A calendar year plan has a funding deficiency as of 12/31/03. The 10% 4971a excise tax has been paid. What is the ending date of the taxable period for correction of the deficiency, thereby preventing impositon of the 4971b 100% excise tax?

In reading prior post I am confused, hoping you all can steer me right.

We design safe harbor match eligibility to follow deferrals whatever that might be - for ease of administration.

It is feasible to have eligibility provisions for deferrals immediate and safe harbor match 1 year. Or, deferrals immediate, safe harbor match 6 months, and profit sharing 1 year. Granted not ideal setup.

Leads me to verify all match, safe-harbor or non SH, have to be setup on same eligibility provisions? In prototypes this appears to be the case, but are there documents written to allow for such flexibility and is that really allowed?

Leads me to verify SH non-elective and Profit Sharing eligibility need to follow same eligibility provisions? In prototypes this appears to be the case, but are there documents written to allow for such flexibility and is that really allowed?

I thought that each source could have separate eligibility parameters and that safe harbor match is really going to always follow the plans' match eligibility provisions, and that SHNEC is going to always follow the plans profit sharing provision.

* If above assumptions correct, I ask if deferrals immediate, match 6 months, profit sharing 1 year. WIth SHNEC following PS and SHMATCH following match:

Can one amend plan to impose year of service for deferrals mid way through plan year essentially eliminating some employee's active participant status by changing eligibility requirements? Since a notice has been given to ee's prior to plan year, there is no way to do this because this would actually be cutting back accrued benefit? Or is way to accomplish this to provide the stop notice for match 30 days prior to effective date of eligibility amendment? How about for SHNEC? No way to amend for SHNEC right, without terminating plan?

Any thoughts are much appreciated.

Go Ducks!

Long story short: national tpa w/ standardized prototype plan sponsor is a small business. One of the owners have one loan that is kept by the tpa. He also has a second loan of about $30,000 amortized over 5 years w/ $400 monthly payment and a balloon payment at the end. Clearly not a qualified loan in fact appears to be an interest only loan. I am not sure why this second loan was ever granted. When I question the tpa, they state that they do not record keep that loan and need to get any information from the plan sponsor?

Question is: can this be corrected without the participant having to pay taxes short of repaying? can this loan be reamoritized? Also, doesn't the tpa have some culpability here?

Can a SARSEP coexist with a Defined Benefit Plan? If so, would the overall 25% of compensation apply as the deductible limit.

Is anyopne familar with this product? It purports to allow a business owner to use amounts held in a 401(k) plan to purchase stock in their own business. The arrangement received an IRS favorable determination letter in 2003 and purports to comply with DOL Opinion Letter 96-08A. Thanks in advance. Ed

A county sponsors a DC 401(a) plan which requires a mandatory 1% employee contribution and a 9% contribution from the county. In 1998 the county set up a separate 401(a) money purchase pension plan solely for a sheriff who was excluded from participation in the states Public Employee's Retirement Plan (DB). The sheriff participated in the DC plan and he and the county made the required 10% of comp contributions. The county contributed 18.5 percent of comp to the MPPP for the sheriff. The sheriff terminated and cashed out in October 2004. It looks like for at least '98-'01, the 415 limit of 25% of comp was exceeded if contributions to both 401(a) plans are coordinated.

Questions: if by some miracle the county can recover the excess contributions from the participant, how is it allocated amongst the two 401(a) plans, i.e. to which plan is the excess contribution attributed? Keep in mind the sheriff was the only participant in the MPPP. If the money can't be recovered, what is the county's obligation - just call it taxable comp to the sheriff?

I received a question today, for which I'm uncertain of the answer. Wondered if any of y'all have run into this.

Small plan has life insurance on a participant. Participant dies. Insurance proceeds are paid to the plan, deposited into participant's account, and subsequently distributed to participant's beneficiary.

How do you account for this on the Schedule I? Is it considered a "noncash contribution" on the Line 2b? I wouldn't think so, but it doesn't seem to "fit" any category. I believe it would all be reported as a distribution on Line 2e, but I'm having trouble figuring out where the death proceeds paid to the plan should be reported. On line 2c?

Thanks.

Just taking a little poll here:

How many of you out there think that the missed earnings on late deferrals should be included when calculating the "amount involved" for purposes of the 15% excise tax?

Just curious.

Working with a client who is setting up a SEP, want to use their fiscal year of 7/1 - 6/30. One of the investment providers they are interested in does not have their own prototype SEP document, instead uses the IRS model. My understanding is that the model only allows for SEP's to be maintained on a calendar year basis. Wouldn't this preclude them from using this provider? What if they wanted to get an individually-designed SEP document. What is entailed to do this? Or, are there any companies that provide "customized" documents?

Partnership and C corp are owned by same 3 persons (related). Partners cannot participate but owners of C corp can. Does having them together taint the 125 plan? Or can the owners defer from W2 comp even though the employees of the partnerhsip are also in the 125 plan?

Can't find the answer to this:

Plan has an HRA which gives employees $3000 at the beginning of the plan year for payment of expenses not covered under the medical plan. I know that the plan has to offer COBRA under the HRA to participants who terminate employment but have been unable to determine how to calculate the premiums to charge.

Since it is an HRA, the employer contributes the entire amount of $3000. As it costs the employer $3000 to fund this account, I assume the premiums would be $3000 plus the 2% admin fee allowed under the COBRA regs.

My problem is the timing of the premium payments. Since the employer makes the $3000 available to active employees at the first of the plan year, is it okay to make the terminated employee pay the entire amount up front, or does this violate the COBRA reg that states that the participant must be allowed to pay COBRA premiums monthly?

The plan allows participants to carry over unused monies, so it would benefit this employee to elect COBRA because they could essentially pay $3060 and have an additional $5000 in the account that had previously accumulated.

Thanks for any insight or comments.

I'm new to ESOPs. This is the plan's 2nd year -Leveraged S-Corp ESOP.

1. Working on plan year 2003. Corp did not make all its payments in 2003. We did have some principal paid during 2003, so we have allocated contribution based on the normal formula for releasing shares. Corp also decided on a contribution receivable of $550,000 to max their tax deduction. Accrued interest at 12/31/03 was $475,000. I was going to post a dollar amount receivable on participants' statements for the assumed principal of $75,000, and allocate the shares in 2004 when loan payments were actually made. However, the loan payments made in 2004 have yet to touch principal, they are all interest payments. So, in 2003, do I then NOT post the receivable, because there will not be any principal payments to release shares with?

2. In 2003, we have now had several terminees who are 20% vested. We are not allowed to pay them out in stock. All of them have under $5,000. Let's say there is $15,000 total distributions to be made. Can corp make a cash contribution that does not go to loan payments in order to pay them out? These will be our first distributions, and I just don't have any idea how these happen. We are trying to pay them out before 12/31 so we don't keep them on books another year.

PLEASE HELP! THANK YOU!

My VS document (DATAIR) uses language defining facts and circumstances "hardship" for purposes of in-service distribution of employer regular matching and profit sharing in terms of "immeduate and heavy financial need of such severity that the Participant is confronted by present or impending financial ruin...".

The same document's facts and circimstances determination of hardship for salary deferrals is much more "generic", i.e., "as determined by the Plan Administator on the basis of all relevant facts and circumstances."

Anybody know of any reason (regulatory or otherwise) as to why there is such a "disparity" in the definition of hardship for employer versus employee money? Do any of the other major document providers contain similar language?

Plan sponsor of DB plan offers early retirement window to HCE's and NHCEs but the people who actually elect to take the window benefits, which requires termination of employment, are mostly HCEs. I now have a demographic error, where the discrimination in favor of HCEs results in the outcome, not the language in the plan. Since affected HCEs are now terminated and this was a precondition to the benefits from the window, what is the correction? Please help me with your thoughts.

Thank you!

Does anyone have any experience with a "good faith" attempt to collect difficult-to-find information for Form 5500/schedules for unfiled plans?

Large LTD and Life Ins plans haven't filed for several years and have changed vendors numerous times--administrator thinks it will be nightmare to get financials for all of the lost years. My reaction is just to do our best and leave blank what we cant findout after reasonable efforts.

Any thoughts?

Let me preface this with the fact that I KNOW NOTHING about Defined Benefit plans. I'm a DC kinda gal. I have been asked by a collegue the following question:

"Have you heard about any proposed legislation that would / could change the

way an employer can calculate the lump sum payout from a defined benefit

plan? I have heard some "buzz" about it, but haven't been able to get any real

detail."

Has anyone heard this also? Is there a source I could refer to? Thanks.

Has anyone had any experience - positive or negative, with the Alerus Retirement Solutions? Omni-Plus is the recordkeeping system and Sunguard is the carrier of Omni-Plus

Can a Coverdell Education Savings Account be funded by a Certificate of Deposit?

We have certain employees that may need some physical therapy to remain healthy to do their job. The employer pays for and provides the services of a chiropractor and physical therapist on site and a nutritionist off site. Any employee in the department may utilize these services.

Is this an ERISA plan? What type of plan would you consider this? Does HIPAA Privacy apply?

If elected in the EGTRRA "good faith" amendment, the increased comp limit of $20000 could be applied retroactively. If so, does that mean that future indexed increases are retroactive as well? I've asked this question of three sources, and gotten a "yes", a "no", and "it's unclear". Anyone else want to weigh in? If the answer is "yes", do you still get the exexption from a4 testing on the increased benefit?