Can anyone think of any reason(s) why a partnership or an S-Corp would wish to use a excutive bonus plan? Thanks

Facts: 401(k) plan with enhanced match if participant elects to receive match in company stock. Employer stock match considered ESOP portion of plan. Diversification rules apply to company stock (55 and 5 years of participation).

Question: Is 404© protection available on the employer securities investment option assuming employer has satisified the laundry list of 404© requirements, or is it impossible given the application of the diversification restrictions.

Employee X worked for a division of Company A since 1995. In April 2003, Company B acquired the ASSETS of the division.

From April 2003 to December 2003, Company B "leased" the employees of the division from Company A. Company B reimbursed Company A for cost of employees that stayed at the division during transition (and worked on a substantially full-time basis for Company B).

In December 2003, Company B hired Employee X.

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Company B Plan Document indicates that predecessor service of an Adopting Employer is reconized for vesting and eligibility. However, I don't think this would apply, since there is no "employer." The Plan Doc seems to address Stock Acquisitions, but not asset acquisitions.

Plan Sponsor took a conservative approach, and credited service from Employee X's 1995 hire date with Company A. Is this allowed if there is no amendment addressing this particular situation? The Plan Doc seems to address Stock Acquisitions, but not asset acquisitions. May the Company retroactively amend the plan to credit prior service for employees from this asset purchase? Would the anse change

A) Upon Employee X's hire by Company B, what service is required to be recognized? (i.e. at a minimum, is leased service from April 2003 required)?

B) Was Company allowed to credit service back to 1995 without an amendment addressing this particular purchase?

C) Could Company B now retroactively amend plan to credit service for employees from asset purchase?

D) Would the answer change is the Employee was a potential HCE?

I apologize if this is too basic, but there's so much on Catch-ups, but I haven't seen a clear answer on the following:

Are Catch-Ups an election or simply the result of "normal" contributions exceeding a limit? In a practical example, a 50+ employee elected 15% deferrals on a $100k salary in 2003. Plan stopped withholding at $12,000 claiming participant did not "elect" catch-up contributions.

The answer is usually "what does Plan Doc say?" Unforunately, it is silent to the issue other than saying that Catch-up contributions are allowed (very poor document).

Absent any further language, is this participant owed $2,000 for the Plan's failure to follow his 15% election.

Along the same line, if the plan does not elaborate, are matching contributions required on the Catch-Up amounts? I know they may be excluded, but is the default that Catch-up amounts are to be matched?

Thanks

I was wondering if anyone could provide some insight into how salary deferrals from a bonus that is paid within 2 1/2 months after the plan year ends are handled.

I had some confusion about how this rule would be administered.

Assuming the plan year and the ER taxable year are both the calendar year:

If the ER pays a bonus on February 1, 2004 for services applicable to the 2003 plan year, can deferrals from this bonus be considered for the 2003 plan year?

If yes, I'm assuming they would be tested in the 2003 ADP test?

Would the additional deferrals be reflected in the 2003 W-2s?

Are these deferrals deductible to the employer for the 2003 taxable year?

When would the ER had to have declared the bonuses? For example, if the ER declared the bonus on February 1, 2004 this would have been after the W-2s had been issued.

Sorry for my confusion, and thanks for any help.

In a self-funded plan, with a new amendment added to increase the waiting period to 12 months, can the plan offer optional limited benefit plan, paid for by the employer, for the 12 monhts waiting period at the end of which the employee would opt into the regular plan?

I have a takeover plan where one participant has a plan loan. There is no written loan policy for the plan. The loan papers she signed does not say anything about the loan being due upon termination of employment.

The owner is terminating the plan as of 9/30/04 and will be closing his business as of 11/30/04.

We were wanting to make distributions to the participants in October. Can I go ahead and distribute this participant's remaining account balance in October and give her until 11/30/04 (date of her termination) to pay back the loan? If she doesn't pay it back, then would the loan balance become a taxable distribution with no withholding?

Thanks for any help on this.

Does anyone know where we can get the text of obscure PLR's???

Small professional corporation has an SEP for one older professional and 3 or 4 young staff members. The owner has contributed $40,000 to the SEP in January for 2004, but now would like to switch to a DB plan and contribute considerably more money.

Can the $40,000 plus earnings be returned as an overage for 2004? If yes, how are the returned earnings calculated (just compute actual earnings?)?

Is it the case that SEPs are not like a Simple that you could not fund the Simple and a DB Plan in the same year, but you could fund a SEP and DB plan in the same year?

Could the $40,000 in the SEP be left alone for 2004 and then fund the rest of what could be contributed to a DB plan for 2004 into the DB plan?

Does anybody know of a web site that might have what I would call a "reverse" loan calculator whereby you input the loan amount, interest rate and payment frequency and the calculator determines the number of payments and the last (usually slightly different) payment amount?

This is for those participants who want to specify a specific dollar amount per pay period that they want to pay on a participant loan.

Thanks - any and all info, comments and/or suggestions welcome!

The employer maintains a 401(k) P-S plan with a match formula of 10% upto 5% of deferrals. They contribute the match on a payroll basis. Some of the participants have contributed 5+% to the plan, but their match is less than the maximum amount of .50% of pay. Normally the document states whether or not the match is based on annual compensation or payroll compensation. The problem is that the document does not state if the match is based on annual compensation or payroll compensation. Is there a default that should be used or does the client have discretion regarding the match and possible true-up? (We are the new recordkeeper and in the past, they have not made any true-up contributions.)

Any help would be appreciated.

if the account had fees and expenses in excess of cap gains and dividends, would you still issue 1099's? if so what would be the amount?

Scenario - ER maintains two plans, one safe harbor and one non-safe harbor for different groups of EE's. The non-safe harbor plan has a 150% match on first 3% of comp. and safe harbor match is 100% on first 3% of comp. If an HCE transfers from the non-safe harbor plan to the safe harbor plan, the aggregate match he or she receives for a year will be greater than the safe harbor match provided in the safe harbor plan. (150% match for part of the year and 100% match for the rest of the year.

According to notice 98-52, this violates the safe harbor requirement that on HCE can not received a greater rate of match an NHCE. See Notice 98-52 (Section IX.B.2)

Has anyone come across this problem and how have you dealt with it ? Has Notice 98-52 been superceded ?

Just seems odd to me that transferring an HCE from one employee group to another for legitimate business reasons could potentially disqualify the safe harbor plan.

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Attention deficit hyperactivity disorder (ADHD) is taking a toll on the household income of adults with the disorder. Income lost is now pegged at $77 billion in the US, according to a study by Harvard researcher, Dr. Joseph Biederman.

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http://www.healthtalk.ca/adhd_09112004_9320.php

Also listed in message forum on http://www.lifelifters.com

Please help with calculating this person's vesting. We have differing opinions here at the office.

Fact pattern:

3 yr cliff vesting schedule

DOH = 2/15/02

DOT = 9/1/04

worked >1000 hrs in '02

plan switched to elapsed time vesting effective 1/1/03, was 1000 hrs before that.

How many years? 2 or 3?

How does one handle deposit overages? These overages are due to the employer sending in too much money, but from employee withholding deductions.

Company B purchases only the assets of Company A. Company B doese not have an existing 401k Plan but Company A does. The employees of Company A will be doing the same work for Company B. What does Company B do with Company A's 401k plan.

1) Can Company A's plan just stay in tact and Company B adopt the 401k plan??? How would this affect Form 5500 filing??? What TIN would be used and Company Name on form 5500 considering participants would be deferring under Company B's TIN???

2) Can Company B just terminate Company A's plan and create a new plan under Company B's TIN# and let Company A's participants rollover to Company B's plan or rollover to an IRA??

What is the best option for Company B on what to do with Company A's 401k plan????

Also how would any transaction affect the Annual Form 5500 filing for Company A's Plan???

I have a client in an area devastated by Hurricane Frances. They have a 9/30 plan year end, and have requested an extension of their open enrollment. All of the meetings had been cancelled, their server was down for 10 days, and all their forms were swept away. They have just reopened their office, but don't think they can get it done in the next 12 days. They would like to give the employees a 10/31 deadline, but not pay claims incurred prior to the date on the election form. Does anyone think such relief is possible? Thank you.

A company received a draft top hat plan in 2001. It was never adopted and key employees never received copies of the plan or its terms (which included vesting and forfeiture provisions). Participants might have been orally told that bonuses would be paid. Of course one key employee may be terminated for cause. If top hat plan were established, benefit would be forfeited. If just an oral promise, forfeiture terms can not be imposed. Any thoughts. Thanks. Ed

Just met with accountant for plan sponsor who showed me past admin work for a possible takeover.

1040 Tax forms were wrong. Participant was advised to borrow back all the pension contributions, by way of the pension administrator who accomodated the transaction.

Big deductions for a db plan for two 35 yr olds. The TPA wrote to explain how all the prohibited transactions would be done.

I agreed the admin looked wrong. Then I checked the DOL who did not receive any of the prior 5500 forms. Thus, the copies of 5500 for db that were given to client and signed by client were never filed. The forms did not disclose the loans.

In addition, the forms did not show the actuary's cert. so I cannot ask if there was a valid enrolled actuary's work done.

My attorney says that the client can ignore the invalid past work at their own peril. Or, much better to go back and correct 4 past tax returns and 4 5500 filings, go into CAP, and sue the old TPA for damages for all the back penalties and underpaid taxes.

Any suggestions on handling this situation?