I want to start a web page and perhaps a blog for some employee benefits related topics. Assuming that I am REALLY dumb about computers and everything technical (what DOES html mean, anyway?) where should I go to establish a web page? Yahoo? Some other place? I will need spoon feeding on this. (To give you an example of how hopeless I am at this - I am now trying to figure out how to actually post this query and am having trouble finding which button to click on.) Thanks.

To spin on a prior post, I recall that in July 2003 The IRS release Temporary and Proposed Regulations 1.409(p)-1T under IRC §409(p), which seems to require looking at both stock and non-stock calculated deferred compensation plans of a Sub-S Corp. in the light of the synthetic equity and disqualified person rules of 409(p). I haven't seen much news on this subject in the last year, but unless the proposed regs. are modified, I suspect this is something of a show stopper in the Sub-S environment. If I recall correctly, distributions of deferred comp in Sub-S plans were required to occur in July 2004 for avoid the 409(p) rules.

Anyone dealt with this lately?

If an employer has a non-ERISA 403(b), therefore no adp testing, can they add a 401(k) with a match, and still have no adp in the 403(b). This would allow hce's who are limited by the adp test in the 401(k) to still go to the 402(g) elective deferral limit between the 2 plans?

Does anyone know how to characterize and report deliquent contributions of demutualization proceeds to a pension plan on Form 5330? Insurance company distributed demutualization shares to the company instead of the pension plan in late 2001. The company didn't realize shares belonged to plan. After discovering the error, the company returned the shares (which have appreciated significantly in value) plus dividends paid on shares into plan. The plan ended up with shares that increased 57% over the last three years. The plan is not under audit.

I spoke with a very helpful guy at the DOL, who advised us to make full correction (return appreciated shares and dividends) and document our correction. I realize we need to file Form 5330s with the IRS to report the prohibited transaction(s). I think the prohibited transactions would be the prohibited use of property (the shares) or an improper extension of credit (deemed loan). But I'm not sure how the IRS would view this. My concern is that the IRS could view this as a deemed tranfer of assets between the plan and company instead of the company's improper use of plan assets (or deemed loan). I can't seem to get guidance from the IRS on this point. Until I figure out how the IRS will view this, it is hard to figure out the excise tax, since the "amount involved" differs depending on whether the IRS views this as (1) a deemed transfer of assets from the plan to the company (in which case the "amount involved" would be the value of the shares on the date the shares were distributed to the company in 2001 (the excise tax would then be due for each year until corrected) or (2) use of property or extension of credit (in which case the "amount involved" would be the fair market value of use of property (or reasonable interest rate in case of a loan) for each of 2001, 2002, 2003 and 2004 (subject to the usual pyramiding). If it is treated as an improper use of property (deemed loan), is the "amount involved" the appreciation of the stock in each period (since the appreciation is what was actually "earned" and it is higher than would be yielded under either the plan's average interest rate, the federal underpayment of tax rate or afr for below market loans). I'm really struggling with how to characterize the type of prohibited transaction (transfer of assets vs. use of property (deemed loan)) and if it is a deemed loan, how to calculate the amount involved.

Sorry for such a long winded (and clear as mud) message. Would greatly welcome any thoughts!

I have a DB plan that is restuctured into 4 component plans for testing purposes. Each component has a safe harbor design. Each component failed the ratio % test. Each component passed the classification test. Each component failed the average benefit % test; however, if aggregated it passes.

Must each component pass the average % test on its own or is it okay that they passed together? If they must pass each on their own, what are my next steps? Rate groups? Thanks.

An employee of an LLC (no ownership) is also a 100% owner of his own S-Corp. If the income of his S-Corp comes from the LLC, can it be used for the S-Corp's profit sharing plan??? Thanks.

Has anyone had any experience dealing with the DOL's wage and hour division to qualify a self-funded health plan as a "bona fide fringe benefit" arrangement under the Davis Bacon Act or Service Contract Act? I have spoken to someone in that office about this issue generally and she said they were willing to work with plan sponsors to deal with this requirement, but I wondered if the reality is different from the PR.

At bottom, the DOL is concerned about the possibility that federal contractors will skim money from self-funded fringe benefit plans and therefore require plan sponsors to prove that these plans can't be used to divert federal money from the employees who are supposed to receive it.

In the absence of a VEBA or taxable trust with non-reversion provisions, my thought was you can satisfy this requirement by showing that the plan satisfies the usual requirements for a welfare plan under ERISA (i.e., that it's not some sort of fly-by-night sort of arrangement) and by including some language in the plan doc/SPD that obligates the plan sponsor to provide the minimum fringe benefit levels required by the DBA or SCA as long as those employees are performing work under a contract governed by these acts (thus creating an enforceable right under ERISA).

From past experience in other areas, I know that "reasonableness" is subjective where the DOL is concerned, and what I think will comply with the regs may not.

Anyone? Buehler?

It is my understanding that a Schedule C should be filed in situations where the plan pays more than $5,000 to a single service provider. Does that include investment expenses? Say, for example, that a plan pays $14,000 in investment expenses to its TPA. Should that be reported on Schedule C? Any insight would be greatly appreciated.

Let's use this as a place to suggest topics for inclusion in the 2005 Gray Book. Real topics please, and not something that has already been answered in a previous edition.

Here is my start. If others think it unworthy of suggestion, opinions are welcome.

Q&A20 from the 2004 Gray Book deals with a method change (to UC) when a plan is frozen. Included in the response is "The normal cost for the plan should be $0..."

Consider a frozen plan, using UC, but the actuarial assumptions include an item for expenses, which is added to the normal cost. Does the 2004 response mean mean the IRS considers a non-zero normal cost to be unreasonable in that situation?

As an employer one of our plants has a union group that currently numbers around 40 employees. Their contract states that if enough employees express an interest in a 401K plan, that we will establish a 401K plan for them. As of yet, no one has expressed any interest in a 401K plan.

However, we would like to know if it's feasible to open up our current 401K plan to these employees. None of these employees have ever been included in the testing of this plan, and I really don't expect much participation by them, if any.

I'm interested to know how opening this up would affect our testing, costs, etc. Since no one has come forward yet, should we just leave it alone until someone does? If they do, then what? We are trying to simplify/standardize as much as we can; and rather than have 2 401K plans, we were seeing if it's feasible to have only the one.

thanks

WHY

A plan participant announced he was terminating employment as of 8/30/04. He did not give a written notice to this effect. The plan has a 8/31/04 plan year end and requires participants to be employed on the last day to receive an allocation of employer contributions. The participant is stating that he should get an allocation because he had unused vacation days. Any thoughts?

Employer is converting retirement plan assets from a variable annuity/GIC arrangement, to mutual funds. Approximately 30% of participants are invested in the GIC. Employer can avoid paying a large surrender charge under the GIC only by moving GIC funds to a money market two months prior to the conversion date. Employer has calculated that each of the 500 or so employees invested in the GIC will lose approximately $10 in earnings during the 2 month holding period, and would like to make a $5,000 restorative payment to the plan to make them whole. Employer would not treat restorative payment as a deductible plan contribution, just as added earnings under the plan. Employer will comply with blackout disclosure rules.

Is a restorative payment of this type permissible? Can it be reported on Form 5500 in a way that does not invite an audit?

At retirement, a plan provides a benefit composed of a "regular payment" and a "special payment". The "special payment" is based on vacation pay and the "regular payment" is based on a standard benefit formula. At commencement, the "special payment" is made in lieu of the first 3 months of "regular payment" (this plan has many of the same characteristics you would find in a steelworkers plan).

My question - would this benefit form (it is not an option) be subject to review for early application (October 1, 2004) of the Relative Value Regulations?

Thanks

Should a Plan Sponsor (Employer) complete a W-8 or a W-9 if it is a foreign corporation with subsidiaries in the US? Which would be appropriate, or is there another more appropriate form?

There must be a similarly situated company out there that has been through this before.

Thanks for any help.

An individual is entitled to receive stock worth $100,000 from an ESOP. The stock is put back to the Company. Assume the trust's basis in the stock is $20,000. I was told that the trustee would issue a 1099-R showing a non-taxable distribution and the Company would issue a 1099-B showing sale of proceeds of $100,000. This doesn't sound correct. Thanks in advance for your help. Ed

I understand that an insured welfare plan that provides benefits for a select group of management is exempt from ERISA's reporting and disclosure requirements (Sec. 2520.104-24), but does there have to be a written plan document as described in ERISA Sec. 402(a)(1)? Thanks in advance for any comments.

Is it possible to transfer money from my 401k account to an IRA account while I am still employed at the 401k plan provider? I am not very happy with the investment options available in my 401k.

Is a catch up match excluded from ACP testing? Any help would be great! Thanks, Amanda

I recently heard a local rumor that anyone can freely download a copy of any plan's 5500 off some website.

For example: It's possible for ANYONE to go to some website and download the 2002 Form 5500 of the Mayo Clinic- 401(k) Plan, Bob's Hardware Store-PSP, etc.

I never thought that was possible or legal.

I knew that Form 990 of charitable organizations were pubic information and open to public inspection because of their nonprofit status. There are a few websites from which anyone can download a copy of any annual 990 return of any organization.

But I never thought that a copy of a plan's 5500 was available on line to the general public.

Please tell me this is nonsense!

In 2000 a client made a late contribution of deferrals into their 401(k) plan on one occasion (30 days beyond the date the DOL said they could have been made).

Although the contributions were made in 2000, and thus the company ceased using the principal in a prohibited manner in 2000, the earnings on the late contributions were not deposited until 2004 (when the late deposit was discovered by the DOL).

Question: is there only one prohibited transaction (in 2000) for the late deferral, or are there additional prohibited transactions for each succeeding year because the company had the benefit of the use of the earnings on the late deposits through 2004? If so, I imagine the tax would be 15% of the value of the use of the earnings (which is all the employer still had the benefit of in the later years).

I saw this same question raised in a thread from 2001 that I cannot locate now, but there was no answer posted.

Thanks for any thoughts and comments.