I have been told that giving certain employees (but not others) a choice between participating in a DP plan and a DC plan could potentially create a CODA situation?

What does that mean (very basically) and why is that bad (what are the consequences to each of the plans/employer/employees who participate)?

Two members of a controlled group are participating employers in the same plan. One member of the controlled group would like to give a 3 1/2 % safe harbor non-discretionary contribution, while the other member wants to stay with the standard 3%. Is this okay? Would it require that the members pass coverage separately, or that otherwise, it be tested under 401(a)(4)?

The model IRS agreements indicate that a Responsible Individual (RI) can be replaced if the original RI dies or is incapacitated.

Can an RI renounce his appointment? If so, who appoints a successor RI? Can the RI be other than a parent or legal guardian?

Does anyone know if/where he is working these days?

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ERISA says a party in interest is, among other things, a 10 percent or more (directly or indirectly in capital or profits) partner or joint venturer with a person that is an owner of 50% of more of the stock of the employer. i am paraphrasing for brevity. our client loaned money to someone who is a 10 percent partner in a completely unrealted venture. when interpreting this provision do they mean ANY venture or the specific business that is the employer?

A potential client has an existing PS/k plan and would like to put in a DB plan for 2004. The last I heard was that even if there is no PS contribution for 2004 the 404 25% limt will apply because just by having an account balance in the PS plan they are a "beneficiary" under both plans. Has the IRS changed their thinking or is that still the case? What if the PS accounts were distributed before the DB was adopted, is that okay, or does the money have to be out for the entire year?

I am trying to find guidance and looking to you for help!

If a plan fails 414S because of the exclusion of bonus from compensation, how do you correct it. Is the bonus added back in for the NHCE group only or for everyone? I can't seem to find anything in black & white to help me.

Appreciate your input.

An employer maintains 3 separate 401(k) plans for its employees. Each one I believe covers a different group of employees. One is for CBA ee's, another for non-cba rank and file, and a third for higher paid management. What options are available in regard to 401(k)/401(m) testing? Do all 3 get tested separately, do all 3 get combined for 1 big 401k test, is it optional to do either, or must the answer be found in the plan document?

Thanks

Company A has a 12/31 plan year end and purchases the assets of 3 other companies (B,C,D) on 9/1/03.

The employees of companies B,C & D are allowed to participate in the effective 3/1/04, but the plans are not merged.

Questions:

When determining HCE's for the 2004 plan year, is the compensation and ownership in the predecessor employers ignored, since they were unrelated for part of the year?

Since Company A is not continuing the plans of B,C &D, are they deemed to not be a continuation of the predecessor employers, and if so what compensation should I be using for the 2004 plan year testing? From 3/1/2004 - 12/31/2004 or 1/1/2004 - 12/31/2004?

I'm not real familiar with SEP's, but I was asked recently about a small business starting a non-contributory SEP. I honestly have never heard of this distincton ("non-contributory") used with a SEP before, but I suspect it just means a SEP in which the eligible employees can contribute pre-tax money, but to which there is no employer contributions made. Thats what the owner thinks (and wants) here.

Does this sound OK, and if the owner does not contribute to the plan, is there really any benefit to sponsoring this plan?

Does anyone know if there was some proposed legislation being pushed that might exempt or reduce taxation on distributions from insurance annuities ? Someone in our office thought they remembered seeing something on that but we can't find anything now. This might be an issue ASPA is concerned about due to it putting qualified plan distributions at a disadvantage. Can anyone set me straight on this ? I realize I may not be stating the issue correctly.

I read about this in a just published book and would like some citations to either support or challenge the concept.

Facts: Sole proprietor, materially participating, no employees. The trade or business has a good gross income level but he expects to have little or no net taxable income on his Sch C for the year, yet he wants to maximize his solo-401K/ProfitSharingPlan contribution.

Solution: form a SMLLC Single-member LLC and have the 1st Sch C "hire" the SMLLC (a 2nd Sch C) to preform administration/management services.

End of year: Sch C #1 has a $200,000 loss (including the fees paid to the SMLLC)

Sch C #2, The SMLLC (Sch C #2), has a $200,000 profit (solely from the fees paid to it by Sch C #1). Taxpayer establishes a solo-401K/ProfitSharingPlan for the trade or business represented by the SMLLC.

He is now able to pay in the maximum for the year based on the $200,000 net income shown on Sch C #2.

The book's author claims that the key here is that the Sch C #2 is represented by a SMLLC (rather than simply a non-entity trade of business filing a Sch C).

If this "works" why does it "work" only with an SMLLC Sch C but does not "work" with a non-entity trade or busienss Sch C?

Any authoritave citations (pro or con) will be appreciated.

If I retroactively correct, by amendment, to define union employees as eligible employees do I have to submit the amendment for full correction?

Can a QNEC be used to satisfy the base contribution percentage for an integrated plan? ie) Integration is 5% for total wages plus 5% over wage base. QNEC required is 3%. If the profit shring contribution is 100% vested can I deem the first 3% of the 5% base allocation a QNEC?

Thanks

We were just informed that a plan of our has a p/t ee who was eligible to enter the plan on 7/1/01. She works 3 days per week, so meets the 1000 yrs elig. requirement. I see that she entered the plan on 7/1/01 (at prior TPA) and was given a profit sharing contribution at year end. Same for 12/31/02 and 12/31/03. We, the new TPA, assumed that she worked f/t, but declined to defer. Earlier this week, the agent was notified that she was p/t but eligible, and he thinks she was never given the opportunity to defer into the plan.

Since more than 2 years has passed, it looks like its VCP for this plan. Either way, how can we make a correction to her (she wants to defer now)? Someone indicated tht we would need to calculate the average deferral % for the plan, and give that to her. I beleive the plan also matches, so the co. would have to pay the match as well. What about earnings?

Would you consider this "insignificant" enough to go the way of SCP?

Thanks for your help!

Does anybody have an opinion regarding the provision in the final regulations re automatic rollovers that states the following:

"(d) Mandatory distributions of $1,000

or less. A fiduciary shall qualify for the

protection afforded by the safe harbor

described in paragraph (b) of this

section with respect to a mandatory

distribution of one thousand dollars

($1,000) or less described in section

411(a)(11) of the Code, provided there is

no affirmative distribution election by

the participant and the fiduciary makes

a rollover distribution of such amount

into an individual retirement plan on

behalf of such participant in accordance

with the conditions described in

paragraph © of this section, without

regard to the fact that such rollover is

not described in section 401(a)(31)(B) of

the Code."

Does this mean that if you do a mandatory cashout of $1,000 or less when you have an unresponsive participant and don't roll it into an IRA, you're not protected?

Plan has not been restated since 1979.

What do we do?

Does anyone know if there is a statute of limitations on uncorrected prohibited transactions? We have failures going back to 1998 and plan to fully correct. Must we also file IRS Form 5330 for each of these years?

I'm sure this has been asked, so sorry - Plan Year ending 10/31/04. What are the dollar limits:

414 limit = 40k or 41k?

Comp limit = 200k or 205K?

TWB = 87k or 87,900?

Thanks.