For Top Heavy testing, do you account for a terminated participant's inservice distribution when their current account balance is no longer considered?

Here is the situation:

Three years ago a participant takes a hardship distribution. A year later that same participant terminates employment from the company. So when doing the current year Top Heavy test, we no longer consider that participant's account balance due to the termination two year prior. What about that participant's inservice distribution that was taken three years ago, due to the five year Inservice distribution rule?

We are having a little debate regarding the answer, so any sources or links for your answer would be greatly appreciated.

Thank you.

The download file we are receiving from Schwab only contains the trade date not the record date -which is allocating dividends based on the wrong date.

What I'm looking for is : Are others succesful in getting a file from Schwab that contains this date?

If not how are you allocating your dividends?

Tomorrow, Wall Street Week will be interviewing Ted Siedle. He will be disclosing the shark like fees associated with investing in DC plans.

If there is a business partnership (equal ownership) consisting of three people can each one of three partners open their own Individual (k) or would there have to be one Individual (k) plan set up for all three partners? Please advise.

Thank You

I realize the "Individual (k)" is used when a small business owner establishes a plan covering only th business owners (or owners and their spouses). If the business eventually hires employees that must be covered under the business's retirement plan the business owner must generally decide to expand their Individual (k) plan into a traditonal 401(k) plan or switch to a different type of business retirement plan.

Once the employer has eligible employees does the Individual (k) automatically beome frozen? How much time does the employer have to establish a traditional 401(k) plan? Please advise.

Thank You

The owner of a traditional IRA purchases the XYZ fund through his IRA custodian. The purhcase represents less than 10% of the total IRA. XYZ Fund resides in a Limited Parternship that is owned and managed by the IRA owner's son and daughter (50/50 partners). The investment in the XYZ fund by the IRA represents 50% of the total value of the XYZ Fund.

Because of the purchase in an investment, where the investment is owned by the son and daughter of the IRA owner, has a prohibited transaction occurred?

Thanks!

7/31/04 Plan year end. ADP test failed and 1 HCE needs to have $1900 returned to him. HCE is catch-up eligible and the plan allows for catch-ups.

By 11/30/04 he had already deferred 16,000 in calendar year '04.

If we recharacterize the 1900 as catchup for the 7/31/04 plan year end, does he now have a 402(g) violation of 1100? Or must we return the ADP amount? I would think that had they gotten the data to us and we had known of the failure earlier we would have recharcaterized the excess and then told him to deposit less catch-up but now I'm not sure which comes first Chicken/Egg!

Any comments? (be kind, it's Christmas!)

Merry Christmas and Happy Holidays to ALL!

1. Notice 2005-1 Q&A -10 contains a statement that salary deferrals generally may not be made subject to a substantial risk of forfeiture. What is meant by this statement ? Does it now prohibit normal salary deferrals under a non qualified plan?

2. Can a greater than 50% owner of a privately held company that sponsors a nonqualified plan still defer part of his salary under 409A when all of the requirements of 409A (a) (2),(3) and (4) are met? and the plan is unfunded and an unsecured promise to pay?

3. Can a greater than 50% owner still have a distribution event under a change in control?

An attorney in my firm recalls having heard about a case several years ago that held that the Buyer did not have a claim against the Seller regarding the imposition of a lien by the PBGC. The purchase agreement stated that the company's assets were not subject to a lien; however, because the statement was not in the employee benefits section of the purchase agreement and the statement did not refer to a lien imposed due to underfunding of the retirement plan, the court found that the rep was not violated.

Of course, we cannot find such a case. Does this purported case sound familiar to anyone? If so, do you have a clue as to the case name or maybe the jurisdiction?

Thanks.

Churches aren't subject to Code section 457, but that doesn't stop financial institution salespeople from wanting to sign churches up or church human resources people from wanting to get their employees a benefit similar to governmental 457s.

I would think a church could sponsor a broad-based nonqualified deferred compensation program like a governmental 457(b) plan but using a rabbi trust rather than a 501(a) trust as required under 457(g).

No rollover, of course, but it seems there would be enough advantages to make it attractive.

Are any 457 providers offering such a product? Any thoughts?

Non-profit maintains a SEP on a fiscal year (7/1-6/30). Looking to term SEP & start a DC plan. Can they term & adopt "as-of" 7/1/04 which is first day of current fiscal year. Or do they term SEP as of current date, make contribution for partial year, & then adopt DC plan?

In reviewing SEP plan for termination it was found that some part-time ee's who should have gotten a contribution from employer in past years didn't. What is the preferred way to correct this before plan moves over to DC?

Can anyone confirm that under 401(a)(9) that even rollover assets from outside plans (say a DC plan) rolled into a DB plan must still be paid out under the DB annuity method instead of the account balance method (I'm aware of the 2 year transition rule on reliance on prior proposed regs but I'm ignoring that for the moment). Thx.

I read this board a lot, though I've only posted once or twice. I'm looking for a little objective advice/criticism and the posters here seem to have varied types and amounts of experience.

Here's my background:

I have three years of experience in the retirement field (TPA, specifically). I work for a small TPA and I've pretty much done "a little bit of everything". I hold a couple of ASPPA designations. As much as I hate to admit it, I really do enjoy working in the field and would like to continue to do so. I specifically enjoy the compliance and plan design aspects and would be thrilled if I never had to process another distribution (wouldn't we all?).

I work full-time and have no intention of working less than full time. My employer is *somewhat* flexible, but not infinitely so. I can vary my schedule by an hour or so either way, but it is substantially an 8-to-5 job.

And now we've come to my dilemma:

I will shortly complete my two-year degree and transfer to a four-year university. I am considering two options. Option 1 is a major in accounting. Option two is simply a BS in Business Administration (possibly with an economics minor). The accounting degree program is at a local state school. All of my classes would be in the evenings (no weekend options) and it will take me about 6 million years to complete my degree (OK, 3-4 years, actually). The BS in Business Admin program is a distance learning program from a very well known accredited state school (NOT some fly-by-night-get-your-degree-in-eight-weeks kind of place). I can finish within 2 years, since all of the classes are online.

I've taken a mixture of online and on campus classes for my AA degree, so I'm very familiar with how online classes work. In some ways, I prefer them. I'm very much a "book learner", so while there are definite positives to in-class time, I find that I learn equally well without it. Also, it's nice when you don't need to commute an hour from work to school (no exaggeration in my area!) and then sit in class for three hours, 3 or 4 days a week.

So, basically, I'm trying to figure out what advantage an accounting degree might give me for my chosen career path, and if the advantage is worth it.

Any thoughts, ideas or suggestions would be welcome.

Thanks!

Can anyone recommend a good article laying out Split Dollar Insurance? Specifically the advantages and disadvantages?

I have read a few articles and they all seem to paint a picture that Split Dollar is a great device. However, people I speak with are absolutely against Split Dollar. I need some good articles by experts that will help explain to me the downside.

Thanks.

I have an employee who was laid off in 2003, took a distribution to herself in 2004 and was rehired in 2004 a few months after her withdrawal. My question is that she wants to not have to pay the 10% penalty and income on her withdrawal. She was not fully vested and can restore the ER portion of her match to retain her vesting. Is it also possible to reverse the distribution and restore the EE portion of her account and avoid including in income on the 2004 1099R? I still have to do the 1099R because we withheld 20%.

If the Look-Back year is the 12 months period immediately prceeding the PY, in determining HCE for the first PY, can one use the first PY comps or must one obtain the compensations for the prior yr?

I would say yes, but some have siad that first PY comps can be used.

I have an employee who is already over 70.5. He intends to stop working full-time next March but may work part-time or seasonally afterward.

When will he need to take an RMD?

What if he is considered retired and then rehired as a part-time employee?

Do I use the status assigned by our payroll processors or are there regs. that would apply? Would break-in-service rules help determine if a termination of employment has occured?

We have a participant who has decided to contribute an extra $9,000 for their EE deferrals for 2004. Following the guidelines, they can contribute that much, but can they just write a check to the Plan? Since the taxes have already been deducted? Or can they just adjust it on their taxes?

Thank you for your help!

NY law prohibits the use of annuities as a funding medium. This in my view recognizes the principle that the purchase of an annuity with pre-tax dollars is like using an umbrella indoors.

Q.: Please identify the other states that have the same prohibition.

What are the requirements for catch up. I have a group that two participants have maxed out for '04. Both are in excess of age 50 by Dec 04, but they have been told that the participant had to be age 50 by December 2001 to be eligible for make-ups, and no one else can take advantage of the catch-up provisions.

Any thoughts, code refs

thanks