Please confirm for me that a 5% owner over 701/2 is still eligible to defer into a 401k plan and recieve profit sharing contributions. They are however required to take the RMD. Is this right or not, I'm somewhat confused

Who has?

Is it a good idea? Necessity?

Where to get it?

Facts: Top Heavy 401k plan. TH required. TH minimum allocated only to nonkeys. Non Elective accrual requirement T>500 hours.

We want to make the least amount of contribution. We want to allocate forfeitures as the top heavy minimum.

Can we exclude the T>500 hours participants because it's only a TH minimum?

If we have to add the T>500 hours then do we also have to add the key?

How would you go about allocating a QMAC in order to get the ADP test to pass. How do you figure out how much each person should get? Relius support told me to first run an ADP test and have the system tell me how much of a QNEC would be needed, then to allocate as a QMAC to only those that deferred (forcing the QMAC eligibility for those that did not defer). This doesn't seem like it would calculate the correct amount for each participant. What do others do in this situation? Any advise would be appreciated. Thank you.

I'm aware that as part of EGTRRA a retired employee who has an existing 403(b) plan may receive contributions to the plan for up to five years after retirement. These post-retirement employer contributions are made using the ex-employee's unused sick leave or vacation pay. Would these contributions be considered true "employer contributions" for the purpose of qualifying the plan as subject to ERISA? My understanding is that a true non-ERISA plan is funded solely through salary deferrals; and it would seem to follow that unused vacation pay or sick leave would have been defined during the employee's tenure as a benefit, not as part of salary. Any insights would be greatly appreciated. Thx.

I am discussing with the OIC in WA regarding the degree of state regulation for self funded MEWAs. Sec. 514(b)(6)(A)(ii) says in the case of any other employee welfare benefit plan which is a MEWA, any law of any state which regulates insurance may apply to the extent not inconsistent with ERISA.

The OIC believes that MEWA case law would be totally separate from single employer case law. When considering the standard "inconsistent with ERISA," would different levels be applied for self funded single employer plans versus self funded MEWAs?

Don Levit

When completing Form 5330 for interest on late deposits, is the date of correction on Form 5330, Part IX, Item 29© the date deposits were eventually made or date in which interest was deposited?

Has anyone heard if the amounts allowed to be contributed to Dependent Care Accounts are going to change for 2005? Are they expected to stay at $5000/$2500?

Assume a sponsor has not, nor plans to make any quarterly contributions for a plan year. The sponsor also has asked for a funding waiver for that plan year (not granted yet). Assuming the waiver is granted, do interest charges for late quarterly contributions apply? If so, how are they calculated - i.e. when are the contributions deemed made?

The last paragraph of the answer to question 8 of Notice 89-52 seems to imply that the interest charges on late contributions do not apply if a waiver was granted. That's about all I've seen on the topic. Any thoughts are greatly appreciated.

How does an accumulated funding deficiency affect the quarterly contribution for the current year and next year?

Can deemed IRA contributions be invested in an unregistered group annuity contract sold exclusively to 401(k) plans? Is there any source that provides either way?

5 lawyers from the old firm started a new 401k the same day they left the larger law firm. The new law firm will be in the same location and building they always worked in. The same staff they used will also follow them. So nothing changed other then the name on their paychecks.

With all that I have read about the repeal of the same desk rule and the wording of separation and/or serverance... my question is...

Do the employees have the option to take their money and NOT be forced to transfer into the new plan?

Is the answer to the above found in what the old plan selected in their EGTRRA agreement?

Any help would greatly be appreciated.

Existing age weighted plan... wants to allow deferrals. Since all the EEs are 100% vested already, would the age weighted contribution count as the 3% SH to pass SH requirements? or would an additional 3% need to be added in addition to the age weighted allocation?

Facts: 401(k) Plan with $10MM in assets. HCE's have very large balances. Employer pays all asset based investment expenses of the plan.

Is this discriminatory? Effectively, the HCE's get a larger "contribution" from the employer?

I'm pretty sure that I read somewhere that this would cause problems (at least it would necessitate general nondiscrim testing).

Any sites/articles/regs etc. would be helpful.

Thanks,

Our plan document does not currently allow RASDs, but would like to amend the plan to do so. Does anyone know when an amendment must be made? I'm thinking it should be by the end of the year, but I couldn't find anything in the regulations.

The lone shareholder of a corporation works an average of 25 hours a week at his corporation, tending to the business affairs of the corporation. He has never taken a salary from the corporation (he receives no W-2). The corp has two regular full-time employees (one bookkeeper and one delivery man). They are paid a salary and each receives a W-2.

Can the corp establish a fully-insured medical plan that reimburses medical insurance premiums paid just by the shareholder (for the shareholder)?

IRC 106(a) says that "gross income of employee does not include employer provided coverage under a health plan" ...... BUT IRC 106(a) does not define the word "employee"?

Does employee mean only a worker that gets paid ?

Where can I find the IRC definition of "employee" as it relates to 106(a) ?

What are the consequences an Employer may face if forfeitures are not allocated according to the terms elected in the Adoption Agreement? What are the responsibilities of the trustee to ensure that forfeitures are utilized accordingly?

Thanks in advance for the help!

an accounting client of my firm came to us to help solve a dilemma. Their current service provider updated their document for GUST. In doing so and with discussions with clients management, they changed the allocation formula from a cross-tested comparability plan to an integrated one. Not sure why it was done, the client mumbled something about divorce proceedings with owner. Anyways...plan year is over and it's time to calculate the contribution amount. However, they want to use the comparability test to do so.....

Since it's after the end of the year are we locked into the integrated formula? or can we file a VCP filing and provide documentation that it was intended to be a cross tested comparability plan. Client would be actually increasing the amount provided to participants under comparability plan.

If we can change it, any ideas on the best way to do so?

Other than to address state community property laws, is there any reason why spousal consent should be required upon exercise of an ISO? What bout an nonqualified SO? I can think of anything.

Other than to address state community property laws, is there any reason why spousal consent should be required upon exercise of an ISO? What bout an nonqualified SO? I can think of anything.