Someone has posted obscene and racist messages under the name of "PPL are weird". Would you please delete the offensive messages and block this individual from posting again? Also, can you track the IP address so that the same person can't register again under a different name?

What is the correction method for a safe harbor plan (safe harbor match) that failed to distribute a safe harbor notice for a prior plan year (discovered within the self-correction time period however) but the employer still made the safe harbor matching contribution for that year? Thanks.

I have heard several people opine that an employer who contributes to HSAs of its employees must make equivalent contributions for employees who are medicare enrolled (in an FSA, HRA or cash).

This statement is based either on the ADEA or Medicare Secondary Payer rules.

Has anyone else heard this comment?

If you have a plan that matches 403(b) contributions in your 401(k) plan, are you including the 403(b) matching contributions in your 401(k) plan audit? If you have a combined plan like this, are you including the 403(b) employees as participants in the 401(k) on your 5500?

Company A sponsors Plan A. Company A owns 70% each of Company B & Company C (which sponsor Plan B & C, respectively). Remaining 30% owned by executives of Company A.

Is there any basis to perform 410(b) testing on a consolidated basis? I believe the threshhold is 80% for consolidated testing.

Are the rules any different for ADP/ACP Testing? Refunds are required for Plan B & C when run individually, but not if all three plans run together (due to high NHCE participation in Plan A).

I'm not sure Plans can (or must) be combined, but wanted to make sure I wasn't missing something (or any ideas where to look next).

My husband and I own a small company (6 employees). We would like to offer our employees a retirement plan. I am a bit confused by the IRS wording regarding the Simple Plan:

"You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's comensation."

Would we as a company be required to contribute to employees' under this plan?

Client is a professor, age 71, and still employed at a school with a 403(b) plan (Plan A). She has several other 403(b) accounts with balances from schools where she was previously employed (Plans B&C). In order to avoid additional required minimum distribuitons, she is considering rolling over the balances from B&C into A. An investment advisor told her that she can open a new custodial account to receive the B&C balances and as long as the account is styled as a 403(b) of the school where she is currently employed, there is no RMD from the account. The investment choices would be different from those currently offered in plan A. Is this correct?

Does anyone have an opinion on whether a db plan would violate the 133-1/3 rule under the following circumstances?

The db plan is a cross tested plan that provides benefits based on employee classifications....Class A, Class B and Class C. Assume that Class A provides a benefit that is more than 133-1/3 percent of the benefit under Class B and the Class B benefit is more than 133-1/3 of the Class C benefit.

With no other facts, it appears as though this would clearly violate the 133-1/3 rule. However, there is no natural progression between classes, meaning a participant does not necessarily start out as a member of Class C and then move up to B and then A. For example, an individual may start out in Class A. Likewise, an individual may start in Class B and never move to Class A.

The purpose of the classifications is not to evade the vesting rules by backloading. However, it may appear as though backloading is taking place since individuals may move between classes.

Any theories or opinions would be greatly appreciated. Thanks!

I am reallocating 2003 forfeitures to the remaining participants of a plan. However, because I am doing this now, instead of at the end of 2003, I have two participants that terminated in 2004 and took a distribution. They were eligble for the allocation in 2003, but the Plan Sponser would rather not give it to them. With that siad, my question is do I have to reactivate their accounts, deposit the forfeitures and re-surrender? Or can I take their portion and reallocate to the remaining participants. thanks

A colleague just realized that a mistake was made when an individual was enrolled in the 403(b) plan. The employee was enrolled in the "over age 50" catch up rather than the basic plan. For some reason, Information Systems had taken the cap limit off. So this employee has had money go into this for the last couple of years without regard to any annual limit.

I have 2 problems to cure: The employee has not received a match because his deferral was going into the wrong area. With the cap limit turned off, his deferral has been over the annual limit.

How do we handle this?

A colleague just realized that a mistake was made when an individual was enrolled in the 403(b) plan. The employee was enrolled in the "over age 50" catch up rather than the basic plan. For some reason, Information Systems had taken the cap limit off. So this employee has had money go into this for the last couple of years without regard to any annual limit.

I have 2 problems to cure: The employee has not received a match because his deferral was going into the wrong area. With the cap limit turned off, his deferral has been over the annual limit.

How do we handle this?

A plan uses the safe harbor matching contributions to pass ADP. The plan also includes a cross tested profit sharing provisions. The only eligibility for the 401(k) is the attainment of age 21. The PS requires age 21 and one year of service.

The Plan Sponsor would like to only offer the safe harbor match to the participants who have met statutory entry requirements.

I know that the Safe Harbor rules have some added complexity when it comes to disaggregating the statutory excludable employees; such as the ADP test must be run if an HCE is in the excludable group.

One question I had was, if the 401(k) portion of the plan is being tested by disaggregating the statutory excludable employees, that does not necessarily mean that the PS must be tested using disaggregation as well?

The Plan is not currently top heavy, but if the plan were top heavy and the otherwise excludables received the top heavy contribution would they then become part of the profit sharing plan? If the PS was then tested using disaggregation, they would not need to receive the gateway?

Any other complications to watch out for?

Thanks.

I wanted to see if anybody else is aware of the the account mentioned below. If yes, where would I be able to get some more information. Thanks.

'Large retirement accounts present a tough tax planning problem because they may be subject to both estate tax at death and income taxes for distributions. A relatively new development to be considered for an IRA with a balance of at least $500,000 is a restricted management account (RMA). The purpose of an RMA is to provide management of the funds for long-term return. An incidental benefit of the arrangement is to receive a valuation reduction of 30 - 40% for estate tax reporting.'

I have not heard of such a develpment so I'm a bit skeptical but the regs have changed so often recently, its hard to rule anything out. Any assistance is appreciated.

Thanks.

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.