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

I have an odd situation that maybe someone has had before and can provide some advice on how to proceed.

A small business was started in November, 2003. When the company began, there was the owner and 2 other salaried employees. On March 31, 2004, employee #2 left, leaving just the owner and employee #1, and it has stayed that way since. Employee #1 will make over $90,000 in 2004. Employee #2 did not make over $90,000 (and would not have even if still employed).

The owner would now like to start a DB plan for the business, effective 1/1/04. The plan is intended to cover only owner and employee #1. I want to arrange eligibility to keep employee #2 out. Can the plan require a year of service, but allow for immediate entry for employees employed on 4/1/04?

Alternatively, if there is no way to keep employee #2 out of the plan, then the next question is keeping him from getting a contribution. Since there are no other NHCE's, I would need him to work 500 or less to be able to keep him out of the 410(b) test. But him leaving on 3/31/04 is right near the 500 hour breakpoint. How should hours worked be counted for him? If we use 37.5 hours as a standard work week, that would produce 487.50 hours worked (37.5 * 13). If we use 40 hours, then we get 520 hours worked (40 * 13). I have a hunch that I should not be able to arbitrarily pick between 37.5 vs 40, but if they are all salary ee's, how should hours be counted?

Thanks

I would appreciate your thoughts on two questions:

1. Does A-18A© allow a plan covering several employees to be terminated as to less than all the employees?

2. Would amending a plan to delay the deadline to elect to defer 2005 compensation from December 2004 to January 2005 (as permitted in A-21) be a material modification as to pre-2005 deferrals?

Company name originally Smith Jones Animal Hospital. For whatever reason it was changed to Animal Hospital of Gotham. Corporate return (1120) now filed under new name, but the blank 945 sent out annually by the IRS still indicates Smith Jones Animal Hospital. Is there an IRS form I can use to change the company name associated with a federal tax ID number? I searched the IRS website and got a couple thousand hits.

Thanks.

I have a business owner who is defering the maximum amount in a 401(k) plan that is sponsored by another employer for which she has NO interest of affiliated service.

Can she set up a SEP with the maximum of $41,000?

My sense is YES b/c the 415 limit is an employer limit and the salary deferral is an individual limit and of course no salary deferalls are being made to the SEP

Please advise - Thanks Ed

For the plan year ending 12/31/02 Company A has one Key employee. The Key employee is the only participant deferring and receiving an employer match. Consequently, the ADP/ACP test fails and all deferral monies have been returned plus earnings and the match will be forfeited. The plan is top heavy. Does Plan have to make a top heavy contribution for 12/31/02 since all contributions were returned for that year? Any suggestions are appreciated.

If a plan is not qualified under any section of the Code, but is covered under Title I of ERISA, then the plan would not appear to be subject to 401(a)(31)(B). However, since DOL issued the corresponding regs under the fiduciary responsibility rules it would seem that these would apply, but not as part of a requirement, only as a safe harbor guideline. Accordingly, should this plan not comply with the regs, while still protecting and guaranteeing benefits, it would not automatically mean they have run afoul of any requirements. Any thoughts?

What are the advantages and disadvantages of letting an employee pay for the cost of supplemental life on a pre-tax basis?

What are the advantages and disadvantages of letting employees pay for the cost of supplemental life insurance on a pre-tax basis? Thanks

Hi,

I converted 50K from IRA to a new ROTH this year (both accounts are at Fidelity).

But, I now believe that ROTH conversions may not be a good solution for me.

And, so I am considering recharacterizing some of that money back to my IRA.

Unfortunately, I moved 20K of that 50K to a credit union (CD).

So, a full recharacterization is not possible, I believe.

The ROTH account has 32K (2k gains) now.

One plan is to recharacterize 25K of that 32K back to my IRA.

Since this is a partial recharacterization, I would have to calculate

the increase in value of the CD and the ROTH account and prorate

the amount to recharacterize. Something like 27K now would

represent 25K at conversion. Does this sound reasonable?

It would save about $2,500 in taxes now.

regards,

gordon

I have a new client that has introduced an HSA as the only option. The deductible is $2000 and the employer is contributing $500 in January and $500 in July. They have asked me to put in a limited FSA for dental, vision and preventive.

The question is - if an employee, who elects employee only coverage, is married to someone who works for another employer and that employer offers a non-high deductible plan, where does that leave the employee? The employer didn't even tell me that their health plan was an HSA plan - I found out in the open enrollment meeting and did an abrupt about face for the FSA.