I would like your opinions on whether or not the following situation is a prohibited transaction:

A plan sponsor has a brother-in-law as the plan broker. The brother-in-law owns an outside business. The broker wants the plan sponsor to invest part of his own segregated account (not other participants) into the privately held stock of this company. Is this a prohibited transaction?

A Client with $300,000 in a 20 year old Plan is moving from Ohio National to another carrier. They were notified that their $146,000 fixed account will be decreased to about $120,000. This is called a market adjustment, not a withdrawel charge.

I have seen market adjustments in fixed accounts before, but this seems way too high. Does anyone have any suggestions?

If the seller in a stock sale agrees to terminate all of its ERISA plans PRIOR TO CLOSING and take responsibility for doing so in compliance with ERISA, Code and other applicable laws, does the buyer have any obligations with respect to the plans?

I assume that the buyer needs to make sure it doesnt have a successor 401k, anything else??

This information was posted 8/30/04 on the 403(b)wise website.

The NTSAA has advised its members today that the 403(b) regs are postponed indefinitely. It is not clear whether we should expect a modest delay or a longer one, but the implication seems to be that we shouldn't expect anything in the next month or two, at least.

A plan that does not require spousal consent obtained spousal consent for a plan distribution. Three interesting twists:

1) The participant also happens to be the owner/sponsor of the Company.

2) The participant forged the spouse's signature

3) He is now getting a divorce.

He has obviously already spent the money and wants to avoid the court saying something along the lines of, "well obviously the spouses consent was required... as such fork over half of the dough."

I'll settle for thoughts on the legal effect of obtaining a spousal consent when not necessary.

Any thoughts?

When you are calculating the required quarterly contribution amount, do you include a Full Funding Credit?

A client of ours is terminating their 401(h) plan and they need to pay everyone out, but they are not sure how to pay everyone out, in other words, must the 401(h) assets be left in the plan until a medical claim is incurred, or can the money be forced out before a medical claim is incurred?

Small plan (the only participant currently is the owner). the owner would like to invest plan assets in a closely held bank and he will be a director of that bank. is this a PT? i think it is a transaction with a party in interest. however, an investment is not a sale or exchange so i have some doubt.

Plan A is a 12-31 yearend 401(k) plan. The owner is selling the company to an unrealted party effective 10-01. I don't have the details on the type of sale or what the old owner and new owner want to do with the existing plan.

I do know that the current owner of plan A would like to make a final profit sharing contribution to the plan before he sells the company. Can the owner make a contribution to the plan if the plan has a last day and 1000 requirement?

Does the plan need to be amended to remove the accrual requirements in order to make a contribuiton? Does it matter that the plan is a new comparability profit sharing design? Any thoughts would be appreicated.

The QDRO states that the Alternate Payee receives 50% of the accrued account balance. The participant is 100% vested and his balance includes an outstanding loan of $8,000. How does the loan balance apply in calculating the distribution? 50% of the account balance is $11,000. I think the distribution is $11,000 and the total loan balance stays in the plan to be repaid by the participant.

Has anyone encountered a QDRO where the participant has an outstanding loan?

Client has supplimental benefits (cancer, etc.). The employees purchase individual policies on an after-tax basis and the premiums are run through payroll.

Is this an arrangement that would require a form 5500 filing? I'm pretty sure the answer is yes, but the client is arguing against it and making me second-guess myself. Any thoughts?

Thanks

Client has supplimental benefits (cancer, etc.). The employees purchase individual policies on an after-tax basis and the premiums are run through payroll.

Is this an arrangement that would require a form 5500 filing? I'm pretty sure the answer is yes, but the client is arguing against it and making me second-guess myself. Any thoughts?

Thanks

I was asked this question by a rather persistent insurance man. If you have a 412(i) plan (or any other tax-qualified DB plan), and because of underwriting delays the insurance company does not issue the policy until the second plan year of the plan, what is deductible for the first plan year? Tha annuity premium only? Or the total of the life insurance and the annuity premiums?

My first reaction was that the annuity only was deductible. Then he asked, when would the life insurance premium be deductible? Would it always be one year out of step with the plan year/tax year? And - here is where he really got me wondering what I have forgotten in my lifetime - what happens when you have an accrual basis taxpayer.

Any ideas would be welcome. Thanks!

A participant took out a loan in Sepember of 2001, and terminated in the month following the distribution. It looks like he never made any payments on the loan, so it's in default. He has an account balance, besides the $8000 loan, of under $5k. Can he be forced out of the plan? I am thinking yes - what do you think?

Does anyone know the IRS and DOL positions on segregating and depositing elective deferrals for the sole proprietors own earned income? Has there been any recent changes or guidance?

Is it based on when earned income is finally determined?

I recently changed r/k firms and moved here to FL. We got hit with Hurricane Charley three weeks ago, and may get Hurricane Frances this weekend. We still have 5500s that we are working on (or waiting on info from various sources).

Does anyone out there know if the IRS grants additional time when you are located in a federal disaster area? I know they did this for those in the NYC area in 2001. Opinions? Or if you know who, where we can contact the IRS to get some info on this topic?

Thanks for your help!

Three doctors were each Sole Proprietors until 06/01/03, at that time they formed a partnership. (Without consulting with us in advance...)

All of the doctors had calendar year safe harbor 401(k)s. One of the plans was amended to the new plan name on behalf of the partnership. The other two doctors adopted this amended plan.

None of the plan provisions were changed.

Should I combine each doctor's Schedule C (1/1/03 through 5/31/03) and K1 income as calculated (6/1/03 - 12/31/03) and limit each of them to the $200,000 compensation limit?

I am looking to avoid re-creating the wheel, Does anyone have a document they are willing to share?

Thanks

Jim

We have an EE who missed the 30 day deadline upon the birth of his daughter to add her to our medical plan. Now 5 months later he is trying to add her. He claims he is able to add her as a late enrollee and he will pay an after tax premium for her to be added. Since our medical is part of our pre tax cafe plan are we okay in denying his demand? I thought the late enrollee provisions related to preexisting conditions?

The multiemployer health plan offers a discounted cobra rate to participants that suffer a loss in coverage due to a reduction in the hours of their employment. This discounted rate is offered for the first six months and then the rate is billed at the full rate of 102% of the fund's costs. The fund has been presented with the situation where a participant has suffered a loss in coverage due to a reduction of hours and has declined cobra coverage. The participant's beneficiary, however, has elected the cobra coverage. The fund does not want to have to offer the beneficiary the discounted rate. Is the fund required to offer the beneficiary the same rate as the participant in this situation or can the fund charge the full rate of 102%?

Thanks.