I have a plan which is merging it's assets into another existing plan. The investments are non-participant directed, therefore under normal circumstances a Reportable Transactions schedule would be required. However, I'm wondering since the investments are not being "sold", they are merely being transferred to another plan under the same TPA, same custodian, etc, would the schedule be required?

Does anyone have any knowledge/past experience with something like this?

Thanks in advance!

I often apply for EIN's for clients using the internet so I can immediately receive the EIN. Recently I've had lots of problems where the applications seem to be rejected for no apparent reason, even though I was carefully following all the Form SS-4 instructions.

Usually what happens is they will fax a response saying something is wrong with the application and ask for a response within a week or so. They list about 10 things that could be wrong, but never circle one of the items or otherwise identify the problem. When I fax a response asking what is wrong with the application, I receive no reply. I have some indication that for these EIN's that receive such faxes, the IRS is nullifying the EIN's, but I have not taken the time to verify this for all EIN's.

Well, I just got a call from an IRS employee asking "Is this an application for a sole proprietor or for a plan?" I was a bit floored, but quite pleased, that they had called me. After a bit of difficulty communicating the difference between the plan trust EIN and the EIN for a sole proprietorship (needed for Form 5500), she told me that whenever you apply for a sole proprietorship EIN, NEVER check the box "created a pension plan" under item 9 "reason for applying." If you do, they assume you are confused and don't actually want a EIN for the sole prop, but rather want one for the plan trust. She said that such applications are usually rejected and the EIN's issued over the internet are nullified.

Checking "created pension plan" under item 9 seems perfectly logical for a sole prop, since you need the sole prop's EIN to file Form 5500. Perhaps others have done the same thing, hence I am posting this info. After more confusion over the purpose of the sole prop EIN and the trust EIN, she agreed with my suggestion to check "other" under Item 9 and enter "required for Form 5500" when applying for a EIN for a sole proprietorship.

As to the perplexing faxes I mentioned in the first paragraph, she said that one of the IRS offices (NY I believe, there apparently are 3 that handle EIN's), does that kind of thing. My experience is that in that case you really need to make a conference call with your client (client is needed on the line unless you have Form 2848), call the general IRS number, wade through the various voicemail options to get to business "entity control", and then try to find out if the EIN was issued, etc.

And also remember that when you need a plan trust EIN, don't check the box "trust" for type of entity under item 8a. As per the instructions, check "other" under item 8a and write "created pension plan", then under item 9 check the box "created a pension plan". IMO, The IRS should really clean up this form, or the instructions, or how they are processing the applications, to make it more logical. The amount of time you can spend on this can be very depressing.

How can a plan define termination of employment in the context of a multiemployer plan. Any guidance? I am aware that plans sometimes state that a one year period with no covered employment is a termination, and in a DC plan, the participant's account balance is distributed. Can the time period be shortened to 6 months without work? Can a plan permit partial distributions at 6 months without work but full distributions after 12 months without work?

Does anybody know the IRS position on QSERPs (not SERPs)? Have they published anything?

I'm confused for some reason...

In 2003, an employee gets paid over $90,000, therefore HCE in 2004.

In 2004, an employee gets paid over $90,000, therefore HCE in 2005?

In 2005, an employee gets paid over $95,000, therefore HCE in 2006?

What are the limits, I'm confused.

Hello,

We are a Massachusetts company. Can we require employees to use short-term disability for medical leaves? We have a clearly defined STD policy, governed by ERISA. We have had several employees refuse to apply for it, opting to use vacation time instead, and then end up applying for STD after several weeks. This has created overpayment problems which are difficult to rectify. I know we can require the use of FMLA time; do we have the same option with disability pay?

Is there anything that requires a SEP IRA to be in existense for at least two years before you can roll it into a 401(k) plan?

Thanks

A 1 person MP wants to avoid minimum funding for the 09/30/04 plan year. Services were no longer performed by the C-corp in 12/03. No compensation earned after that date. So, technically, isn't his last day of employment 12/03, and since he is not employed on 09/30/04 there is no mimimum funding for the MP plan?

Company is sold part way (1/4) through the year (asset sale). Enhanced safe harbor match being made on a payroll-by-payroll basis.

Since deferrals and match both cease at the same time, do I sitll have a safe harbor plan, or do I now need to test since I am ceasing the sh match?

Under the Working Families Tax Relief Act, there is a new definition of dependent for purposes of Code Section 152. This definition provides that a "child" must, among other things, satisfy age requirements. In general, the child must either (i) not have attained age 19 as of the close of the calendar year or (ii) is a student who has not attained age 24 as of the close of the calendar year. Disabled children are deemed to satisfy these requirements automatically.

The problem is that many existing health plans have traditionally used differing definitions of dependent to determine eligiblity. It seems to me that if a health plan that offers health benefits to an employee's child who does not fit the new Code Section 152 definition of dependent child, the value of those benefits will be taxable. Is there a solution other than conforming the health plan definitions to the new code section 152 definition?

In the event a 50/50 partnership that sponsors a 401(k) plan dissolves, terminates the plan, and distributes all assets, if one of the partners continues the business as a sole proprietor can he establish a new DC plan without violating the successor plan rule?

I have a client who made Match contributions to all employees who defer. The rate of match was 6% of salary - regardless of the rate of deferral. (Basically, a 6% Profit Sharing to only those who defer). 2003 was first year for the plan.

(These are segregated accounts, identified by money source. I would like to avoid moving money around and leave the money as a Match since they made monthly deposits - and the intent was for it to be a Match anyway.)

My first thought is that this is discriminatory - those who defer a higher percent received a lower of match. (example: 3% deferrees received a match of 200%, whereas 5% deferrees received a match of 120%.)

The ACP passes, therefore I believe that 401(a)4 is satisfied. As it turns out, the HCEs are receiving the lesser rate since they deferred a higher percentage.

There are posts of this nature on the Message Boards dated back in 2001, but no definite opinions on this matter.

What I would like to do is "back into" a match formula that will work for 2003 and 2004 - if I can come up with one. Document states match is discretionary.

Any one have an opinion on how to handle this situation? Do you agree that if ACP passes, no additional testing is needed and it can be left as a Match?

Thanks for your insight!

I have searched this board and found some discussion but no definitive answer. When MPPP is merged into 401k PSP are the MPPP amounts 100% vested?

Where can I get a copy of the 2005 pension plan limits?

Employer is a Sole Proprietor, with a Schedule C needed to calculate the annual SEP contribution. He would like to also have a 401(k) Safe Harbor Profit Sharing Plan....is that possible to have both plans active???

2 HCE's

2 NHCE's..

Help!!!!

What is the time frame which particpants must be notified when terminating a 401a plan. When terminating a plan what are the things to be careful about.

Terminating plan has small amount invested in limited partnership and gold coins. Trustee wants to offer all participants a chance to take part of their distribution "in kind". In other words he wants all participants to have a chance to receive some of the lp and coins and not look like they were distributed to HCE only. Does anyone have a letter to participants that gives this option?

Facts: U.S. company has Puerto Rican subsidiary. In the past, employees of P.R. sub participated in the U.S. DC plan. Recently, the P.R. sub established its own P.R. DC plan, and its employees no longer participate in the U.S. plan - but they still have account balances in the U.S. plan. The parent company would like to spin-off P.R. assets/liabilities that are in the U.S. plan and merge them into the P.R. plan.

Question: Are the issues here the same as if the merger were between two U.S. plans? If not, what are the differences?

If an employer is part of a contolled group, must ADP testing include employees of the contolled group?

We're doing an estimated Average Benefit Test for 2004 and will use a "snapshot" date of 12/31/2004. There is 1 DB and 2 DCs in the testing group.

In Section 3.04 of Rev. Proc. 93-42 there is mention of a needed adjustment to the ratio percentage and nondiscriminatory classification percentage to compensate for relative differences in the turnover rates among eligible HCEs and NHCEs.

The Rev. Proc. doesn't seem to mention a similar adjustment to the Average Benefit Percentage ?

Could this be correct ??