We (TPA) have been asked to comment on a request to honor a distribution form being signed by a court appointed 'commissioner' acting as the participant. The participant is a terminated employee of our client. The court has appointed a commissioner under "Rule 70". Our state has adopted the same language as in the Federal Rule 70. The plan document does not address this specifically in definitions or elsewhere. Counsel will be contacted, of course, but I am interested if there is any experience to be shared here.

In negotiating a executive's employment agreement on behalf of an employer recently, the executive's attorney requested that the employer agree to INDEMNIFY the executive, in the event that the employment and nonqualified deferred comp. agreement turned out NOT to comply with 409A, and therefore resulted, in the future, in tax liability as a result of income inclusion.

We said no, and it was left at that.

But I'm wondering if anyone else has thought about this.

Since 409A puts the whole burden of a failed 409A-subject plan on the employee, it seems that the employer has no interest in agreeing to indemnify any employees. The employer's interest is just to draft the plan properly. But I suppose, in theory, indemnification is permissible, if both parties are willing.

Any thoughts?

Can someone point me in the right direction?? I have a situation involving uncashed refund checks. For example, a COBRA participant is allowed an extended grace period to make up a payment that's short by an insignificant amount. The remaining balance is not paid and we've sent a refund of the portion that was paid.

What happens when these checks are not cashed? Do ERISA's plan assets rules continue to apply? Do state escheatment and unclaimed property rules apply?

We have 4 DB Plans contained within a Master Trust. In the annual census submission, I realized that we set up a participant who retired 8/1/03 incorrectly on our bank's system, and he has been paid out of the wrong plan since he retired. I know we need to transfer the assets and calculate earnings/losses associated with those assets. Do we need to do any DOL or IRS filings?

I am getting mixed messages from TPA's. I thought that a 3% safe harbor plan that ns NO other contributions ( or forfeitures ) from the employer is EXEMPT from the top heavy rules that year. Is this correct ?

THis means that an employee entering a calandar year plan on 7/1/04 for example only gets the safe harbor 3% on comp from 7/1/04 to 12/31/04. They do NOT get a top heavy allocation for the whole year comp since the plan is exempt. Is this correct ?

If the plan in some future year has a profit sharing allocation OR a forfeiture ( that is allocated like a profit sharing allocation ) then is not exempt that year and the 3% top heavy on the WHOLE year must be contributed for a person that enters on July 1st - correct ?

The retroactive annuity regulations were effective July 16, 2003 and apply to plan years beginning on or after January 1, 2004. Under the proposed and final regulations, a retroactive annuity starting date may be used only if the plan provides for it. Under Notice 2004-84, released 12/14/04, plan provisions relating to a retroactive annuity starting date are designated as disqualifying provisions and plan sponsors may adopt retroactive annuity starting date amendments in the 2005 plan year. Does this mean that a plan may use the retroactive annuity starting date provision without a plan provision and then retroactively amend the plan back to the date that the provision was first put into effect?

With respect to 409A, what is the consensus out-there in NQ Land as to remedying mistakes?

Specifically: what if a distribution is made in error and a check/assets must then be redeposited.... what would be the repercussions under 409A?

Would the erroneous distribution be taxable? Would the plan be in jeopardy?

I think the IRS touched on this is their Q&A guidance, but I didn't focus in on the answer as I should've

A KSOP PROVIDES FOR THE INVESTMENT OF MATCHING AND SALARY DEFERRAL CONTRIBUTIONS IN EMPLOYER STOCK, SUBJECT TO THE DIVERSIFICATION REQUIREMENT. CAN THE PLAN BE AMENDED TO REDUCE THE DIVERSIFICATION AGE TO AGE 45 WITH NO SERVICE AND/OR TO PERMIT PARTICIPANTS EVERY THREE OR FIVE YEARS TO HAVE AN OPEN WINDOW TO SELL EMPLOYER STOCK AND DIVERISFY? tHE ONLY CONCERN I CAN THINK OF IS THAT WE NEED TO MAKE SURE A "SUBSTANTIAL" AMOUNT ALWAYS REMAINS IN EMPLOYER STOCK.

ANY COMMENTS?

I am preparin a 5500 for the first time. It was done by an accountant who has made mistakes on it and stirred up inquiry letters from the DOL.

1. This is a defined contribution protype plan,There was changed in the plan due to the tax law in 2003. Is there a place on the return that indicates a date for amendmants?

2. The plan has its assets in a brokerage house and a bank. It contains mutual funds and CD's. Page 2 line 9 a3 ( plan funding arrangement)indicates trust and line 9a could be checked as general assets of the sponseer . I am not sure which box to check . the same is true for line 9b plan benefit arrangement. In the past schedule I was not included. I believe it should be included. It is a small plan.

3.The plan has two trustees. Can 2 schedule p's be filed out. In the past only 1 form was filed.

4.I am filling out a ScheduleA . The pension plans pay an administration fee of 25 a year to a life insurance company. Does this need to be lised in part 1? It is not a commission.

5.. On schedule A the contract number was wrong in prior years. Should I correct it or leave it.

Thanks for your help....

For 2004, my only income is interest and dividends, and these are not eligible compensation as defined by the irs.

my question is, can i still rollover my traditional IRA to a ROTH IRA?

since i have no eligible compensation for 2004, could it possiblely result in a failed conversion?

or is it better for me to not mess with the conversion and just withdraw from my traditional IRA and take the 10% penalty?

thank you

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.