We have an employer who would like to offer two 403(b) plans. One would be through TIAA-CREF and the other would be administered by a local company. The employer wants to do this because half of its employees prefer TIAA-CREF while the other half is more comfortable with the local company. Is there any reason (besides the obvious administrative hassle) that would prevent them from being able to do this?

We have a MDR from a profit sharing plan. First, they have to have a minimum withholding of 10% correct? Second, the distribution occured in Dec 2004, when does the withholding have to be sent in by? January 15th? Or January 31st? Thank you!

Partnership dissolved in 2004. One partner becomes a sole proprietor and earns about $15K from his new business in 2004 after leaving the partnership. The two business entities do co-exist briefly during the transition. The nature of the old and new businesses is identical. In 2005, can the sole propietor open a SEP for himself and make a contribution for 2004 AND open a solo 401K for 2005? No reason for opening the SEP except that it's too late to set up the 401k for 2004.

I know there have been several posting regarding catch up contributions but I am still a little bit confused and the ERISA outline book does not specifically answer this question. Any thoughts would be appreciated.

Assume the following facts:

Plan Year October 1, 2003 – September 30, 2004

Participant’s deferral contributions in calendar year 2003 and 2004 are $14,000 and $16,000 respectively

Deferrals are contributed during the following period:

January 1, 2003 – September 30, 2003 - $11,000

October 1, 2003 – December 31, 2003 - $3,000

January 1, 2004 – September 30, 2004 - $16,000

Can the following contributions be made in the plan year October 1, 2003 – September 30, 2004 without violating the 415 limit?

Match Contributions - $8,000

Deferrals -$19,000

Profit Sharing Contributions – $19,000

Total - $46,000

This would assume none of the 2003 catch up contribution had been used in the previous plan year and the participants had catch up contributions of $2,000 for 2003 and $3,000 for the plan year ending 2004.

In an off calendar year plan, can you use the amount that exceed the 402(g) limit from two calendar years.

I appears to me that (assuming the election timing and grandfathering provisions of 409A are followed as applicable), the new rules don't affect the practice the deferring gain on stock options into a NQDC. I think you just treat them as another source of participant elected deferred compensation and test them as to their election timing.

Am I missing anything? SB

If a plan has no distributions for 2004, are they still required to file a form 1096? Are they required to file a 945? Does the 945 have a zeros?

Employer terminates health plan then 2 days later lays off a bunch of people then offers a new health plan to the less than 20 remaining employees who help unwind the business. It does not offer COBRA to anyone.

Problems?

I am getting mixed messages from TPA's. I thought that a 3% safe harbor plan that has no other contributions ( or forfeitures ) from the employer other than the 3 % safe harbor contribution is exempt from the top heavy rules.

This means that an employee entering a calandar year plan on 7/1 only gets the 3% safe harbor on 7/1 to 12/31 compensation. They do NOT get a top heavy allocation for the whole year comp since the plan is exempt.

However if the plan does have a profit sharing allocation ( or just a forfeiture allocation ! ) it is no longer exempt and if it is top heavy than the person avove would get a TH allocation based on full year wages.

Please confirm and clarily and many thanks !!

I have a client with a 401(k) Plan. The match is based on 50% of the first 5% deferred. Eligibility is 3 months and age 21. Entry is 1st of the month.

Employee is hired 5/1/03. His entry date would be 8/1/03.

He doesn't defer until late '04. From deferral election to year end, he defers $8,700 on pay of $15,000. Full year pay is $58,000.

How would you calculate the match?

Plan says that each participating ER contributes only amounts attributable to its EEs. But the Plan was established in 1970, so (according to 413©(4)) 412 is applied as if all participants are employed by a single employer.

Plan says that each participating ER that withdraws from the plan shall contribute an amount to fully fund with respect to participants who are its EEs.

1) Is one participating ER responsible (maybe pro rata) for the contributions of another if the other defaults (due to bankruptcy or other)?

2) Same as #1, but the participating ER has terminated participation in the plan.

3) What PBGC filings are involved/required for the plan (or a participating ER) when an ER terminates participation in the plan?

Thanks for your time.

I am working with a 100% participant directed plan (SDBs) and an active participant wishes to use assets from his plan account to purchase a condo. Does anyone know if there is any reason this woukd not be allowed? Thanks!

Is there anything improper, illegal, or discriminatory about giving away a prize to an employee who enrolls in our 401(k) plan by a particular date? I would send enrollment kits to all eligible non-highly compensated employees who are not currently enrolled in the plan. Those who complete and return an enrollment form to me by a specified date would be enrolled in the plan and entered in a drawing to win a prize like a digital camera. I found one at Circuit City for $99.99. The value of the prize would be somewhere in that ballpark.

Which employee benefit plans are subject to ERISA if the employer only has 25 employees? LTD? STD? Medical, dental, vision? Life insurance? 401k? Health Care FSAs?

A US Doctor working in Australia would like to establish a DB Plan. Doctor has his own US "S" corporation established that receives his Australian income and pays him as an employee. Question is, can he use his gross income as shown on his 1040 before the foreign tax credit? He pays Australian income tax on his earnings and then gets a foreign tax credit on his 1040. Couldn't the DB Plan be based on his 415 compensation?

We had a client come to us and request to set up a one person 401(k) Plan. He has a sep. full time job, but set up an LLC in order to do day trading.

He would like to know if he can set up a one person 401(k) under this business and roll $50,000 into the plan - and then take a loan from the Plan (which he intends to pay back over the 5 year time frame).

I wouldn't think any of this would be a problem, except that he does not receive any salary through the business and other then the loan payments, he would be unable to make contributions. Any thoughts?

Thanks!

I am reviewing draft footnote from non-profit sponsor (don't know who prepared the draft, probably auditor), with the following item immediately following the funded status:

Benefit cost included in the combined statements of operations and changes in net assets

Never seen this before. Can anyone help my poor brain understand what this means?

Can a plan that has used the presumptive method, say, elect at any time to adopt a new withdrawal liability allocation method such as the rolling 5 method, for example? This assumes the plan is not a construction industry plan.

I am preparing Form 1099-R for a retired participant in a DB plan. He retired before age 50 and has been receiving monthly annuity payments since that time. He reached age 59 1/2 in June of 2004.

For 1099 purposes, should he be coded as 1 (early distribution, no exception) even though he meets the "substantially equal" rule? The 1099 instructions don't seem to have a code for substantially equal payments for someone who separated from service before age 55.

Alternatively, may he be coded as 7 (normal distribution) since he turned age 59 1/2 during 2004?

I feel this is a problem but since I see it so often I wonder if I am wrong.

Many small plans have no checking account or money market account available for writing checks. The brokerage makes participant distribution checks payable to the trustee but tells the trustee to deposit in the corporate checking account and then to draw corporate checks to the participants.

I don't like the idea of plan assets being deposited into the employer's checking account. Am I wrong on this, and if so why?

We normally pay in arears and take benefits deductions based on the pay cycle (i.e., if the deduction beginning date falls within the pay cycle then the benefit is deducted). At times this may mean that an employee whose benefits begin on the first of the month doesn't see the deduction in the first paycheck they receive in the month if the first does not fall within the pay cycle. Our most recent pay cycle ended on December 31 with the pay date being January 7. Should the paycheck received on January 7 reflect benefits elections and new deduction rates that went into effect on January 1 even though January 1 was not included in the pay cycle being paid out on January 7?