Hello All;

On June 24th, there was an article on the BenefitsLink Newsletter titled "IRS Plans to Issue Guidance Regulations for 403(b) Plans".

Besides the article attached to the newsletter,does anyone know where I might be able to obtain additional information on what Guidance the IRS may be releasing?

The IRS will tax @ 100% all qualified distributions. I had a small Roth I closed in 2002. This was a qualified distribution. The 1099 has a distribution code of T (exception - not taxable). The IRS has informed me the entire distribution amount is taxable. The IRS has also informed me that they will not discuss the matter untill all taxes, penalities and intrest are paid. At that time, I have the right to engage an attorney to attempt to have the monies returned. Since all the money was paid in after taxes, this is double taxation and nulifies any advantage of the so called tax savings. :angry:

Can anyone cite something in the DOL regs that would support a TPA firm providing the service of reviewing and approving loan applications? The plan sponsor signed a blanket loan authorization contract/agreement, and has no involvement in the process unless the participant does not provide supporting documentation, or another issue arises.

The auditor is stating that it is not acceptable to have a TPA firm perform this service. Do you have any idea why?

Also, why would an IRS auditor be reviewing DOL requirements?

Thanks

Is anyone aware of any reliable studies or information that examines the overall cost impact (if any) of adding coverage for domestic partners? Any info appreciated.

401(k) only plan has 3 months eligibility service requirement and quarterly entry (1/1, 4/1 etc). Employee is hired 6/23/03, layoff 8/19/2003, and rehired 5/17/04.

What is date of participation?

I have a client who had 113 participants in the beginning of the year so I filed as a small plan. There were 117 participants at the end or 2003 and entry date is 4/1 so I should be okay for 2004.

But can anyone tell me if once the participant count goes over 120 and has to be filed as a large plan with an outside audit can you ever go back and file under the waiver if and when the participant count drops below 120. The instructions seem to say that you have to have filed as a small plan in the prior year to claim the waiver.

This is a country club who's employee population fluctuates constantly.

I have access to a database and intend to prospect some plans..... Anyone have a good prospecting letter, advice about how I should go at this task?

Thanks!

Is there any need for a qualified plan to have an EIN? The plan's trust may need an EIN to report distributions (if there's no corporate trustee), but the plan wouldn't seem to have any need for one. But a faint bell rings in my head -- have I heard not too long ago that the IRS wants us to get EINs for plans? Or is that just another sign of advancing age?

Consider this factual scenario for a CONSTRUCTION industry

defined benefit plan.

Company A has two divisions (electrical and mechanical). They contribute

to a separate plans for this work. The electrical plan has significant withdrawal liability. Company A decides to sell their business to an unrelated buyer. Immediately after buying the company, buyer closes the electrical division.

Questions...

Does WL attach to the seller at the point of sale? They did not request a waiver or post the necessary bond.

Would the closure of the electrical division affect the answer? Under 4203 of ERISA, a construction industry employer may close his business without incurring WL so long as he doesn't reopen (non union) in 5 years. Therefore, absent the sale, the buyer would seem to be off the hook

Input is appreciated.

Is the correct code 8 or 9?

A client of mine is closing up shop and needs to terminate their 401(k)plan as of 8/1. Notices went out on 5/1. For the employees who were hired in April and fired in May, are they new participants in the plan (assuming the plan uses age 21 and 1 year)?

Are they counted in the adp test or top heavy tests?

Assuming that the plan fails one of the non-discrimination tests, would they get a contribution?

thanks for all your help.

Which is the correct code, 8 or 9? Is UP-1994 supposed to be synonymous with 94 GAR?

I have a nonprofit client that permits non-compensated directors on its Board to purchase up to $50K of life insurance through its group plan. Is this permissible? I thought that only "employees" could do this.

Does anyone know what statute applies to benefits for non-compensated directors on the board?

Are there are good articles on benefits for non-profit directors?

Thanks for any help you can provide.

I have a nonprofit client that permits non-compensated directors on its Board to purchase up to $50K of life insurance through its group plan. Is this permissible? I thought that only "employees" could do this.

Does anyone know what statute applies to benefits for non-compensated directors on the board?

Are there are good articles on benefits for non-profit directors?

Thanks for any help you can provide.

I have a client that adopted a "word-for-word" volume submitter prototype document for its GUST restatement of its cross-tested profit sharing plan. The document is a Corbel document. Because the document was "word-for-word", we did not submit it for a determination letter.

Now, the document has been amended to change the definition of compensation to exclude bonues, except those paid to hourly and administrative staff employees, and to the plant manager. In 2003, there were 2 NHCE's and 3 HCE's with excluded bonuses. In the 414(s) test, the ratio of NHCE's to HCE's was 124.7%. One of the 2 NHCE's with excluded pay is a new hire who will be an HCE in 2004.

My question: though I know you don't need to submit a document for IRS approval, we generally have done so for our clients in the past, and did submit all GUST restatements that were not "word-for-word". Should we submit this amendment for approval? What are the pros and cons? Can we submit on Form 6406 (we've never used this method before), or Form 5307?

I'd appreciate your comments.

Has anyone heard anything lately on legislation that would cap 401(k) participant employer stock holdings in 401(k) plans?

Have any of you or your clients put restrictions on employer stock owership by participants in 401(k) plans?

Thanks!

It just sounds too good to be true. Tell me what's wrong with these. Can the medical bills really be deducted and not be taxable.

1) A sole proprietor owns a hardware store. He establishes a medical reimbursement plan (MRP). His wife and kids are the only employees of the store. They (owner, wife, & kids) incur $thousands of dollars of medical bills, which they pay, and then the store reimburses them. The store deducts those medical bills on the owner's Form 1040 Sch C. The reimbursements are not taxable to them.

2)Same as 1)above, except the store is incorporated. He owns 100% of stock. All of them are employees. The corp deducts the bills. Nothing is taxable to them.

3)Same as 1)above, except the store is a partnership. He & wife are partners and the kids are employees. The partnership deducts the bills. Nothing is taxable to them.

4)Same as 1)above, except he has no employees. Can he have a MRP just for himself.

It seems to me that there is no discrimination, because 100% of all employees are allowed to participate.

I've received mixed answers on this, so I wanted some extra opinions.

Plan has minimum (& maximum) funding requirement for Plan Year ended December 31, 2002 of $300,000. Company funded $400,000 in September 2003 (and also reported $400,000 on 2002 Schedule B). Additional $100,000 was not deducted for Tax Return.

Is there a 10% excise tax on top of the disallowed deduction?

Also, can the additional $100,000 be deducted on subsequent Tax Returns (even though already reported on previous Schedule B)?

Company A is owned 95% by 5 individuals. Company B is owned 85% by these same individuals. Company B has one other owner, Joe, who owns the remaining 15% of Company B and none of Company A. This is a controlled group. Both companies are covered by one 401(k) Plan. Is Joe considered a key employee due to his 15% ownership in company B? I would love to have an official cite on this one.

Can an employer require its employees to undergo a health screening if there is no requirement that an employee do anything other than be screened? Meaning that if an employee has high blood pressure, he will get those results, but is not required to do anything about it? He can do something about it, and nurses will be available to assist if he so chooses, but the program doesn't require any such action. I don't see this addressed in the HIPAA proposed regs, but I may be missing something.