I have been asked to run a DB proposal for the following situation:

Husband and wife partners in an LLC. Husband K-1 at 200K, wife K-1 at 50K. No employees.

Husband also receives other consulting income, directors fees, and non-qualified stock options that his CPA has been showing as "Other Income" on line 21 of the 1040.

My question: Can the "Other Income" be used for pension purposes and how? Is it necessary to start another business to accept those various sources of other income and have both companies adopt the plan? Is it possible to use the "Other Income based on how they report it now (I don't see how but I am not sure). Any other thoughts?

Let's just say for this discussion that all of the sources of income can be used for comp per 3401(a). In other words, none of it is rent from rental properties, etc.

Any help or input is appreciated.

We have a client who does COBRA administration for themselves. They are about 130 employees and this is how she is doing it:

Employee terminates, HR Mgr. has the employee complete a COBRA election form at the exit interview, if there's a spouse or dependents she DOES NOT send a seperate one, then only gives the QB 30 days to pay the first premium and if she doesn't receive it in 30 days she terminates the employee for non-payment of premium and sends a letter to him stating so.

There are so many COBRA rules broken here but I cannot convince her of that. I have given her written information on several occasions, time-frame charts, notice listings, etc. My hope is that someone will reply for me and I can print this out and send it to her!

Please help!

I believe if a plan offers a lump sum distribution option before retirement age (e.g., upon termination of employment), and the lump sum amount is over $5,000, then an immediate J&S annuity must be determined/offered at the current age.

If the lump sum is base upon GATT (plan provides for lump sum equal to greater value of (a) actuarial equiv or (b) Gatt mortality/rates) does the GATT PVAB at the current age get divided by an immediate annuity factor based on plan's normal actuarial equivalence (used for alternative forms of annuity distributions) - OR - by an immediate GATT annuity factor using the Gatt table/required interest rate ?

Thanks !

Treasury and IRS Propose Retirement Annuity Regulations

http://www.treas.gov/press/releases/js2099.htm

Who do my husband and I talk to about his pension benefits. We are in New Jersey.

Does anyone happen to be familiar with the program ACT? I am currently using version 6.0 and I have to sychronize a database and am having trouble. I have called tech support and no can cen seem to help. I know this is a random question to throw out, but I am desperate for assistance. Thanks!

A bank client's owner died. He left a large account balance. His beneficiaries are non-spousal. The beneficiaries are younger and wish to be paid on a life expectancy basis. The plan allows investment in insurance products, so is there any reason why an annuity couldn't be purchased as a mechanism for the plan to make these payments?

Thanks,

Dan

I want to see if I've got this right - without going blind figuring out original case, vacated decisions, remands, etc... maybe some of you legal types are more conversant with it.

With the latest decision, are we now, for the moment at least, at the stage where vested participants are counted? Have I got that right?

Would it be possible for an employer to use an HRA to fund the gap between the HSA balance and the catastrophic deductible?

Assume an employer believes that 7% of his employees will exceed their deductibles.

A group HRA is set up to fund this gap, which could be easily determined once a year.

Reinsurance is bought to fund the gaps in years which exceed this 7% estimate.

Also, for COBRA purposes, could the former employee continue to self fund his HRA?

If so, how would that amount be determined?

Don Levit

A defined benefit pension plan covers a controlled group consisting of a sole-proprietor and a C corporation. Is it correct, based on the wording in 404(g)(2), that the corporation can make and deduct the entire required contribution, including any portion attributable to the sole-proprietor's Schedule C income?

If so, is it also possible to split the contribution and deduction between the sole-proprietor and the corporation in any arbitrary fashion?

Client plan & fiscal years end 12/31/2003

They wish to make a profit sharing contribution in Feb '04 based on 12/31/2003 comp, but have it credited as a 2004 annual addition.

I believe the contribution is deemed to be an annual addition for 2003 because it is being allocated as of 12/31/2003. Does anyone see anything which would contradict this conclusion?

thanks

Last month we contacted a very impressive candidate whom we extended an offer to. At the interview, we offered her the job on the spot. We told her she was our top pick of candidates and that she could start working the following Monday. I gave her the Benefits package and was excited about her starting.

Weeks went by pending a start date for this candidate from the Accounting Dept Manager. I found out from the Accounting Department that the Hiring Manager who wanted this candidate had changed his mind about the position altogether. I feel bad because the candidate passed up job some job opportunities to accept the job that we verbally expressed and had sent emails to stating our interest, pending a start date.

The candidate has been calling and emailing expressing her opinions about what happened with the position and that she missed out on another job waiting on us. We feel so stuck that we haven’t called, emailed, or communicated with the candidate or even the fact that the job is no longer needed. Honestly, we are hoping that she would just go away. We are wondering, can she legally pursue us for putting our ‘foots in our mouths’ about this position? She does have my communication, HR, in several emails stating that we wanted her to work for us and we were just pending a date.

Don’t know what to do… Please advise

CD

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.