to account based on commission based on sale of product which was later cancelled by customer. Can the plan forfeit the match and 401(k) contribution based on the cancelled sale?

Assume Employee B is a commissioned salesperson and sells a product for fraudulent reasons. B earns a commission for which X allocates a 401(k) contributions and matching contribution to B's account under its 401(k) plan. Internal investigation reveals B's fraud. Can the plan forfeit the match and 401(k) contribution based on the fraudulent circumstances of the sale?

Assume Employee C is a salaried employee and elects to make a 401(k) contribution of 6% of compensation. Due to an administrative error, the plan erroneously credits contribution of 8% of compensation even though only 6% contribution reduced from C's pay. Can the plan forfeit the excess 401(k) contribution?

Assume Employee D is a commissioned employee and sells a product to a corporation. D earns a commission for which X allocates a 401(k) and matching contribution to D's account under X's 401(k) plan. An internal investigation later reveals that the circumstances of the sale suggest that the buyer of the product intended to use it for purposes of money laundering. A further investigation reveals that one of the directors of the corporation is an al-Quaeda operative identified by Homeland Security as a major terrorist. Can the plan forfeit D's 401(k) contribution and matching contribution based on the improper sale?

In each of the above circumstances, is it implied that compensation means that which was properly earned? If an error occurs can the error be corrected by a payroll reversal? Or is a plan amendment necessary to take such corrective action? EPCRS talks about overpayments which are payments in excess of the amount the participant is entitled to. But can a plan take a preeptive approach to prevent overpayments on or after the time when contributions are allocated?

We have a plan that changed trustees several years ago. At that time, money was transferred from the clearing/holding account of the prior trustee to the new trustee, where it has sat unnoticed, until recently.

Under the prior trustee these assets sat in an account that would temporarily hold assets until they were allocated. For example, the sponsor would wire their payroll contributions into this account and then the trustee would pull the money out of this account and put it into the Trust.

When distributions were processed, the funds would come out of the trust into the holding account and then the trustee would wire the money to the checking account that paid the distributions.

When the change in trustee occured, these assets were transferred to the new trustee, where they were kept separate, but never used.

It would seem that the balance in this account should be very small, but it is not. The theory (not yet confirmed) is that at one point the sponsor may have had to make an estimated contribution because they were not going to be able to post contributions within the DOL's required 15 business day rule. This has been known to happen. Then, when the actual contributions were posted, the sponsor again wired the full amount.

The question is what can we do with these assets? Can they be withdrawn or must they remain in the plan and used to pay plan expenses/future contributions?

Can an employee who terminates employee submit claims for services after the date of termination? Or can they only use the runout period for claims incurred while an employee? In effect does the coverage period end at termination of employment?

Is it too late to amend a Plan for the 2004 Plan Year (Plan Year ended 12/31/2004) to change the employer allocation from Age - Weighted to New Comparability. The change would result in a higher percentage allocation for NHCEs as well as HCEs.

2 large 401k plans are permissively aggregated for 401k testing. Both are calendar year plans, both have eligiblity requirements that are more lenient than 21 & 1. Plan A allows for entry on the first of the month following employment. Plan B has a 6 month wait and allows entry on 1/1 and 7/1.

For the combined 401k test, do I apply the eligibility for each plan separately to determine who is in the test, or do I use the most lenient eligibility (Plan A's) and apply it to all employees, including Plan B. I think the former is right, but would appreciate and comments.

I have a physician (MD) client who has submitted for reimbursement the following expenses:

Fees for a beginning Tai Chi class

Subscription to Dr. Andrew Weil's "Self Healing" medical newsletter

Tufts Unicersity's "Health & Nutrition Letter"

These do not appear to me to be 213(d) medical expenses. However, as a physician, the client can easily provide a letter of medical necessity.

Any experience with such claims?

I have a 401(k) plan that had a match formula for the first half of the year, then they removed the match formula mid-year and added a non-elective formula.

When doing the ACP test, do I use compensation just for the first half of the year, or the entire year?

When doing the 401a4 test, do I use compensation for the second half of the year, or the entire year?

When doing 410(b) for each component, do I use the employees who were non-excludable for the entire year...or do I use the ones who were non-excludable for the first half towards the matching, and the ones who were non-excludable for the second half towards the non-elective component?

Any cites?

We have a takeover plan that uses the Frozen Initial Liability Cost Method. The initial FIL base is considered amortized due to the ERISA FFL in past years. The plan was amended to freeze benefit accruals. This amendment reduced the unfunded accrued liability.

Do you set up a base for the reduction in the accrued liability?

We adminstrate the tax withholding checks for our plans in the following manner.

1) Send tax checks to client to deposit under their TIN or plan trust TIN.

Drawback: Clients get the check and don't deposit the check timely, don't know what do do with the check, put the check in a drawer, you get the drift. (If a separate trust TIN was not set up and they are supposed to be remitting checks via EFTPA and semiweekly, then you can see the impending disaster here). Because we prepare the 1099Rs, I have to confirm with each company that they made the deposits and address any outstanding tax deposits and that can be very time consuming in January.

2) Make the deposit for them under the plan Trust EIN and charge for this service, and prepare the 945.

I spoke with an IRS agent a few years back who audits plans etc and, to paraphrase the gentlemen.."We don't really care what TIN is used so long as the 945s match the 1099Rs for tax withholding." So I thought about this and was wondering if we could just use our own company TIN to make all the deposits and issue the 1099Rs under. Other than adminstrative penalty exposure, what downside would there be for doing this? I see it as simplying the adminstration of the 1099Rs/945s etc.

Client is a multiemployer group that

maintains a DB, DC and health plan.

The admin will be leaving in the next

few months and we need to post the

opening.

My question is where this should be done.

We are planning to post the job on this

website, the International Foundation

site and in the local papers. Is there

anywhere else that could generate

a decent response?

A profit sharing plan currently exists. Neither the employer nor employees are pleased with the TPA, the investments, the broker, nor the fact that there is no 401(k) feature. It uses a prototype plan document of the broker. The employer and employees want a 401(k) plan.

The employer has located a new TPA/ broker which offers a 401(k) prototype and of course investments. The new broker's investments are more profitable than the current broker's.

The employer was told that if he wanted to switch to the new TPA/ borker's plan, the employer would have to amend (or restate??) the current plan and move all plan assets to the new broker.

The employer however would like to terminate the current plan, distribute (or rollover all assets) to participants and then immediately adopt a new plan (401k)with the new broker.

All participants are already 100% vested in the current plan.

Is it legal to terminate a plan, distribute all assets, and then immediately adopt a new plan ?

I seem to recall that an employer contribution for a dc plan had to be deposited prior to the employer's filing of the corporate return if the corporate return was not extended (e.g. 12/31 pye, 1120 filed 2/15, deposit had to have been made by 2/15).

Can anyone refute or corroborate this recollection?

An employer is considering breaking down heath care costs (including prescription drug charges) by department. Individual depts. would be charged for the actual costs oftheir employees. Some depatments have only one employee. Do HIPAA issues result because Co. in-house accountants could see that a spike in charges could be associated with an employee's health issues. Thanks in advance. Ed

This was forwarded to me in an email today.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewI...item=6947643175

Is there a regulation that states that all eligible employees are entitled to a QNEC, or can you exclude the otherwise excludables from the calculation?

How much would you bid?

OddEBay.pdf

I have a 401(k) SH plan which excludes overtime, commissions and bonuses. I have to run the compensation ratio test. Does anyone know if Relius runs this as part of the non-discrimination testing? If not, how do I test the compensation for non-discrimination? Thanks.