I have a client who adopted a 401(k) plan in 2003 administered by another TPA. They have a separate profit sharing plan which my company does the third party administration.

The 401(k) plan has immediate eligibility - the profit sharing plan has age 21, 1 year of service eligibility.

When we prepared the combined top-heavy testing for both plans - they are top-heavy for the 2004 plan year.

The owner of the company has already deferred the maximum in 2004. When I explained that the company would be required to make a 3% top-heavy contribution for the 2004 plan year to everyone who is eligible to participate in the 401(k) plan and the profit sharing plan, they said that their 401(k) TPA told them that the owner would be able to take back his deferrals that he has already deposited into the plan in 2004.

Isn't this a prohibited transaction? Does anyone have anything in writing that states you cannot do this?

Thank you for any input.

I'm having a hard time laying my hands on the tax brackets for Unrelated Business Income Tax. I thought it used the Trust Tax rates which I thought was about $7500 for the highest tax bracket. I'm not sure if anything has changed on this in recent years and was wondering if anyone knew the highest tax rate is for UBIT and at what threshold (net income) it kicks in at ? Thx for any help.

An employer is leasing some employees who are covered by the leasing organization's plan. The employer's plan has a slightly better contribution formula than the leasing organization's plan, so the employer will give the leased employees the difference.

Does the employer also have to be concerned about meeting a benefits, rights and features test for the leased employees? In other words, does he have to compare his plan to the leasing organization's plan to make sure there's no discrimination for provisions other than the contribution formula? For example, distribution options?

Employer wants to set up a Premium Payment Plan so that is sole employee can pay the $300 monthly premium pre-tax--the caveat is that the premium is for the employee's SPOUSE's health insurance. Spouse employer has no cafe plan. Can this be done and if so what are the risks? THANKS!

What exactly does the phrase "...form of a joint and survivor annuity with respect to the alternate payee and his or her subsequent spouse..." mean under ERISA 206(d)(3)(E)(i)(III)? Does this restriction apply to ANY J&S that is available under the plan or simply the QJSA? I concede, that the statute is clear on its face and precludes any form of J&S for an alternate payee and his/her subsequent spouse. However, the FAQs issued by the DOL on QDROs and Drafting QDROS both specifically say that a QUALIFIED JSA is prohibited. Which interpretation is correct?

Also, on a related note, if a jsa is an optional form of benefit, could the alternate payee name his/her sister, child, etc. as the joint annuitant?

Thanks.

An employee (NHCE) wants to sign an irrevocable waiver out of a safe harbor 401(k) plan before he is eligible for the plan. This plan uses a SHNEC. The plan document does allow for this. How would this affect the safe harbor rules? I cannot find any guidance in Notice 98-52 or Notice 2000-3.

Can someone please point me to where I can look up the rules for spousal consent for distributions from a DC plan? I know it should be for amounts over $5000 but is it only on Money Purchase Plans or only for plans with annuities or is it for all distributions over $5000? Thanks for any help.

Pursuant to IRC 401(a)(11)©, ESOPs are exempt from the QJSA & QPSA requirements if they satisfy the three requirements of 401(a)(11)(B)(iii). One of those requirements is that a participant's vested benefits are payable in full on the death of the participant.

Does that mean that when a participant dies, whether before or after commencement of distributions, that the beneficiary must receive the entire vested amount in one lump sum?

For instance, we have a participant that terminated service with the employer. Before the terminated participant started receiving benefits he died. According to 401(a)(11)(B)(iii) [to maintain QJSA exempt status] do we have to distribute 100% of the participant's vested benefits to the beneficiary in a lump sum, or can the beneficiary receive the benefit over the installment schedule that the participant would have received the benefits? I guess the question is what the term "in full" means?

Any assistance with this would be appreciated! Thanks.

Has anyone approved a claim for sunscreen? In South Florida, everyone is advised to wear sunscreen every day. We have a claim from an attorney (actually a litigator) who bought sunscreen at his dermatologist. We were not able to develop a history of skin cancer. We have denied the claim, but want some other input in case he appeals. Thanks for your help.

Can anyone lead me to a good site that has material on Non-Q plans?

Thanks!

I have a plan that allows for installment payments or lump sum. Participant has chosen installment option (yuk..from administrative end!).

The participant has asked if they can reduce installments if they find that the amount they are getting is too much.

The corbel election form for distributions says that installmetn period can be accelerated, but says nothing about reduced? Therefore, I believe that it can not be reduced, probably to avoid the possibility of payouts beyond the life expectancy. However, do you know if there is anything in the regs that would allow reduction, as long as it is not extended beyond life expectancy?

What i'm getting at is that i'm not sure if this is true for all documents or if we could amend our document???

Thanks.

Dee

I have a question, I am currently a Plan Administrator and have a STRONG interest in taking the CFA exam(s). Does anyone know what areas (Compliance, Client Services, etc.) within the Retirement Services industry that a CFA charter would compliment well (if at all)? Thanks in adavnce to anybody that can answer this question.

John

Real Estate Sole Proprietor (Schedule C) wants to setup a SEP.

He owns 100% of another company with 5 employees, which he does not work for or receive compensation. The company is a C-Corp that 2 years ago terminated a 401k plan.

What issues do you see for the Sole prop? I thought a SEP did not require discrimination testing which would allow us to ignore the employees of the other company.

Thank you

Is there any duty under HIPAA to disclose to group health plan participants the identity of business associates, for example a third party administrator maintaining a Web-based claims information center? More specifically, does the covered entity (plan sponsor) have to disclose the fact that it does not maintain the claims info center, that is otherwise designed and "branded" to appear that it is maintained by the plan sponsor alone.

I'm amending a client's sch C, but now there's an excess SEP contribution. What is the proper way to correct this and will the excess be subject to a penalty? Thanks for the help.

If a pension plan provides for the payment of medical expenses (not its primary purpose and the payments are subject to certain restrictions) is it subject to the Privacy Rules?

I'm looking for feedback from those of you that have negotiated with the IRS regarding penalties/excise taxes/etc. that arose from an audit of DB plans. The IRS is giving the client an initial sanction of $45,000 and I'm trying to get it to $0 (of course). If you have any experience in dealing the IRS attitiude, especially in So Calif., I would like to hear what you learned.

Here's the barebones of what's going on with my client. The DB Plan FSA omitted quarterly contributions and interest thereon on the Sch B (for 02). The local IRS actuary has done his calcs on what it should have been, what the excise tax should be, and wants to collect $45K from the client.

The Plan has since been terminated and all participants were distributed their benefits, 100% vested of course, and no waivers of any kind. The termination was audited and passed with no change. My opinion is that this is a "no harm no foul" situation. Any monies desired by the IRS are rationalized by technicalities (isn't all of our work?) and are unreasonable.

Discussion anyone?

Our plan has a qualified preretirement spousal annuity default and option. Many young widows and widowers prefer a lump-sum payment.

When their minor children are the contingent beneficiaries, couldn't the surviving spouse defeat the QPSA requirement by disclaiming his or her own benefit and accepting a lump-sum payment as the guardian of the minor children?

Couldn't find a better forum for my question. Since you are dealing with spousal rights and benefits here, I thought someone might have run across this before.

Does anyone have participants residing in Puerto Rico in their plan? If so, are their distributions handled differently (taxes, etc.)?

I have a 401(k) with a limited partnership as an investment. The LP was sold by the broker who works for one of the big investment houses. I wasn't sure if the LP was considered Unrelated Business Income reportable on 990-T?