Employees receive commission upon the sale of the employer's product. The commission is considered compensation for purposes of our 401(k) plan and deferrals are withheld from these amounts when they are paid. Sometimes employees terminate employment prior to the payment of the commission.

So, my question is do we withhold deferrals from commission checks paid after termination of employment? These individuals are no longer employees when the amounts are paid, so how can we contribute deferrals to the plan for non-employees? Alternatively, the commissions are technically earned while employed. Please help.

I posted this under the ESOP board but didn't get anywhere...

I am looking to update my file on the SEC communication requirements for a plan with Employer stock. I know that the SEC issued Release No. 33-6867/34-28094 (June 11, 1990 Federal Register #23909) back in the early 1990's. Has that been updated? Does anyone know where I can get a link/copy to this? I have general information regarding what we are required to distribute but would like to look at some of the source documentation to make sure we are still meeting requirements.

Thanks in advance for your help.

PAL

Is 5500 required for cafeteria plan offering medical reimbursement, dependent care reimbursement, and group health with fewer than 100 participants? The employer remits the participants contributions to us, we hold in a segregated account with the account title being "Employer A Cafeteria Trust" and then make the reimbursements to the participants from this account. The group health premiums are deposited into the account and then sent back to the employer. Each employer has their own account and our plans are reconciled back to the balances in these accounts.

Also, if it is necessary to file the 5500, is an independent auditors report required?

Can a non-key HCE be prospectively excluded from a top heavy db plan when he has already accrued benefits under the plan? I dont think so.

I think it is a different story if he was excluded from participation right from the effective date (i.e. he never accrued a benefit under the plan). Then as long as the plan passes 401(a)(4) they are OK.

Anyone disagree with this?

Thanks

A small company is thinking about adding a 401k feature to their profit sharing plan. For himself personally (but the option would be available to all), the owner would like to use the k feature as an end of year activity rather than a regular monthly transaction, and inquired about whether or not her could defer $0 out of all regular paychecks, and then defer up to $16,000 (over age 50) out of his bonus, which is more than large enough to handle a maximum 401k contribution.

Does anyone see a problem with this? Is the obvious answer - that being he elects not to defer all year long, then elects to start deferrals just in time for the bonus, and then ceases deferrals again for the next 12 months, a little too impractical to keep in place?

Thanks

I have a plan that was amended, effective 09/01/2001, to change the plan year to 12/31.

I have a short plan year for 09/01/2001 to 12/31/2001. If an employee had 1,000 hours during the period 01/01/2001 - 12/31/2001 they got 1 year of service and if they had 1,000 hours during the period 09/01/2001 - 08/31/2002 they got 1 year of service.

My question is: Do these year of service requirements apply to employees who were hired after the short plan year? For instance, one employee was hired 03/14/2002 and worked enough overtime to have 1,000 hours by 08/31/2002. Does he get that year of service, as well as the year of service for the 01/01/2002 - 12/31/2002 plan year?

We had someone come to us that currently has a SARSEP - they are looking to transfer reps - however they think they may have over contributed for the owners in 2003.

1. I know you take the average NHCE deferral, do you take the AVERAGE highly comp deferral - or individually. For example...

John Doe - Owner - Contributed 5.5%

Jane Doe - Owner - Contributed 6.5%

The NHCE average deferral was 5% X 125% = 6.25%.

In the above situation would John Doe be fine and Jane Doe have to be corrected - or could you take the average to make 6% and they both pass?

2. Let's say they fail either way - what are the correction methods and/or penalties?

Before we do anything with this, we want to make sure that all is correct with the world! Thanks for the insight!

My client's plan paid the necessary contributions to the staff, but neglected to make the contributions for an HCE (the client) based on old and outdated information provided to them by their CPA (along with the typical assumption that the market would continually go up). The account is owed well over $100k (after earnings). Error occurred 7 years ago.

Since the error occured a few years back, is my only method of correction through the VCP program? Any other ideas? Already tried to self-correct and the brokerage firm where the IRA is held won't accept the contributions as prior year contributions. Can't make it current year contributions as there is no current year income to support it...would raise a flag with the IRS if there is a current year contribution reported by the IRA institution but no current year deduction.

Any ideas?

Can an employee submit invoices for their long term health insurance that they pay for own their own?

Does a frozen plan with sufficient assets to terminate satisfy 401(a)(26)? Assume that at least 40% of the company's employees are participants in the plan.

I've heard an argument that if the plan has sufficient assets to terminate, the participants are not considered "benefiting" under this section and fails.

Any thoughts?

The spouse of a 100% owner currently works less than 1000 hours (1000 hrs required for allocation). She had been full time in previous years so she is an active participant. Can she be included in non-discrim testing?? It seems like this is an easy way to help testing if the spouse works a year or two to enter plan then only work minimum hours in the future to be included in test. Thanks.

We have a union contract that allows certain non-benefits eligible employees to buy-in to our group health plan at full cost. One of our "buy-ins" has sent us correspondence that he is now "covered by Medicare" and will discontinue his coverage. I do not know if "covered by Medicare" means both parts A and B.

The question is: are we responsible for sending a COBRA letter due to his Medicare entitlement? My initial thought is no, since he could have continued the coverage (with his Medicare becoming secondary) as long as he remained an eligible employee. If he then became an ineligible employee at that time he could be offered COBRA due to termination or reduction in hours, correct?

Thank you for feedback.

Can anyone provide me with a sample or a link to a sample indemnification section of an administrative services only agreement?

I just want some parameters regarding the responsibilites of the plan sponsor and those of the Insurance Company providing the services.

Thanks.

We allow employees to cover their domestic partner and domestic partner's dependents under our health and dental plans. IRS requires that we tax the employee for the portion of the premiums that cover the domestic partner and their dependents. Does the IRS set any other limitations on domestic partner status?

For example, an employee just submitted a claim for reimbursement under our flex plan. The claim is for an expense incurred by the domestic partner who is covered on our health and dental plans. Are we permitted to reimburse for this expense?

A client of our received on of these from Turner Investment Partners. The client received a "dividend" check from them in late 2003 for $47. The check was deposited into the profit sharing portion of this plan (has a 401(k) feature as well), as that has the Turner fund that this goes to. I am not sure what to do with this 1099. The "recipient's identification number" is not the trust ein that I have on record. Any ideas? Thanks for your help!

I have someone who wants to sell their real estate out of their IRA to his brother. I don't see anything under IRC 4975 that says that this is a PT. Am I correct?

In this case, the owner-employee took out a loan (less than two years ago) in violation of a loan policy provision that the term of the loan cannot exceed the lesser of 30 years or the number of years prior to Normal Retirement Age. Age discrimination issues aside, this is clearly an operational violation. Because this involves an owner (presumably a plan fiduciary), should the VFC program be used and a no action letter sought? On the other hand, can we simply use SCP and self-correct?

According to an NCPERS article, the new Social Security reform bill requires SS opt-out employers to provide a notice to new employees.

NCPERS Article: Social Security Bill Signed Into Law

Quotes from the linked article:

"The Social Security reform bill, HR 743 [Public Law No. 108-203], that impacts public sector employees was signed into law by President Bush on March 2, 2004."

"...Requires employers not covered by Social Security to provide written notice about the GPO [Government Pension Offset provision--KCW] and Windfall Elimination Provision (WEP) to new employees and have these employees sign a statement stating they understand that by working under non-covered employment they could be subject to the Social Security pension offsets.  This provision becomes effective January 1, 2005."

I'll bet more than a few new employees will take a "now you tell me!" attitude once you say "welcome aboard. Now that you're on the team, I thought I'd let you know your Social Security benefits are going to take a hit."

If any of you guys come up with a good notice, keep us in mind and post it here.

Let's hope the Feds publish a safe harbor notice in the next few months.

What is the procedure for filing with VCP? I have a prototype adopter who signed the adoption agreement for GUSt restatement on Feb 27, 2004. He did sign the "intent" to adopt a prototype plan last year.

An esop is being terminated. It was leveraged, but loan is paid off in full.

Corp. bylaws do not allow distribution in stock, thus all will get cash payout (to roll or 20% w/holding).

Document seems to be saying that corp can payout in 5 yr. installments. Does this mean we revalue the esop each year or use the value at time of termination?

Thanks