An employer prefunded a partial profit sharing contribution for 2004. Is it ok to hold this in a "suspense account" until year end (and receive earnings) and then allocate? How would we treat this contribution? This contribution is for one participant specifically and we can't show this money in his account until year end or it would be discriminatory? We weren't sure how the IRS looks upon prefunded contributions and if there were any rules relating directly to this issue.

We have taken over a group from another company. They allowed the claimants to use a cash register receipt for documentation where we asked for the actual Rx tag from the bag. Is a register receipt ok? I didn't think it supplied enough information? Thanks for any help on this.

I have a client (husband and wife) who owns 100% of a company. They currently have a SEP plan, but considering a profit sharing plan.

As employees of this company, the husband and wife receive salaries, and would be eligible for the profit sharing plan.

Independent of the company and unrelated services, the wife receives $50K during 2004, and it will be included on her Schedule C income tax return.

Can the wife participate in BOTH the company's profit sharing plan AND in a DB plan associated with her Schedule C income?

Participants defaulted on 401(k) plan loans during 1999 and 2000, but Employer never reported deemed distributions.

Fast forward to 2002. Employer seeks forgiveness from IRS under EPCRS, and IRS agrees, in 2004, that Employer can "make things right" if it reports the deemed distributions for 2004 (i.e., by issuing 1099-Rs to the defaulted participants early in 2005).

Here's the rub: Big accounting firm (let's call it E&Y) insists that loan defaults must be disclosed on 2003 Schedule G filed in 2004. But if Employer does so, there will be a mismatch since 1099-Rs will not be distributed until 2005. Further, Schedule G Instruction (I think) expressly provide that defaulted participant loans under individual account plans are not reported on Schedule G Part I. Nor are they reportable under Part III because they are exempt under ERISA 408(a).

Who is right? Worth a second opinion?

Part owner (<50%) of Company A is a participant in a Profit Sharing Plan that Company A sponsors. Part owner is also an owner (50%) in company B, which is unrelated to Company A. Company B does not sponsor a qualified plan.

Part owner in Company A wants to use some of her Profit Sharing assets and invest in Company B. It would be in the form of prefered shares. Is this a prohibited transaction?

We are frequently asked by our employees to accept credit card payment for COBRA premiums (also for payment of benefit premiums during leaves of absence). We administer COBRA (and leave billing) internally.

Do you have any experience with this? What are the caveats? The positives?

We are a BIG employer: around 150,000 benefits-eligible employees nation wide.

Thanks for your thoughts.

I have a client that has amended their 12-30 plan year end to reflect 12-31. In running a short plan year ADP/ACP test (12-31 to 12-31) I was hoping someone could provide some guidance as to how I would pro-rate the 401(a)(17) limit? Do I round up and pro-rate for a using a whole month? Thanks for any guidance provided!

Our employer has indicated a desire to contribute $400 to this year's FSA accounts for all employees. If the employee did not elect to participate in an FSA he would establish an account for the employee with this money. I don't believe that such a mid-year contribution to a calendar year plan is allowed, but am not able to find the language I need to convince him.

I'm looking for a morbidity table known as the "UAW Table", for determining rates of disablement. Can you provide or steer me to a link? (I did not see it on the SOA website.)

In 2003 Company XYZ sets up 2 NEW plans (Retirement Plan & 401(k) Plan.

A transfer of rollover balances are made from an old (terminated in 2003) company sponsored plan.

Unfortunatelty the rollover balances for the Retirement Plan are incorrectly deposited into the 401(k) Plan. The next day, the correction is made and the money is transferred into the appropriate Plan.

Does this need to be reported as a Prohibited Transaction on Form 5500 and does the client need to be penalized for the actions of the prior recordkeeper??

does anyone know if you can bring up new ideas on appeal in the 2nd circ. like breach of fiduciary duty when in district ct. it was vesting of retiree benefits under erisa? we lost in district court and judge disagreed with our arg that contract was ambiguous. need to show that contract is ambig to let in extrinisic evidence. end goal: getting retireers they benefits that were promised for life. but contract is sneaky and has clause saying have right to amend terminate plans. any ideas????? thanks

lost in district court, judge in 2nd circuit said contract is not ambiguous so we can't bring in extrinsic evidence to interpret contract. extrensic evidence would help us since co. sent letters to retireers saying they have lifetime benefits. does anyone know of any case law 2nd circuit or any other circuit that would help me argue the following:

1) that the co. made a promise to vest benefits for life.

2) contract is ambiguous

3) need to look at extrinsic evidence

4) anything else.

unfortunately the contract looks pretty straightforward b/c co. has a clause on right to amend/terminate. and says plan/coverage is only for duration of contract.

any ideas greatly appreciated.

FAB 2003-3 which came out in may, 2003 provides that fees for distrubutions can be charged to participants when distrubutions are paid on a periodic basis.

Benefit Distributions. Some plans provide for the imposition of benefit distribution charges on the participant to whom the distribution is being made. These charges may be assessed for benefit distributions paid on a periodic basis (e.g., monthly check writing expenses). ERISA does not specifically preclude the allocation of reasonable expenses attendant to the distribution of benefits to the account of the participant or beneficiary seeking the distribution.

certain commentators have said they were not sure if this applied to lump sum distributions. does anyone have an opinion on this?

How are you allocating funds returned to a plan from a breakpoint settlement from the mutual fund company.

Can QMACs be used to satisfy Top Heavy Minimums?

Is there a difference between a Health Reimbursement Arrangement and a Self-Insured Medical Reimbursement Plan? Are they one in the same? Both requiring written plan documents?

Can anyone tell me how they are handling IRA's rolling into a retirement plan? Are you requiring any type of documentation detailing that the IRA is qualified or what portion may be after tax? My understanding is that the IRA custodians generally will not sign off on the rollover contribution form indicating all $ are qualified because they do not track after tax, it is the participant's responsibility. Is it true that for an IRA distribution, the entire amount of distribution is recorded in box 2a, and box 2b is checked indicating taxable amount cannot be determined?

In the past, we required the Plan Sponsor of the distributing company to sign off that the funds were coming from a qualified plan, or required a copy of the determination letter from the distributing plan. This doesn't seem possible with IRA custodians.

Does the total value of the plan have to be part of the SAR?

Small client, 5 EEs, 3 family and 2 non related. Plan has $1mil plus with $150k split between the non related EEs. Plan sponsor is concerned that they will do the math and see what the owner etc have. Says it is a company breaker.... If the total value of the plan isn't disclosed then he feels it will be fine....

Can that be omitted?

We have a potential new client with a question on a successor Plan. Here are the particulars:

Attorney A is a PA and has his own Plan with 1 employees

Attorney B is a Pa and has his own Plan with 5 employees

Attorney C is a sole prop and has no Plan. He has 3 employees.

The three Attorneys are contemplating establishing an LLP. They would have different ownership percentages, with Attorney A owning about 70%, Attorney B 29% and Attorney C 1%.

Would it be possible to amend Attorney A or B's Plan as a successor plan?

Thanks

A participant takes out a loan in 2001 with the final payment due in 2006. In 2004, he wants to take an additional loan with a 5-year repayment period and include the initial loan as part of the new loan.

Since the new repayment period would extend beyond the due date of the initial loan, as long as the outstanding balance of the old loan plus the total of the new loan do not exceed the 1/2 vested balance/$50,000 limit, is everything fine within the rules/regulations? Any other considerations?

Thanks.