My company has an upcoming change of control which will require us to distribute the assets accumulated under our deferred compensation plans. What federal and state tax withholding should be applied to this money?

I just recently picked up a defined benefit pension plan that is sponsored by a sole proprietor.

Upon inspection of the records, I have discovered that some of the checks written to fund the plan were not written from the business account, but rather from the sponsor's personal checking account and from the personal checking account of his wife.

If the plan sponsor were a corporation, I know that there would be a problem, but due to the manner in which a sole prop takes the deduction for contributions to a qualified plan, is this a problem? Any citations for me to look at?

Does anyone know of an example where an S corp distribution can be considered compensation for benefit calculation?

A profit sharing plan was restated as a safe-harbor 401k plan 1/1/04. Participant terminated 3/04. She never received or was entitled to any other contributions or made any deferrals after 12/31/03. The restated 401k safe-harbor plan is not subject to a vesting schedule and the old PSP has a 7-year graduated vesting schedule. Is she subject to the vesting schedule or because the plan was restated, there is no vesting schedule that needs to be applied?

We have a situation where a former employee's physician called during the "election period" to see if former employee was covered, provider said yes, however, election period ended, without the former employee electing COBRA coverage, 4 days prior to the service provided by physician. Does anybody know of any case on point? Any guidance will be appreciated.

I currently handle administration and assets for non-electing church pension and 401k plans for a national (small but growing) denomination. I have recently had several inquiries about information distributed by a firm in CO claiming that their plan design allows for all clergy distributions upon retirement to be classified as "housing expense" and therefore will be non-taxable income. This firm specializes in clergy finances, says that the large denomination plans do this and that they are the only place to get such a deal outside of the big churches. I've spoken with their retirement plan contact at the firm and he doesn't know any of the "legal stuff" that allows them to do this.

Can anyone give me direction in regard to case law, regulations, ltr rulings, anything that would allow this? I can find nothing at this point. I'm looking for any resource, including attorney, that would allow me to make design change recommendations if possible, or to find out if this a loophole not worth messing with.

Thanks!

Please help out one confused person. These are the particulars:

I am 48 and single. My 2004 income will be below $95,000, albeit I do not know what "modified AGI" means. I have four retirement accounts. One is an old traditional deductible IRA at Vanguard that currently has a value of approximately $100,000. The second is a non-deductible IRA with Schwab with a current value of approximately $42,000. The third is an old IRA Rollover (from a past employers 401k) with a current value of approximately $295,000. The fourth is a current Keogh PSP with a current value of approximately $225,000. These assets are approximately 45% of my total financial assets.

I have a few questions. Which accounts can I convert to a Roth IRA so not to pay taxes on withdrawl at retirement? Should I convert the accounts I can to a Roth? If so, should I do so now or wait until the end of 2004? With income below $95,000 in 2004, can I open a Roth (in the recent past I did a non-deductible IRA) and at the same time contribute to my Keogh PSP? Thank you very much.

I'm a 26 year old medical school graduate and I begin my residency this summer. My income as a resident will allow me to open a Roth IRA if I choose. My question is what will happen to my Roth IRA if my income makes me ineligible after residency. I plan on maxing out my contributions for the three years of residency but I anticipate that my income when I go out into private practice will make me ineligble. I want to take advantage of being taxed now rather than later as my $3,000/year compounds until retirement.

Will I be able to keep the $9,000 I contributed to my Roth IRA over 3 years? As my income increases I would then consider other retirement options. By the way, my residency program doesn't offer any retirement plans (401K or otherwise).

Thanks.

I have a private C Corp with a 401(k) Plan that was just converted to an agency of the state (Texas). Since the state agency cannot have a 401(k) plan , they want to amend and restate the 401(k) Plan as a gov't 401(a) plan, or create a 401(a) plan and merge the 401(k) into the gov't 401(a) plan. Will either way work?

I have reviewed the message board and have seen this issue in reverse, but not in this direction. Any comments would be appreciated.[/size]

Company A sponsors a p/s plan with no J&S language. Company B sponsors a non-union DB Plan with J&S language. Company C purchases Company B (stock deal) and terminates Company B's DB Plan. Before IRS provides Determination on Termination and prior to distribution of benefits from Company B's DB Plan, Company A purchases Company C. Some participants in the terminated Company B DB Plan want to roll their benefits into Company A's p/s plan (Company A's p/s plan does allow rollovers, even for non-participants such as a new hire). Does J&S language from Company B's DB Plan stay with those assets in Company A's Plan?

The prior actuary used actual compensation for the year for a beginning of the year valuation (ex. 2003 comp for a 1/1/03 valuation). I don't chalk it up to the wrong category, but I also don't like that methodology. Do you think this is:

a) a component of the funding method

b) an assumption

If a), do you see a way to change this with automatic approval?

Query: if welfare plans are funded through a VEBA, how does one treat the VEBA for reporting purposes? Specifically, must the adminstrator provide a summary annual report to participants for the VEBA?

It looks like a VEBA arguably could qualify as a "master trust" under the DOL Regs (2520.103-1(e)), in which case the administrator would not be required to provide a summary annual report for the VEBA (although it would have to provide SAR's for the individual plans funded through the VEBA).

Anyone ever run accross this issue?

State government employer has a 401(a) plan (414(h) pickups, employer, and voluntary after-tax contributions) and a 457(b) plan (deferral only). An employee in both could have the following contributed on their behalf:

1. 401(a) plan - up to $40,000 or 100% of compensation AND

2. 457 plan - up to $13,000 or 100% of compensation.

This would be a full $53,000 because the 457 deferrals would not count against the $40,000 allowed under 415. The only thing "reduced" by the 457 deferrals is the amount of includible compensation under 457(b) and the amount of compensation under 415©(3).

Is this right?

Also, as a state government, no nondiscrimination or coverage rules apply (pre- or post-ERISA) so it would be possible to have different vesting schedules for different classes of employees in the 401(a) plan.

Is this right?

Having a hard time getting the Code sections, etc. to confirm.

Thanks! AEA

The plan uses prior year testing.

For the 2002 plan year, one low paid NHCE deferred a large dollar amount. The 2002 definition of comp for testing is less deferrals. For all other years the definition of compensation will not be reduced for deferrals.

My question is: For what year is compensation for HCEs likewise reduced by deferrals?

1. Reduce HCE 2003 comp for deferrals, since this is the HCE data that will be tested against the 2002 NHCE data?

2. Reduce 2002 HCE comp for deferrals, even though the 2002 HCE data is tested against 2001 NHCE data?

Thanks for your help.

Richard

Quick question - Our standardized document states that if a loan is taken it can be for hardship or financial necessity. Would an auditor find any fault with this if an individual does not adhere to these guidelines? (I also need more information on how broad "Financial necessity" is?)

A builder of residential homes Company A, creates a new LLC for each project under development. Each LLC will have a small number of employees, all of whom are hired, fired, and under the control of Company A. Some of the LLCs are owned 100% by Company A. Others are owned 50% by Company A and 50% with another developer. However, even in the 50% only LLCs, Company A has direct control over the employees. When one project is completed and another started a new LLC is created and the employees of the dissolved LLC will sign a new employment contract with the new LLC, as directed by Company A.

Clearly the 100% owned LLCs are a controlled group, however, Company A would like to cover all of the employees in all the LLCs regardless of the amount of ownership.

Is there a case that the employees in the 50% owned LLCs are common law employees of Company A and would be able to participate in Company A's plan.

Is there any special wording I would need in the plan document under eligible employees?

Thanks for any assistance!

What do people charge to terminate a plan (basic PS plan with 10 participants) ?

and, does anyone ever Not file form 5310... simply file a final 5500?

Client is balking at my fee... maybe he should drop the cost of a root canal from $750 to $200, talk about a racket!

The distribution of a nontransferable annuity contract from a qualified plan is not taxable to the plan participant. Instead, the participant is taxed only as and when s/he receives payments under the annuity contract. For purposes of the qualified plan distributable events, such as those applying to 401(k) plans, is it permissible for a 401(k) plan to distribute an annuity contract to an active participant if the plan changes to a recordkeeper which does not want to deal with annuities?

Provided that the plan allows expenses to be paid from the plan itself, is it reasonable for a plan to pay expenses associated with using a commercial locator service to find missing participants in order to complete a plan termination? The plan in question is a 3-person DB plan where the owner will take the hit, so no participants' benefits are being reduced. We're looking for two people, so the fees won't be exorbitant by any means.

Does the participant have the right to obtain a copy of the audit that was completed by DOL?