The scenario that I have is as follows:

Participant of a profit sharing plan is in "pay status" when he dies. His beneficiary is his wife. She dies in the year following the death of her husband. She took a minimum distribution from the plan in the year of her death. Her beneficiary is her estate.

Is there a timeframe in which the estate must be paid the full remaining account balance (i.e. 5 years)?

Thank you for any input.

Client has a 401(k) plan which provides for deferrals and employer matching contributions. There are no other plans sponsored. In the plan, they exclude a class of participants not covered by the statutory exclusions under the Code.

Question has arisen as to whether the employees in the excluded class who would otherwise satisfy the eligibility requirements and be in the Plan if they weren't excluded should be considered for the ADP and ACP tests. Clearly these folks are included for purposes of 401(a)(4)/410(b) testing; don't see why they would be kept out of ADP/ACP tests or am I all wet here?

I have a potential client who has a SEP and now wants to switch to a PS/401k plan. Apparantly he has several employees who work low hours, yet were eligible to be in the SEP. He now wants to keep them out of the PS. Assuming we go with a 1000 hour requirement/1 year of service to enter the PS plan, is it acceptable therefore that we could have employees who were in the SEP, but not eligible to be in the PS plan? Seems OK to me.

(also posted as a SEP thread)

Under a dependent care assistance plan, participants are eligible to defer up to $5,000 per year. In addition, the employer makes a nonelective contribution for all participants. Does the nonelective contribution count towards the $5,000 limit? My guess is that if the nonelective contribution causes the amount to exceed the limitation of exclusion contained in Section 129(a)(2)(A), this would result in taxable income to the employee for any amounts contributed in excess of $5,000? However, I can't find any authority for this position.

I have a potential client who has a SEP and now wants to switch to a PS plan. Apparantly he has several employees who work low hours, yet were eligible to be in the SEP. He now wants to keep them out of the PS. Assuming we go with a 1000 hour requirement/1 year of service to enter the PS plan, is it acceptable therefore that we could have employees who were in the SEP, but not eligible to be in the PS plan? Seems OK to me.

Tax exempt organization employs disabled individuals (blind persons) to do various types of work. Organization wants to set up a 401(k). Any special issues to be aware of? The only thing that comes to mind is possibly no full vesting upon a participant's becoming disabled (since all participants are such from day one). Any reasons why it wouldn't be possible to set up a 401(k) in this situation? Thanks for the help.

For years I have been blithly ignoring item 5 on the 5500, Optional Preparer informtion. Apparently I now have an alert client who read the form and wants to know why Line 5 is blank.

Having reread the instructions, I see that it is "to designate the person or entity principally responsible for preparation".

I can read that two ways: (1) who is responsible for getting the form done - that would be the Plan Sponsor, yes?. (2) who filled in the boxes on the form - that would be the TPA.

I don't mind admitting that I filled out the form, but I don't think I want to admit that I am responsible for having the form prepared.

I am I getting too paranoid? I wonder why it is worded that way, rather than "Name of paid preparer" or some such thing.

Also says that AP is not to be treated as surviving spouse. It appears to be a shared interest DRO, but how on earth is the plan administrator going to keep track of the AP's marital status?

Anyone seen this before?

Can the ESOP borrow additional funds to purchase the stock of a retiring employee in order to raise the cash to make a distribution? Or do you need to go through the steps of distributing the stock, having the employer sell the stock to the ESOP through a leveraged transaction? This is a nonpubicly traded employer.

I am looking for the precise rule and authority for the requirement that the total benefit paid to a nonspouse beneficiary under a QJSA is not less than 50% of the total benefit being paid (or is it projected to be paid) to the participant.

Can an employer have an arrangement whereby employees pay for their co-pay (not premiums) on a pre-tax salary reduction basis without a cafeteria plan (health FSA) or HRA or MSA? I heard of someone doing this this and I can't find the authority for it.

When I read the Form 5500 instructions, I don't see an exemption for 457 plans, but something in the back of my mind says that they don't need to file a 5500. Can someone confirm that for me?

2 questions:

1) if 457(b) non-gov't plan has NRA of 65 and does not allow election of different retirement age, and employee presently is older than NRA, is employee unable to take advantage of the catch-up?

2) if plan is retroactively amended to increase deferral limit in accordance with EGTRRA for years prior to current plan year, can contributions be made retroactively (in addition to current year deferral amount) to make up for contributions not made in prior years b/c of lower limit? I suspect no, but worth checking.

Thanks.

Hoping someone can help me out. I've reviewed as much of the regs as I possibly can and I continue to be at a loss on this issue.

Scenario:

We have a fully-insured medical plan via a local insurance carrier.

We also have a contract with a COBRA administrator, who handles all COBRA roles/responsibilities associated with that same fully-insured medical plan.

While we receive no PHI from the fully-insured carrier and thus are out of the loop for most of HIPAA Privacy Requirements, our COBRA administrator is saying that the employer/plan needs to have a signed business associate agreement between us --the employer/covered entity (they are saying) and our COBRA administrator (business associate).

I just don't see where this is required?? If it were, that could mean that we are on the hook for coming into compliance with all HIPAA Privacy Rules by signing the BA agreement as a covered entity.

Husband has insurance for himself and for two children through his employer A, spouse has insurance with her employer B. Shortly after termination from employment due to voluntary resignation, husband and wife have a new baby. Question: Since Husband has had an "event" he is eligible for COBRA and could he add the new child to his insurance via COBRA related benefits from employer A. In addition, can't Spouse could elect to cover new child with her employer (B) since there is a change in family circumstance? To complicate the matter, Husband starts new job with Employer C 10 days after birth of new baby. What are parents options as to coverage? Who should be sent claims for new child just born? What are rules for pre-existing conditions and/or whether new employer must accept claims for new child? Thanks in advance

Proposed CB regs have apparently been withdrawn

http://www.treas.gov/press/releases/report...ement200457.pdf

The definition of alternate payee includes a spouse, a former spouse, or a child or other dependant of the participant.

So an alternate payee can be a current spouse right? When would this happen?

Can the same company sponsor more than one 401(k) plan to benefit certain segments of its employees? For example:

One 401(k) plan excludes all office workers and has a profit sharing contribution.

Another 401(k) plan excludes all but office workers and has a match.

Assuming coverage requirements are met, are there any issues?

We have an IRA customer living abroad. He wants to make his 2003 contribution today because that is when he files his 1040. However, in looking at the regulations it appears that June 15 is an automatic extension granted by the Treasury for filing of his return, not the return's due date, and thus he would have to make IRA contributions by April 15 for it to be treated as made in the prior year. Am I correct in this analysis? Has anyone else had to deal with this issue?

I have a client who had a late salary deferral deposit in September 2003 that was corrected in February 2004. The plan year is the calendar year but the employer's fiscal year is July 1 to June 30. Because the late deposit spanned 2 plan years (2003 and 2004) but only 1 fiscal year (7/1/03-6/30/04), I am a little confused on how to complete the Form 5330.

I was thinking of filing one 5330 with the transaction listed twice in Section VII, once with the date of the late transaction and the tax on the amount involved in 2003 ($209 in lost earnings) and a second time with a date of 1/1/04 with the amount involved in 2004 ($92 in lost earnings). Does that sound reasonable?

Any advice on this would be appreciated. I can't seem to find very much guidance in situations where the fiscal year is different from the plan year.