If you have a profit sharing only calendar year 2004 plan, can a participant who is over 50 have an emploer contribution of $44,000? They are over the 415 limit, but do you need deferrals to get the catch up?

Several years ago, an international chess tournament was being held in a swank hotel in New York. Most of the major stars of the chess world were there, and after a grueling day of chess, the players and their entourages retired to the lobby of the hotel for a little refreshment. In the lobby, some players got into a heated argument about who was the brightest, the fastest, and the best chess player in the world. The argument got quite loud, as various players claimed that honor. At that point, a security guard in the lobby turned to another guard and commented, "If there's anything I just can't stand, it's chess nuts boasting in an open foyer."

We are converting a MP Plan to a P-S Plan as of 1/1/2005. On 4/1/2005, we are then adding a S-H 401(k) feature using the 3% NEC. We are defining compensation from the beginning of the year (rather than date participant entered the plan). Here are my questions:

Can we state that the S-H contribution starts on 1/1/2005, even though the ptps will not be able to defer until 4/1/2005?

When is the S-H notice due to the ptps?

If we start the S-H conts on 4/1/2005 and the plan is top heavy, will the employer be responsible for the T-H min conts for 1/1/2005 – 4/1/2005?

Can we make catch-ups eligible on 4/1/2005 as well?

Any help is greatly appreciated.

Strange situation here. Any insights, or suggested resources much appreciated.

A CEO of a company had a misunderstanding with the board of a company, and resigned. The board talked him into staying for a while (a couple of years), but at reduced compensation and with reduced CEO obligations.

As part of this arrangment, the board is reducing his compensation by $X0,000 per year, which happens to be the same amount that they would have contributed on his behalf to a profit-sharing plan, per year.

The CEO apparently is accustomed to his nice salary, and states that he can't afford to have his compensation directly reduced by $X0,000 per year.

So, the Board is looking at other ways to trim $X0,000 from his total compensation. We already know that the board can't just eliminate the profit-sharing contribution, since the profit-sharing plan is a qualified plan that requires any opt-out to be performed before at the beginning of the year, and not now (late in the year).

The CEO also has an undfunded Non-qualified deferred comp arrangement. Under the arrangement, the CEO may elect, prior to each calendar year, to elect compensation to the Plan, which is credited to his "account" during the February following each calendar year, but which is not payable until his termination. According to the agreement, CEO has an unsecured claim against the assets of the company for the credited amounts, and has no right to receive the amounts. There is a mere promise, by the company, to pay the amounts.

Here's my question. Assuming the CEO has already elected, prior to 2004, to defer money for 2004, can anyone think of any reason why it would be problematic for the CEO and Board to negotiate that now the CEO's 2005 nonqualifed plan credit (for work performed during the 2004 period) will be reduced by $X0,000 of the 2004 deferral? (I also wonder if this would be a material modification under ACJA).

I'm thinking there could be a possible contructive receipt issue - i.e., that the IRS might say he can't turn down that money. On the other hand, he doesn't, it would seem, really have a right to it, and I don't know why the CEO and Board couldn't "settle-up" their new compensation reduction in this way.

(Unless, of course, such agreement would be a material modification, which might trigger income inclusion, etc.)

Help.

I'm trying to convince someone that the prohibition on restructuring of 401(k) plans does not apply to the testing of a profit sharing allocation in a plan with both profit sharing and 401(k) features.

I know the answer is that the testing is completed after the PS and (k) portions are mandatorily disaggregated, that they are for testing purposes two different plans, but I am having trouble finding anything in print that says that in plan English. Certainly in-depth analysis of the regulations would lead you to that conclusion, but plan English in one sentence or paragraph is not easily found.

Tom, maybe you can add that to the next edition of the Coverage and Nondiscrimination Answer Book. It's implied in many places, but .......

Any suggestions?

Our pre-approved Volume SUbmitter plan has the language in it that allows for the selection of "each participant being their own allocation group" (often used in conjunction with cross-testing). Now, if in a given year if client just wanted to do a regular integrated allocation (which normally is a safe-harbor formula) do my allocations have to be general tested given the afore stated plan doc structure (each participant their own allocation group) or can I claim it's still a safe-harbor contribution not subject to general testing ?

I guess the issue is whether the plan doc specifically needs the integrated formula specified in the plan doc in order for the integrated contribution to avoid the general test and be deemed a safe-harbor contribution/formula. Since I can "impute" permitted disparity into the general test, maybe the whole issue is a moot point if the general test (w/imputed permitted disparity) pretty much guarantees me to pass anyway using standard permitted disparity contributions. Thoughts ?

Ok, the other one I have had for years. I found this one out on the internet, haven't even looked at it

Christmas Song Puzzle:

Below are possible original titles of 40 well known Christmas Songs. To get you started, the answer to the first one is "I'll Be Home For Christmas" . (Don't ask me for the solutions!)

Expect My Arrival At My Domicile For Yuletide

The Primary Carol

Tinkling Chimes Stone

My Singular Desire For The Impending Yuletide Season Is A Pair Of Central Incisors.

Precious Metal Inverted Cups With Clappers

Righteous Darkness

Celestial Messengers From Splendid Empires

The Yuletide's Dozen 24 Hour Intervals

I'm Fantasizing Concerning A Celebration Day Without Color

The Event Manifest Itself At the Onset of a Transparent Day

The Diminutive Male Of Less Than Adult Age Who Plays A Percussion Instrument

The Seasonal Tall Coniferous Plant (Woody?)

Proclaim It To the Hills

Diminutive Nazarene Municipality

During The Dark Hours When Herdsman Supervised Their Charges

Are You Listening To What I Am Listening To?

The Mannikin Of Crystalline H2O

The Event Occurred At One Minute After 11:59 PM, Visibility Unlimited

Tinkling Cup Shaped Metal Pieces

Loyal Followers Advance

Are You Detecting The Same Aural Sensations As I Am?

I Apprehended My Maternal Parent Osculating With a Corpulent, Unshaven Male In Crimson Disguise

Delight For This Planet

Please Permit Crystalline Formations To Descend

Aged Matriarch Plowed Under By Precipitous Darlings

Our Desire Is Your Yuletide Cheer

Casteneous Colored Seed Heated In a Conflagration

Season Without Color

Listen, The Heavenly Messengers Harmonize

Caribou With Vermillion Olfactory Appendage

Soundless Nocturnal Period

Happy Elderly Martyr Without Five Cent Pieces

Bipedal Traveling Through An Amazing Acreage During Mother Nature's Dormancy

Omnipotent Supreme Being Tells Happy Males To Relax

In Another Place Meant For Bovine Storage

Tranquillity Upon The Terrestrial Sphere

The Approach Of The Holiday Commemorating The Birth Of Christ Is Becoming Evident

What Offspring Abides Thus?

A Visitor Is Coming To The City

Embellish The Corridors With Large Sprigs Of Berry-Bearing Evergreen.

Can a participant assign as the secondary beneficiare his children and literally put on the form "divided equally between my surviving children" or should s/he spell it out with each of their names ... i.e. "in equal shares to Bobby T. Jones, Suzie Orman, and Tom Brokaw"

What is commonly meant by a "cash-back deferral" when someone is talking about a Nonqualified deferred comp plan?

Employees in our I.T. dept. (both exempt & non-exempt), at a small private university, is now being expected to be "on-call" over the holidays. We receive holiday pay from 12/24-1/2. We are trying to determine how these employees should be compensated, besides receiving their normal holiday pay. Has anyone else run into this problem? Any suggestions? Any other companies doing this?

Once again we approach the end of another calendar year. As with the end of every calendar year (and April 1st), I fully expect to see at least some situations where RMD's have not been paid out and where the excise tax is going to come due.

Does anyone have any hard examples of "river of tears" letters resulting in tax waivers, PLRs on the topic etc? Just trying to get ahead of this years crop of "my dog ate my paperwork" stories and get a feel for what has a reasonable chance of success and what does not.

Thanks

The object is to identify the following 24 Christmas songs.

................................................................................

............

Hey, Merry Christmas all! May God Bless your homes with peace.

For those who may be Jewish, maybe I am late but

Happy Hanukkah.

(My apologies for those whose religious beliefs are not encompassed above)

We have an employee that opted to pay her disability premiums with pre-tax dollars. Now I have a letter from Aflac with the amount she received in disability benefits. This is our first employee situation with benefits received with pre-ax dollars. How do I handle this on the employer side? Any info would be greatly appreciated.

Monica

AikensGroup

My client has a 401(k) plan. Until this year the employer was a controlled group consisting of two nursing homes and a company managing the homes. In 2004 the group split apart and now the three are individually owned; however their functional relationship has not changed. The sole function of one company is to provide management services for the other two. Is this an affiliated service group?

I would be happy if it is since the plan is on a prototype and we are relying on the prototype determination letter. My understanding is that an affiliated service group is treated the same as a controlled group. Is there some complication here? Do we need to file anything to get a determination that this is an affiliated service group?

Thanks

A participant is in Ch 13 bankruptcy. The BK plan is to pay back the loan, but under the terms of the BK plan. The participant's bankruptcy attorney asserts the bk court can modify the terms of the loan by making smaller payments and extending the length of the loan. Our position (I'm counsel to the plan) is that the smaller payments cause the loan to default immediately because payments are no longer substantially equal or default at the end of 5th year by the oustanding amount.

Does anyone know whether BK code prevails or the IRC (that is, 72(p)) prevails? Do you think we need a private letter ruling that says going beyond 5 years does not violate 72(p)?

The DOL went back to 2000, and calculated a total amount of late interest for a plan by payroll date. The client is saying that the DOL did not provide a participant breakdown. The totals are very low, especially when at the time there were 300-400 employees on payroll during 2000. In addition, many of the affected employees are no longer in the plan.

Payrolls

5/10/2000 $7.49

10/25/2000 $180.00

11/08/2000 $114.78

12/01/2000 $111.41

12/20/2000 $94.33

12/20/2000 $719.52

12/20/2000 $461.38

01/12/2001 $205.61

2/01/2002 $41.29

3/15/2002 $93.21

05/07/2002 $41.91

Total $2070.93

In Chapter 13 regarding the VFC program, Sal Tripodi says that a special "de minimus" distribution applies with respect to former employees. If the cost is less than $20 per individual, the distrib does not have to be made. Instead, the client makes the payment to the plan as a whole.

If I don't have participant-level detail, I cannot confirm that all amounts are de minimus. Yet, I don't know what else to do besides allocating the $2070.93 prorata among eligible participants. Do you have any advice?

I've seen a number of links here to questions involving notice requirements applicable to the ESOP diversification rules. While most SPDs contain information regarding this qualification requirement, I was recently contacted by a Company that did not provide an additional notification. Is anyone aware of the IRS' position on this issue? After the fact, can an otherwise qualified participant argue that an ESOP administrator should have provided diversification materials? Thanks in advance. Ed

Owner of a firm dies in 2003, before RMD began. Owner names each of two children as equal beneficiaries. One child takes the owner's position at the firm. So that child is now a Key Employee. Other child is not employed by the firm. Both children elect payments over their life expectancy. Distributions to beneficiaries will begin in 2004. Will Beneficiary/Employee's remaining balance be included in Top Heavy Test for 2005? My expectation is no, but I am having trouble finding reliable guidance.

Thanks for any help.

do you withhold for distributions made to a trust when trust is beneficiary and participant died before RBD? i know you dont withhold the 20% but what about the 10% for non periodic payments.

We have a situation involving multiple employers that do NOT constitute a controlled group. However, it has been determined that several groups are affiliated service groups. For instance, Employer A and Employer B are an affiliated service group. Also, Employer B and Employer C are an affiliated service group.

Would then, A B and C constitute an affiliated service group? Our situation extends beyond three employers, but this is the basic question we face.

Any thoughts?