One of our clients has a division of employees who expected their employment contract with the client to be terminated at the end of the August. However, the contract was extended through the end of the Plan Year. Employees made Plan Year Annual Elections to their FSA's based on expenses they would incur through the end of the contract period. Now that they have effectively been 're-hired', could this be considered a change in status that would allow these employees to increase their Annual Elections to their FSA's?

Any and all guidance would be greatly appreciated. If you can direct me to any reference material regarding this situation, that would be great.

Thanks in advance for your help.

I have a stupid question. I am 38 and trying to pay down debt so I can start saving for retirement.

Presently, things are tight with the mortgage and a small HELOC, 1 car payment, 2 kids in preschool, 2 529's.

I opened a Roth in '98. I have about $12K. I have a credit card for 5K at about 13%. I am wondering if I can borrow 5K from the Roth to pay off the card without the penalty, being that the Roth is 5 years old +.

Thanks for any explanations.

Do I have to convert the participants' account balances to annuities to report them on the Form SSA, or can I just show account balances?

Consider a Calendar Year Plan with EOY valuation.

Plan is terminated Aug 15, 2003 say and plan assets distributed by October 31, 2003. Therefore, on 12/31/2003, the plan has no assets or participants.

For the PY 2003, how does one perform a valuation @ 12/31/03 and prepare a Sch B?

P.S . This is purely a Val & Sch B question so let's not worry about proper notices to the participants, vesting, PBGC etc issues.

Employer wants to charge the participant for fees relating to QDRO review calculations. Is that permitted? Does anyone know where I can find something on this subject?

Thank you

Hello--I have a client, a small law firm, and one of the partners owns 50% of Corporation X. The law firm has a 401(K) plan. Corporation X does not have a retirement plan. I have 2 issues here:

1) The law firm uses 2 employees from Corporation X that they use for secertarial services. The law firm does not pay these employees directly. The law firm pays Corporation X a certain dollar amount and then Corporation X pays these employees.

I'm very new to affiliated service group and controlled group issues.

Would these 2 employees of Corporation X be able to participate in the 401(k) plan of the law firm??

3) Also, what potential 415 issues would I have, if any?

Thanks for your help!

I spoke to an employer recently about their health plan. They just changed to a higher deductible plan and have decided to reimburse employees a portion of their deductible expenses. I mentioned to them that they needed a sec 105 plan document in order to do what they wanted to do and not have the payments counted as compensation (subject to FICA and taxable to the employee). I explained there was a right way to do employee reimbursements and a wrong way and if they didn't do it correctly, there were potential penalties and back taxes. They were unsure of what I was telling them and wanted a legal or code reference. Does anybody know of a reference that would include the penalties, tax implications.

I'm having a little disagreement. I discovered an employee is over their annual limit already, due to computer error. I say his limit should be $13k, other says $16k due to catch-up. I said our plan doesn't allow it, other says all over 50s can catch-up. The final regs say "An employer is not required to provide for catch-up contributions in any of its plans." Seems cut and dry to me, but I want to make sure I am not missing something. Also, if the plan doesn't allow it, and we allow him to do the 16k anyway, then the whole plan could be in violation, right?

Thanks!

Does anyone have experience with amending a 5500 multiple times? Our concern is that this will cause a red flag for an audit for this plan. There were several errors that were made by the prior recordkeeper that we have discovered. The 5500 has already been amended once. Does this kind of situation ever cause an audit?

We are confident that if there was an audit, there would be no problems however we don't want to cause problems for this sponsor.

I am confused. I've had brokers and TPA's tell me two different versions of what you use for premium deduction totals when performing the 25% keyman concentration test. I was taught you use only the pre-tax deduction that the employee is responsible for (i.e. for his/her own portion, spouse, dependents, etc.). A broker said no, that you use all of the premiums whether paid for by the employer or the employee. Any guidance would be greatly appreciated.

Thanks.

I have a traditional IRA, and I converted a portion of it ($10K) to a Roth IRA about a month ago. As we are aware, the market has recently dropped, and of course, I wish that I had waited to do the conversion. I understand that if I recharacterize my previous conversion, I will need to wait until the beginning of 2005 before I can "re-convert". My question is: can I convert another $10K now (the new balance of my traditional IRA is well over $10K), and after this second conversion, then recharacterize my original $10K conversion back to the traditional IRA? This would have the same net effect of recharacterizing today and reconverting the next day. Are there rules that limit the number of conversion you can have in one year? If not, am I allowed to specify which conversion is being recharacterized? Any guidance would be appreciated. Thanks!

company ABC is 100% owned by Mr. D. his mother and grandfaher own 50-50 company XYZ. (There is no asg) Mr D works for XYZ.

controlled group b/c of double attribution?

thanks

A participant with a QDRO recently came forward to request a benefit illustration. He is the participant; she is the alternate payee. The QDRO calls for her portion of the benefit to be converted to a benefit payable over her lifetime.

The previous actuary did an illustration for them 4 years ago and used sex-distinct mortality. In other words, the participant is 65 at his NRD. When he is 65, she would be 63. The previous actuary (large national firm) multiplied his benefit by a male factor at 65 and divided by a female factor at 63. Is it appropriate to use sex distinct mortality for this conversion?

I guess if the document said you always used male mortality for the participant and female mortality for the survivor, then it may be ok, but this document is silent regarding actuarial equivalents. It just lists the factors used to convert benefits, but never defines the underlying assumptions.

Employer is a non-profit school which maintains a 403(b) annuity plan through TIAA-CREF. Employer makes a % contribution on behalf of employees in the plan as well as handles employees' salary deferrals as per plan document. CPA has questioned whether the employer needs to continue filing a 5500......? Thanks for your help.

Can anyone verify if the Annual Open Enrollment period is mandated by state or federal regulations, or is it up to the individual carrier to offer?

What is the latest news on submitting a (k) Plan for favorable letter regarding EGTRRA provsions. Has the IRS said when the program would be open ? Site ? Thanks.

Hi,

I was hoping someone would be so kind as to provide a copy of the sample notice in Appendix A of PBGC Reg 4011.1. Apparently, we don't subscribe to that service on our research software. Any help is greatly appreciated.

Thanks!!!

When can we expect Congress to set guidelines for Phased Retirement?

I have a plan that just noticed that for the past three years they have sent in more match then they intended. The document says that match is discretionary. They calculate and fund the match on a payroll basis. They wanted to match up to 5% of deferral. They switched payroll systems and the system was matching up to 15% of deferral for everyone in the plan. Everyone was treated the same and matched on everything they were deferring. Communication to the employees at enrollment meeting states they were matching up to 5%. Testing was done each year. But this was not noticed until recently by the client. I see this as an operational failure. How do you recommend this be handled?

We have a client that recently filed their final 5500 on a terminated profit sharing plan. There was a security held by the plan that was in excess of 20% of the value of plan assets during the year. We answered question 4(i) as "Yes", but were stumped as to what value to put down as to the value of the asset. As all assets were distributed by the end of the year, and questions in line 3 all reference end of year values, we put down $0 (the value as of the end of the year) for the asset, since the instructions provide no guidance as to the value to put down (beginning of year, end of year, highest value during the year).

Client got a bounceback letter from the DOL on the question. Ended up with a supervisor on the phone who (basically a complete jerk) would not provide any guidance whatsoever as to the amount to put down for the question, whether beginning of year value or end of year value of security in question.

Besides being a little ticked that this guy wouldn't (or couldn't) provide an answer as to what to put down, what would you do in this situation?

1 - Terminated plan with all assets distributed by end of year

2 - Ongoing plan: beginning year value of security in question, end of year value, or highest value during the year (which would basically be an impossibility to reasonable track?).