Here's the situation: Mr. R gets a mandatory 70.5 distribution. He asked

that we withhold 100% for federal taxes. We did this in December 2003.

In 2004, Mr. R meets with his CPA. He would like to file electronically.

Everything went fine until his return was rejected by the IRS.

Seems you cannot file electronically if you withhold 100% for taxes.

Well, that means that the CPA reworks the return, Mr. R mails the return

and asked for the refund to be deposited ACH into his bank account. No,

that's not an option either. All this seems to be a result of taking the

entire distribution for taxes. We don't understand, Mr. R's CPA doesn't

understand.

It certainly seems to be doing things the hardest way possible. Can anyone

shed any light on this?

For failure to timely submit Employer contributions and/or Employee Deferrals to a 401(k) Plan, how is the 5330 excise tax calculated?- Is the 15% excise tax on the full amount of the late contribution and late deferrals or is it 15% of the interest lost on the money?

The dollar amount under 409(o) has increased to $830,000 and 165,000 for 2004. Have there been any changes to the distribution periods?

Hi,

I was under the belief (apparently wrong) that the filing requirements for 125 plans were suspended in 2001. We just received a letter from a 125 administrator telling us that we need to file a form 5500 for the fring plan and that because assets are held in trust, a Schedule H needs to be completed (and I suppose an audit?) as well.

I am trying to find clear guidance, but coming up short. Can anyone help?

Many thanks.

P.S. We do file a Form 5500 for their fully-insured welfare plan because it has greater than 100 parts. How would (or could) we combine that filing with the medical reimbursement filing if required?

Hi,

I am struggling to comprehend what type of filing is required for a medical reimbursement portion of a 125 plan. I was under the belief that 125 plans no longer had to file Forms 5500, but now I understand that a medical reimbursement portion of the plan (as a welfare benefit feature) still needs to file

The 125 plan admnistrator is saying that since contributions are held in trust, we need to complete Schedule H, which then requires an audit.

Can someone help clarify why we need the filing and the audit?

P.S. The company also has a fully-insured welfare plan that a Form 5500 is filed for because of the >100 participant rule. Is is possible to combine this as part of that filing, but what about the Schedule H??

Help is greatly appreciated.

Thanks!

A client made the last contribution last year for a participant who reached retirement in 2003.

Now, the 1/1/2004 valuation is being performed and this participant is still active.

Some obvious funding choices would be (method is Individual Aggregate)

1 Treat like a retiree and set assets to PVB and no further funding

2 Treat as active and assume 1 more year of funding giving appropriate formula increase and/or actuarial equivalent increase

Another option being proposed is to calculate the lump sum as of the valuation date and subtract the allocated assets and fund the difference in the current year.

The first 2 options I feel comfortable with but feel queasy about the additional option. Any ideas??

Do employers give the 29 month COBRA extension in cases where the employee has not yet been disabled by Social Security during the first 60 days of COBRA?

We have a participant who has requested an extension, saying that it can take years to get a s.s. determination, and that other employers accept a doctor's note only.

I have always thought that we should follow the COBRA regs., but are other employers more lenient?

Thanks.

Participant in 401k plan dies in Sept. 2001. Non-spouse beneficiary finally decides in 2004 to take Lump Sum distribution. Just before distribution is to be made,

beneficiary decides to change to installment payments per provision in 401(a)(9)

amendment signed in 2003. Beneficiary is 52 years old in calendar year following year of death (2002) - single life expectancy is 32.3 years. Now in 2004 - participant will be 54 by 12/31/04 and life expectancy is 30.5 years. In determining the life expectancy to use, is it 32.3 even though nothing will be distributed until 2004 or is it 30.5 because its the life expectancy in the year

distributions start that should be used. The RMD amendment indicates beneficiaries can elect the 5 year rule or the life expectancy rule and the election must be made no later than the earlier of Sept. 30 of the calendar year in which distributions would be required to begin (Age 70 1/2) which for this participant would have been in 2005 or by Sept. 30 of the calendar year which contains the 5th anniversary of the participant's death (w/b 9-30-2006). So it seems okay that beneficiary can make installment election in 2004 - I'm just not sure which life

expectancy number to begin with. Thanks to all for an opinion.

I'm in the middle of "due diligence" and need to find out where I can find out what the underfunded status of the multiemployer plan we are a participating employer in (and what our "withdrawal liability" would be as of a specific date).

How do I get this info? I tried pbgc.gov and freeerisa.com (am I missing something)? I cannot get a hold of the Form 5500.

Can we ask the union for this information?

I have a very basic question. Does a defined benefit plan have to be tested under 401(a)(4) nondiscrimination testing if the same benefit formula is used to determine all plan participants' benefits (e.g., 2% of compensation times 10 years of service)?

I have an opportunity to reduce a PBGC variable premium for a client by $30,000+ by recharacterizing quarterly contributions for the next year as for the prior year. Because I have a receivable not paid until the due date for the prior (premium year), this would cause the quarterly contributions to be considered missed, and because the amounts are high, result in an overdue filing of PBGC Form 200 by five months. Form 200 says the PBGC can assess penalties of up to $1,100 per day.

PBGC Q&A 13 from the EA meeting addresses this exact situation and says they would not assess penalties in this situation as long as Form 200 were filed within 10 days of the Schedule B filing date (due 4/15).

The intro to the Q&A says that the answers to these questions cannot be relied upon by any person for any reason. Hmmm. What value does that answer have?

Opinions? Obviously I'm going to point out the positives and negatives to the client and let them decide.

But what do you think?

anyone notice in 9.0 that the gateway report uses the lowest HCE % to apply the 1/3 test? is there a fix for this?

In order to pay a benefit from a qualified defined benefit plan, is a QDRO required or recommended?

I have a Dissolution of Marriage from 1987 that clearly assigns 1/2 of the benefit to the ex-spouse. The participant died last week (intestate, if that matters), and no DRO was drafted.

I realize that from a taxation standpoint, it is in the participant's best interest to ensure that a DRO is drafted and qualified.

Also, how does one pay a benefit from a plan in the instance where the participant won't produce a copy of the divorce decree or QDRO? Is there some other means by which the Plan Admin/Sponsor might affirm that the benefit is not partially assigned to an ex-spouse?

Any help, advice, experience, guidance, etc. is greatly appreciated.

Does anyone know of any financial institutions that are thinking of taking the automatic rollovers?

How many times can a plan be amended before a restatement should be

done. For instance, a traditional 401(k) plan was restated for GUST

effective 1/1/02. The plan was amended, effective 1-1-03, to a SIMPLE

401(k). Now I need to add two participating employers, change the

name of the plan and amend the plan for quarterly entry. This seems

a lot of change for just a simple amendment. The three companies do

not constitute a controlled group so it wouldn't be a multiple employer

plan. Thanks to everyone who provides a response.

If an employer has a DB Plan effective 1/1/04, can i use accrued to date testing based on service prior to the effective date if i only have current compensation or would i need compensation to match the prior service?? Thanks.

Individual (age 51) is receiving periodic payments from their IRA in order to satisfy the exception from the 10% tax under 72(t). They now want to roll over the remaining amount in their IRA to a 401(k) and received advice that as long as they continued with the series of periodic payments they could - just include as ordinary income and no 10% penalty.

I can't find where this would be prohibited (unlike the prohibition of periodic payments qualifying as an eligible rollover distribution from a qualified retirement plan) but if they did do this, all distributions made in the form of the periodic payments prior to age 59 1/2 would now be subject to the 10% penalty (and ordinary income). Am I correct? Anything else?

is the interest a participant pays back on a loan deductible on tax return?

I have an employer looking to start a new plan, effective 4/1/04. They want to exclude union (cba) employees and also want to have all non-union people employed on 4/1/04 to enter the plan immediately. Is this provision permitted in most prototype documents?

Does the penalty for 'early' disbribution still apply if IRA funds were simply converted to a Roth IRA? 1099-R states Code 2 which means no 10% penalty (in my opinion) but accountant seems to think there is....thanks