Our firm has taken over a client whose document was previously updated for GUST and EGTRRA. For various reasons, we are restating their document to a prototype offered by the new investment provider.

We are confused about how to handle the EGTRRA amendment adoption. Do we use the effective date of the restated document, which will closely coincide with the adoption date?

Thanks for your help!

For 1/1/2004 DB valuations, is anyone using 90% of the weighted average of 30-year Treasuries to develop the Max ?

I thought PFEA of 2004 reset the allowable range to 90 - 100% of the weighted corporate blend ?

On June 16th the IRS issued an information letter to Mr Eugene Delgaudio in which it confirmed that under the Defense of Marriage Act the term spouse for the purpose of administering federal law, including the tax law, is defined as a person of the opposite sex who is a husband or wife. According to the IRS DOMA applies even if the state recognizes the union of two persons of the same sex as a legal marriage.

While the IRS letter answered the question of eligibility to file a joint tax return, the definition of spouse under DOMA will apply to those provisions of the IRC affecting benefits such as QDROs, contributions to a spouse's IRA, spousal rollovers, payments from an FSA and exclusion of health insurance premiums from income taxation. This means that a QDRO cannot be issued for benefits under an ERISA plan if the marriage is between members of the same sex legally married in Mass or Canada. While spousal death benefits will not be required for plans subject to ERISA (e.g., J & S annuity), there is no prohibition against an employer providing such benefits for same sex couples under a qualified plan subject to ERISA provided the applicable nondiscrimination rules are complied with. (Note: the value of the survivor benefits will be considered a taxable gift of the employee or a taxable transfer by the employee under the federal estate tax.)

We have a situation wherein employees of a noncontrolled group employer that did not adopt Plan A were permitted to participate in Plan A. They began participation on 1-1-04. This was recently discovered. To correct this, we decided to distribute the deferrals made by the employees of the ineligible employer. There are some employees of the ineligible employer that rolled over funds into Plan A. The service provider is saying that no only will the distributed deferrals be taxed, but that the rolled-over funds will be taxed as well since it is outside the 60-day window to rollover.

Thoughts? Suggestions?

I looked at old posts... here is what I found.

If a participant is in 2 plans and ends up over deferring for 2003, one plan needs to distribute the excess prior to the current year end, 2004. That plan will issue a 1099R and the participant will be responsible for taxes on the overage in the year of the distribution (2004). Also, the participant's W2s for 2003 will show that he/she over deferred and will end up being taxed for the overage. Double taxed!

What else? anything?

This is probably an old topic, but...

A sole proprietor contributes to a DB plan enough for minimum funding, but more

than their net schedule c income. The excess is not deductible in the year funded,

which happens to be before year end. The amount would be otherwise deductible

to meet minimum 412 funding.

No penalty applies. But when does the contribution become deductible?

Do we continue to carry the non-deductible portion as an offset to plan assets

for purposes of 404 funding rules? (My belief is that we do carry forward the

non-deducted amount.) Does this become a part of non-taxable basis in the contract if the participant closes the account before the deduction is credited?

Can an executive's voluntary termination trigger early distribution in a for-profit nonqualified deferred compensation plan? I may be getting confused with the 83/457 rules, but won't it trigger constructive receipt if the executive can "just" quit and get the money early?? Please help straighten my brain out!!

I've read up on Roth IRAs and am finally beginning to understand how they work. What I'd like to know is where, who, and when is the best time to invest in a Roth. I'm only 18 years old, but my business teachers at school, tell me NOW is the best time. Time is one of the most important factors in a Roth IRA, or so I've been told. I don't have much money to contribute but I would definitely like to get started. I'm excellent with saving money, so I'll probably be depositing as much as I can ($3000 cap). As of right now, I have more than $3000 to invest so should I open two Roth IRAs, is that possible? If so, why don't other people do it to increase their gaining potential since there's a $3000 contribution limit. Any feedback would be greatly appreciated. Thank you

Employer pays the employees' co-pay and does not give them a choice to receive cash instead. Can they do this without a cafeteria plan?

Last year, I had a multiple employer plan with three companies adopting the plan. During 2003, all three companies adopted their own plans with one continuing to be the plan sponsor of the original plan. This year, I believe that I need to file 3 separate 5500s and show that two of the plans are filing for the first time. I also need to show on the Schedule I that the assets are transferring into two of the plans.

Is this correct?

A guy rolled over to an IRA $25,000, of which $12,000 was employer money (match & P/S), and forfeited $5,000.

He may be rehired w/in 5 yrs. Plan has buy-back provision, doc says to restore forfs, he must pay back ER portion.

How does he go about that? Does he write us a check for the $12k? Does he have to remove it from his IRA?

If he writes a check, won't that money be taxed twice, then?

If he removes from IRA, what kind of transaction is it? Transfer? Rollover?

Would he have to amend his taxes? (original distrib was 4 yrs ago).

Any help would be appreciated.

DOL information letter of May 24, 2004, clarifies that an affiliated service group with less than 25% common ownership is not a controlled group and thus a health plan covering the employees of members of the group would be a MEWA. I have such an affiliated service group (professional group where professionals own professional corporation and a management entity (with employees) that provides management services to the P.C.) I have obtained d-letter from IRS on 401(k) plan as to affiliated service group status and follow qualified plan rules for affiliated service group. 2003 is first year for group.

I now will file M-1 (late) for 2003 and ask for waiver of penalties. Anyone else is same boat and will you take similar approach?

What are you doing about state insurance deptartment regulation, if anything? My group operates only in one state and there is no authority to conduct a MEWA in the state. I intend to have an informal meeting with state insurance dept and get their clearance that while I technically have a MEWA, the affiliated service group walks, talks and smells like a controlled group and the state should not regulate or prohbit its self-insured health plan. It is not a health plan that is being marketed to others so I do not believe the entity is "in the business of insurance" under state insurance laws and regulations.

Things Dad Would Never Say

It's OK that you're late. The curfew is only a suggestion.

Well, how 'bout that?... I'm lost! Looks like we'll have to stop and ask for directions.

You know Pumpkin, now that you're thirteen, you'll be ready for unchaperoned car dates. Won't that be fun?

I noticed that all your friends have a certain "up yours" attitude.... I like that.

Here's a credit card and the keys to my new car -- go crazy.

What do you mean you wanna play football? Ballet not good enough for you, son?

Your Mother and I are going away for the weekend ... you might want to consider throwing a party.

Well, I don't know what's wrong with your car. Probably one of those doo-hickey thingies-you know-that makes it run or something. Just have it towed to a mechanic and pay whatever he asks.

No son of mine is going to live under this roof without an earring. Now quit your bellyaching, and let's go to the mall.

Whaddya wanna go and get a job for? I make plenty of money for you to spend.

Here, you hold the remote for a while.

Hey, Hon, can I do the dishes tonight? Please?

OK, girls, just keep talking. The ballgame will be over in a few minutes.

Now that you're 16, hey, feel free to take the car anytime!

But Honey, I don't want to go to the hardware store!

Let's watch the Lifetime Channel tonight!

Does this outfit make me look fat?

Boy, that George Clooney is a fantastic actor!

Oh, let me iron that for you.

An owner (100% ownership) wants the money from his 401(k) account. He is not willing to terminate the plan, but wants his own funds. Therefore, he has "terminated" employment as he is no longer on the payroll. However, he has not liquidated any assets, and still owns the business.

My obstinate boss calls this a distributable event. I challenge that under IRS regulations, an owner cannot claim distribution due to termination if he still has a substantial interest in the company.

Am I wrong? Is there justification for the "termination" if Mr. X does not receive compensation directly from the company?

I'm just looking for an "Amen" or "no you idiot" comment(s) here, preferrably the former. Isn't one of the strategies with DB/DC combo tested plans (aggregated for both 410(b) and 401(a)(4)) not to offer a lump sum under the DB plan (or limit it to 5k only) so to keep MVARs for HCEs as low as possible and eliminate most/all of the 417(e) subsidy ? Has anyone had good experience with this. I guess I always wonder what happens down the road when the plan terminates and then they want the lump sum, would amending the plan to "then" offer lump sums work or does it "unravel" prior year testing that did not take 417(e) into account ? Thanks for any thoughts.

The Plan Admistrator (Employer) is required to provide a Summary Annual Report to participant/beneficiaries no later than 9 months after the plan year end. I've searched, but cannot find what, if any, the penalties are for not providing this report. Can someone point me in the right direction?

We have a situation where employees of an employer that is not in our controlled group made salary deferrals into our plan. There is some common ownership, but enough to kick in the controlled group rules. The other employer has not adopted our plan. This happened because of a common paymaster.

Any advice on how to correct this? Evidently, this has been going on since 2000.

We have a 501© Not for Profit Organization that wants to establish a 401(k)/PS plan. They have about 80 employees. We have been told that they pay all 80 employees are paid by the organization via check check (reported on W2); however, appx 10 employees fall under the Title V category and their compensation is reimbursed by the government. I am not familar with Title V rules. Any problem allowing these employees to participate in the plan if they meet the eligibility requirements?

Any info would be appreciated.

Situation:

Small 401(k) plan had a fire that destroyed office. Due to this there were late employee contributions on 1 or 2 payrolls while they recreated their records.

Should they answer yes or no on Schdule I Part II 4a? Surely they are not the only employer that this has happened to, where contributions were delayed through no fault of theirs. Is there a DOL exception for cases of flood, fire, or other 'act of God' type of situation?

A dear friend of mine passed away over a month ago and I am the beneficiary of his 401k. I don't know the name of the company that holds his 401k. How does this company find me?