Scenario: There currently exists an irrevocable trust trusteed by our client's brother. The only thing in the trust is a life insurance policy where the trust is the beneficiary. Client wants to gift personal money to the irrevocable trust. The trust is going to form a preferred LLC. The plan will then buy stock in the LLC which in turn will buy property. The plan will receive a fixed rate of 6% from the LLC. Is this a prohibited transaction? Is this a violation of the exclusive benefit rule? Client's attorney said West Coast law firms have been doing this and there have been court cases won regarding this. Of course he would not cite any.

This smells bad to me, of course client is going with what attorney is saying. Anybody know about these?

We have a C-Corp plan where the owner & his son are the only employees. We have been filing a Form 5500-EZ for the past 5-6 years. The rules for filing a Form 5500-EZ state the employees must be the owner & spouse only. Does anyone have any correction suggestions? Thanks!

If an employer decides to limit his personal deferral amount into his company SarSep, or to NOT defer any monies at all for Top Heavy & ADP testing reasons, is he allowed to deposit after- tax monies into his traditional IRA?

Thanks for your response.

I hope someone can point me in the right direction. We received some correspondence that said we could make deductible deposits into a Welfare Benefit Plan, let the funds grow tax free and then pay no tax on the monies at retirement. Further, this plan would not require us to include other employees, does not penalize us if we need to withdraw the money before age 59 1/2 and provides an added pre-retirement death benefit.

What type of plan is this? I would like to research it, but need some direction on where to start.

Thank you.

They have three individuals they cannot locate. They utilized the IRS forwarding system but no contact resulted. The balances are small with the largest being under $500.

What is the approved method for removing these individuals? The company is located in Louisiana (in case that matters).

Any suggestions would be great!

Thanks

Just checking on what other TPA's are doing when they administer SH Plans under the following.

Large Company who sponsors SH 401(k) Plan. Demographics are many min. wage salaried employees, few management and a few owners. Company gets SH notice out to EE's offering a basic SH Match. In addition to notice to EE's, they go through a very thorough enrollment meeting. Results - Owners want to Max out their 401(k) contribution, Managers as well. Of the 70+ eligible min. wage workers 7 sign up to defer. Here is the question. What are TPA's doing about the following:

1. Proof that the SH notice was given

2. Are you getting enrollment forms back that indicates the other 63 eligibles decline defering. If so, is that impartive

Anything else missing regarding admin to a 401(k) SH Match? My concern is about the low participation, yet allowing the owners and other HCE's to max out.

I have someone who is part of a 457 plan and wants to establish a Solo 401K plan (I guess he has a side job). He tells me he can make salary deferrals to the 457 and to the 401k which of course would exceed the 402g limit. Is this true? do you not count deferrals to 457 plans as part of the 402g limit?

Is it the same rule with 403b plans? (I know, this is the 457 board but I thought you guys would know). A CPA is telling me he has a similar situation where a client can actually end up contribution $41,000 to his 401a plan and defer $16,000 to his 403b for a total of $57,000.

Thanks!

1964 Commissioners disability table that was updated in 1985

Does anyone have a copy of the original table (1964)??

How about the updated one??

I searched SOA and other areas and could not find the tables. Thanks in advance for any assistance.

A brain cramp. A design-based safe harbor db plan requires 1000 hours for accrual. The plan covers 1 HCE and 2 NHCE.One of the NHCE goes on a reduced schedule and only works 698 hours. She needs to get an accrual for 410b. As long as she gets the regular formula accrual, or t/h min if greater, the safe harbor is still maintained, right?

when determining the top heavy minimum, what comp limit is used for 2001?

In 2001 the comp limit was 170,000, but EGTRRA allowed you to retroactively use 200,000.

Does the answer depend on whether you actually retroactively amended the comp limit for those prior years?

A qualified plan's TPA made delinquent deposits of taxes withheld from participant/beneficiary payments. The IRS slapped the plan with a whopping penalty + interest.

First, can the plan pay the penalty+interest from its own assets? Or, are the plan fiduciaries responsible for paying the amounts assessed?

Second. The plan, and not the fiduciaries, paid the penalty+interest. If this is a no-no, there must be a reportable nonexempt transaction that's subject to an excise tax (plan loaning money to a disqualified person)? The plan booked the penalty/interest as a receivable from the TPA, and the plan trustees intend to sue the TPA to recover the money.

What's a typical price range for a limited scope audit for a 1000-1500 participant defined contribution plan with about $30 million in assets? Is there anywhere that I can find benchmarking information?

Has anyone ever heard of a plan administrator using a combined COBRA General and Election Notice?

I assume this is okay as long as the notices contain both sets of notification content requirements and is provided within the applicable time frame for each notice.

Thanks!

30% of the stock was sold, and the ESOP loan has been paid back for 2 years now, therefore no loan balance remains. However, the company has experienced profit this year and wanted to know if they could make a contribution to the ESOP plan? Is that possible? Can the ESOP accept profit sharing contributions?

I currently do testing for an old SARSEP. In performing the 1.25 test, the wife of the owner has an excess contribution in the amount of $4.50. Are there diminimis amounts as it relates to this excess? I advised the client to remove the excess, with earnings, in a conservative application.

Thanks for any thoughts.

The plan document provides that loans are payable upon termination of employment. However, neither the document or loan policy defines the time for repayment. What is a reasonable time frame for allowing a participant to repay the loan in full upon termination of employment. I don't think the cure period applies to termination.

Is it reasonable to give the participant until the next payroll when their payroll withholding would have occurred?

Will retire next year at 55, have a 403(b) with my school district. What are my options?

Owner of 2 companies (A & B) offers a pension plan in which the employees of both A & B participate. Plan follows controlled group rules and files 1 5500 with 2 Sch. Ts. Owner now wants to set up a separate plan for the employees of B. Plan provisions will be the same. Assets will be transferred. The only change is 2 plans instead of 1. Why you ask....owner doesn't want to pay for a plan audit. The number of eligible participants employed by B is greater than 20% of the total eligibles. Might this be considered a partial termination of the AB plan? Appreciate any guidance anyone can offer.

When terminating a PBGC covered DB Plan with insufficient asset it is obvious that only the >50% owners can take a “cut” in their benefits. In a case where the Plan has insufficient assets and is not covered by the PBGC, I cannot find definitive guidelines.

My instincts say that only owner(s) can take a “cut”, but I see in a Defined Benefit answer book that 411(d)(3) allows a plan to terminate and pay benefits “to the extent funded”. The answer book seems to suggest that after taking care of some priority benefits, it is permissible to prorate the assets of the plan by each participants PVAB, essentially decreasing the benefits of all participants and not just the owner(s). Others that I have discussed this with say that it would not be allowed under 411(d)6 anti-cutback rules.But 411(d)(6) seems to specifically talk about cutting benefits due to a Plan amendment.Here we are talking about reducing benefits due to a Plan termination to the extent funded.

If we file such a termination with the IRS showing each Participant receiving a prorated piece of his/her PVAB, will the IRS approve it? Has anyone tried?

We have a participant who terminated in 2000 with an outstanding loan balance. They are now rehired and requesting a new loan, however the first loan had never been defaulted.

We are going to default this loan from 2000 effective this year (2004). When processing the new loan right now, do we take into account the outstanding loan balance when figuring their availability or do we consider them having no outstanding balance since we will be defaulting this year?

Hope this makes sense. Thanks for the help.