Cleint wants to invest plan $$ in undeveloped land. Property can be purchase outright ($30K parcels, no mortgage). KICKER... he is the agent and will receive a commision... I am sure this is a PT... I typically advise clients to not invest in Real Estate... this one is adamant.

Questions.... Transaction goes throught the usual RE course... Plan would purchase land, client himself would be agent for sale and receive a commision... PT right?

If there is a way how would it work?

OK - my search feature doesn't seem to be working... I have a client with a calendar year 401(k) Plan. They want to amend the plan to safe harbor to avoid the ADP testing. I know it can't be effective 01/01/05 because they passed the 12/01 deadline for notice. Is it true that they must now wait until 01/01/06 or can the plan be amended now and make the safe harbor effective 03/01/2005 as an example? Thanks in advance.

Can an employer fund his entire HRA commitment in one year and deduct it? Or must he only deduct when the expenses are incurred?

My understanding is that a rate of 5.07% was used for determining lump sum distributions in 2004 (e.g., employee terminates and accrued benefits are converted to equivalent present value).

My questions are:

How is this rate determined?

Do we know what the rate will be for 2005?

Thanks.

a client of mine made a contribution well in excess of the allowable contribution for the current plan year. it looks to me that in order to use mistake of fact the contribution can not be in excess of 25,000. here the contribution was greater. as we are still in the same plan year it looks to me like you can return the money to the employer but only after obtaining a nondeductibility ruling. is this correct?

Our money purchase plan will be reducing the cash out limit from $5000 to $1000 to comply with the upcoming regulations. We do not want to go the route of automatic rollover IRAs. Since the standard from of payment is a J&S annuity, all vested balances above $5,000 are offered an annuity and all vested balances below receive lump sum cash out. For an annuity, we remove the balance from the plan and purchase an annuity from an insurance carrier who then makes payments to the participant. If we reduce the cash out threshold to $1000, that means all vested balances above $1000 must be offered annuities. Yet no insurance carrier wants to deal with amounts below $5000. What are other plan sponsors doing in this area to deal with the automatic rollover rules?

If a 412i plan defines the accrued benefit as the CSV of the contracts, and the CSV = 0 at the end of the plan's 1st year, does that mean that the plan automatically passes 410b because no HCE benefits? The answer would seem to be "yes" but it doesn't pass the smell test.

Whatever the answer, the same reasoning would apply to the a4 test if the plan is not a safe harbor (which it won't be if it's funded with insurance and annuities, at least according to Jim Holland), right?

Hello,

Let me first briefly introduce myself; I am a student at the International Rotterdam Business School and currently writing my thesis (graduation at last!). I am researching the possibilities for a HR web-portal through which several employee benefits services will be offered.

I am looking for persons who have experience with these kind of applications, either from the employee's side or the employers' point of view.

I do realize that I am asking you for a favor, but I'd extremely appreciate it if you could share your opinion or experiences, or give me any hints to look for these.

Thanks in advance.

Kind regards,

Bob

I am attempting to start a solo K plan using a third party prototype plan with effective date 1/1/2004. We are in the last throes of making changes to the adoption agreement and then I will create a custodial account at a brokerage house. The sponsor, and my ERISA lawyer tell me that the plan is in effect as soon as the Adoption agreement is signed on or before 12/31/04. However, given the late date I am concerned about the consequences if the actual account at the broker is not established and funded by 12/31/04. The brokerage house has to review my plan before accepting it so I am not sure it will be in place by year-end. I want to be able to make contributions for 2004. I've been advised that the contributions do not have to be made till tax filing date with extensions, and I need not be concerned. But does the custodial account itself have to be opened in 2004, or is the signed adoption plan enough.

If not, should I quickly open a standard solo k program with one of the online-vendors, partially fund that before 12/31, and then subsequently transfer the assets to my original custodian with my original plan in 2005? Or can I keep two plans if I stay within the maximum combined limits?

Thank you for any advice regarding these questions. Obviously, I am not a professional in this field.

I would like to hear feedback regarding the prospects of an employer increasing an employee's pay comensurate to the cost of a voluntary premium (i.e., voluntary life insurance) so that employee can afford voluntary premium. What if any considerations are suggested before recommending that an employer do this?

I have a call into the carrier for an answer but am curious if anyone has a take on this.

I have a client that is considering sending some employees to Kuwait and possibly Iraq to help service their military related products. Given the situation over there, I need feedback on how a group life & LTD carrier would pay based on the following scenarios.

1. Employee is working with the military and in effort to avoid an act of terrorism or war trips on his/her own feet while running to safety and -

A. Breaks his/her neck and is permanently disabled.

B. Breaks his/her neck and dies as a result of the injury.

2. Employee is riding in a caravan of contract workers when their car runs over a land mind and explodes into flames and -

A. Employee is kidnapped by insurgents and is eventually killed.

B. Employee is severely burned and permanently disabled.

C. Employee survives explosion but while running to safety is accidentally hit by a car and killed.

3. Employee is traveling through a hostile area with the military and is attacked by insurgents. Employee is forced to use a gun to defend himself and -

A. Is shot and killed by insurgents.

B. Is shot and killed by friendly fire.

C. Is shot and is permanently disabled as a result of the injury.

I apologize for the graphic examples, but you never know unless you ask.

I converted a traditional IRA to a Roth IRA in 1998, paid federal income taxes (over 4 years, 98-01). Since I'm under 59 and 1/2, what income tax (if any) will I face if I withdraw funds in 2005?

With California passing various bills requiring employers to offer health coverage to domestic partners, will partially self funded plans be requried to follow suit or will they pre-empt state law?

In addition, is anyone aware of any recent legislation requiring employers to make health insurance available to parents? If so, your comments and reference to the actual bill would be greatly appreciated.

Help! I've fallen and I can't get up.

A VEBA provides some nonexcludable, taxable health and medical benefits -- coverage for domestic partners and other nondependents.

It's very clear how to handle this situation for active employees. The benefits are Form W-2 compensation, fully subject to all payroll taxes and income tax witholding, and the FICA and FUTA wage bases are coordinated with the regular compensation paid by the common law employer.

But, what about retired beneficiaries? What happens when a VEBA pays taxable benefits to someone who's retired? Even though the individual is treated as an "employee" for the purpose of excluding eligible health care benefits, the employer-employee relationship no longer exists. Do the benefits constitute wages? Does the VEBA report the taxable benefits reported on Form W-2 or on Form 1099? If the VEBA uses Form 1099, which version should it use (1099-R? 1099-MISC?)?

I'm pretty much just looking for opinions because I don't think there is a clear cut answer to this question (or maybe there is). I have a client that is a group of doctors. There are 10 partners, 3 other highly compensated employees, and approximately 30 non highly compensated employees.

The issue is on the 3 non-partner highly compensated employees. Two of them are basically regular employees, the office manager and the CFO. They make approximately 90,000-95,000 each. The third is a physician that makes $300,000+ per year in salary.

This physician is fairly young so it is messing up all of the discrimination numbers. The company is considering excluding her from benefitting all together. The thought process was to create a group that is non-partner physicians (there are others that will fall into this group in subsequent years, they just aren't eligible yet).

Excluding her allows the plan to pass all applicable discrimination testing.

My concern though is that she is the only women physician. If the other non-partner physicians do not stay at the company they may never become eligible. Do you think the client could be opening themselves up to a sexual discrimination lawsuit?

County Agency administers publicly funded health care plans serving County residents. It is a creature of state law and its board is chosen by County Board of Supervisors.

The Agency devises a health insurance product directed at a sub-class of employees of another, unrelated County Agency. The Agency is also considering offering the health insurance coverage to other County employees, to School Board employees, to its own employees, and to members of the public.

Is it safe to assume:

1) that offering the health insurance to employees of the sponsoring Agency would be an employee welfare benefit plan that is exempt from ERISA Title I as a governmental plan?

2) that offering the health insurance to members of the public would not implicate ERISA but would instead fall within the state's insurance laws, under ERISA's savings clause?

3) that offering the health insurance to other governmental employees (e.g., employees of the School Board and the County) would not implicate ERISA but would instead fall under the state's government code provisions governing benefits for civil servants?

Or is it also possible that the Agency sponsoring the health insurance could be deemed to be an "employer" of non-Agency governmental employees, either under by acting "indirectly in the interests of an employer" under ERISA Sec. 3(5), or under common control/controlled group principles under the "good faith" standard set forth in IRS Notice 95-48?

Any advice/commentary welcomed.

Greetings from Massachusetts, where we have received our first inquiry regarding benefit enrollment for a family with a same sex marriage. We are busily trying to figure out how to set up our payroll system to handle the pre/post tax issues of employee contributions and the gross income issue of employer contribution.

Would greatly appreciate any guidance!

The employer has a 403(b) Retirement Plan and allows catch-up contributions. We have a few employees that will turn age 50 in 2005, some turning 50 as late as December 2005. Am I correct to inform all participants turning age 50 in 2005 that he/she may contribute $18,000 beginning January 1, 2005? Am I correct that the regulations state "the additional pretax catch-up amount for employees who will be age 50 by the end of the taxable year may contribute the maximum dollar limits? Or does the regulations only allow the catch-up to begin in the month in which age 50 is attained? Many thanks to all for your feedback!

Now that we have an OK to pass the costs of a QDRO along to a participant, what sort of notifications should we have in place?

A client of mine just had their first since this new attititude, and it's been a doozy; probably several thousand dollars of time when it's all added up. The document says that the plan can pay expenses from the trust. The SPD doesn't say anything about this, though it does mention that if a court finds that an action of a particular participant is detrimental to the plan as a whole (which I would say could potentially include trying to have the whole plan pay the costs of one participant's QDRO drafting/review), the plan can be ordered to offset your benefit by a court.

Not exactly what I was looking for. But does the plan have enough justification to say that the plan document allows it, so we can do it?

If the participants should be notified upfront, does that mean we have to re-write the SPD's of all our plans?

We have a plan where a participant past his required 70.5 start date died. Since this was a small plan designed around him, the plan terminated. The surviving spouse (who was also a participant in the plan and not yet 70.5), received his distribution and rolled it and her benefit into an IRA when the plan terminated.

It's my understanding (and I'm relatively new to the business, so please correct me if I'm wrong), that at this point, she has received a full distribution of his benefit, so she will not be required to take a 70.5 based on his benefit in the plan. She will only be required to start receiving 70.5s when she becomes eligible and the amount will be determined using the IRA rules.

The client's CPA says that he went to a conference and was told that she still had to take 70.5s based on his age on the amount she received from him??? Is there something new in effect, or a special provision in the 70.5 rules for deceased participants that I don't know about?