We have an S-Corp (2 employees - both owners) - we are making a profit sharing contribution for 2003...when is it due?

Must the contribution be submitted by 3/15 when the S-Corp tax return is due?

Or can the contribution be submitted by 4/15 when the participants (two owners) individual tax return is due?

Thanks!

One of the new guys at work is eligible to make catch up contributions. If he maxes out his normal contributions at the 20% that the company allows, is he eligible to make the catch up contributions as well? He will probably be a HCE (barely) this year if that matters.

The HR rep initially told him that because he was "maxed out" on the %, he was not eligible for catch up. She then changed her mind and said she would look into it.

Thanks,

Ok, a multiemployer plan is generally defined as a plan to which more than one employer contributes and which is maintained pursuant to one or more collective bargaining agreements between one or more unions and employers. A multiple employer plan is all other plans to which more than one employer contributes.

A non-Taft Hartley plan covers the employees of more than one unrelated employers. Some of the employees of these employers happen to be "unit" employees. Is this automatically a multiemployer arrangement b/c the plan provides benefits in certain cases to employees pursuant to a CBA, or can it fall in the multiple employer category b/c the plan is not jointly trusteed by labor and management?

Thanks.

We're in the process of correcting a failed ADP test. Our client's 401(k) plan has two young HCEs plus one older HCE, age 54. Our system has calculated corrective distributions to the two young HCEs only. The older HCE deferred $1,511. Can we treat any of, or possibly the entire $1,511 as a catch-up contribution? Thanx.

Our plan allows for one outstanding loan balance at a time. The SPD states "The maximum loan amount is the lessor of 50% of the the vested account balance or $50,000 minus the highest outstanding loan balance in the prior 12 calendar months".

We are questioning if this is inline with how the regs word the calculation. Is there mention of "highest outstanding loans" in the prior 12 calendar months.

For example, if a participant took out a loan for $10,000, paid it off, and then took out another loan for $5,000, all within the past 12 months. Would the current available balance be $50,000-$10,000-$5,000 = $35,000?

Plan calls for current year testing. Switching to prior year testing would reduce refunds required. Proposed Regs say that plan document must specify method to be used. Therefore, plan amendment is required to switch method of testing (and use of current year testing for last 5 years to switch to prior year testing). Is anyone aware of any authority to adopt a plan amendment before March 15 (deadline for correction without paying excise tax) to switch to prior year testing? Normal rule for plan amendments is that they have to be adopted prior to year end (and perhaps earlier to avoid anti-cut back issue, which we don't have here).

this is bizarre but i have two entities adopting a prototype. one company just never participated in the plan, instead continuing to participate in its own plan. i know that both plans must be tested together regardless but assuming they each pass, i am thinking i have another issue. that is that one company adopted the plan and did not participate in it. anyone know if i have a problem?

Is there any required or approved format for an employer to make the request for estimated withdrawal liability? Any reason a short letter to the plan sponsor wouldn't suffice?

Start laughing..... now.

Client expects serious response to this. It must be Friday.

What is the general rule with respect to the effect on retirement plans in an acquisition setting? My understanding is that, with a stock purchase, the retirement plan of the acquired company is included in the deal (unless the purchase documents indicate otherwise). On the other hand, in an asset purchase, the purchasing company would not be responsible for the acquired company's retirement plan unless the retirement plan was among the assets purchased. Correct?

Hi, Everyone,

I recently purchased a house from a divorcing couple. Their real estate agent gave me their respective forwarding addresses, but let me know that the ex-wife does not want the ex-husband to know where she is living now. I was requested not to share her address with anyone. I don't know the details in this case, but I imagine that, in cases where domestic abuse was involved, ex-spouses may have good reason to want to protect the confidentiality of their new address.

That got me thinking about the QDRO Process that many of my clients use.

As counsel to the Plan Administrator, I usually draft letters announcing the determination result of the QDRO review process. The letter is then sent out by the Plan Administrator on the Plan Administrator's letterhead.

The home address of both the Participant and the Alternate Payee is standardly included in the determination letter.

Have any of you ever experienced any problems or complaints as a result of including both addresses in a determination letter? In other words, are any of you aware of an instance in which an ex-spouse may have obtained their former spouse's address FROM the determinaiton letter, and thereafter caused problems for the other spouse? Would a plan administrator face any liability in such a situation?

Of couse, the law requires the QDRO itself to contain both addresses. So if either part reads the QDRO, the addresses are shared.

Has anyone ever tried, putting a statement in the written QDRO procedure stating that both addresses will be included in the determination letter UNLESS either the Participant OR Alternate payee opts to receive separate mailings?

I appreciate any feedback on this topic!

Is disability wavier part of the normal cost if it is within the incidental benefit rules as part of the life insurance contract and therefore deductible?

My opinion is yes, it is deductible if it is within the limits, however I'm also getting conflicting arguments stating that it is not part of the normal cost and not deductible.

Your thoughts and insight would be appreciated.

A cash balance plan uses fixed factors (set forth in the plan on a chart and determined based on the age of the participant) to convert a participant's account balance to a life annuity. The account balance is divided by the fixed factor, the result of which is the participant's annual benefit. Has this method of calculating annuities been an issue in any of the cash balance lawsuits? Does anyone see any problems with this method of determining annuities?

Has anyone heard of an insurance company not providing the commission and agent information for usage on the Schedule A? If so, do you know there reasoning for not providing this information since it is a requirement of the filing?

What are the tax/penalty ramifications if someone takes funds out of an IRA where a 72t distribution is currently in place? Custodian said they wouldn't stop client from doing so but I wanted to make client aware of tax implications.

Am working with a client who was divorced last year. In October she was issued a distribution for her Profit Sharing balance which was in plan with ex-husband (she worker for him). The balance was over $5,000 - client said she never completed distribution paperwork. Husband simply wanted her "out of the plan". She just got a copy of the 1099-R (after numerous phone calls). No 20% withholding was done, distribution code was 1.

My understanding is that a plan cannot force out a participant if their balance is over $5,000. How should my client proceed in getting this rectified? She would like to roll over the full distribution amount to avoid taxation & penalty. As a side note, shortly after she received the check & deposited it a lien was put on her bank account from a credit card company that she was joint on with husband. Ultimately she had to pay them $6,000 to clear up lien. She does have enough funds available now to do a rollover. Any guidance would be appreciated.

This lady was told her by doctor to take a calcium and soy supplement to lower her cholesterol- she found this in what is called "Ultrameal" (in a shake form). We did a little research and it looks like it can also be used as a meal replacement (i.e. help with weight loss). We do have a prescription from her doctor but are very hesitant to reimburse this expense. She is going to provide a copy of the label to verify the ingredients but we're still not sure...

What's your thoughts?

Thanks,

Rachel

I have a small client, 2 owners and 2 employee's of which they maximize their contributions to $41k?

They are currently under a P/S only plan with their current TPA. The owners think that the 2 employee's do not appreciate the 17% contribution they receive a P/S.

Could a Safe Harbor Enhanced plan ($1:$1 up to 6%) be implemented so that the owners can take $25.3k ($13k Deferral $12.3k S/H Match on $205k comp) from the 401k side before the other $15.7k is obtained from the P/S side. The catch is that they think the employee's will not defer so the employer match contribution would be 0%. The owners percentage on the P/S side would be 7.8% and the 2 employees under an integrated formula would be slightly less than 7.8%. Thus the comparison would be the 17% they currently receive vs. <7.8% on this design for 2004.

The ages of the group do not favor a New Comp design.

My question is what if the 2 NHCE's do not participate at all? I would have the plan sponsor obtain a signature from each of them, during the S/H election period so it clearly identifies the match they are giving up. Is there any else I should do or is this scenario and BAD setup?

Thanks....

Are there any issues with a company allowing contributions to a 401k plan from an employees base + OT earnings? Our company will only allow us to take our 401k contributions from our base pay.

I will have some more follow up questions, but this one seems like a good start.

Thanks in advance...

I am assisting another employee in researching a prohibited transaction exemption. He believes the exemption was in the form of a private letter ruling as opposed to an individual PTE, but he is not sure. Here is the information on the case:

A participant received a loan from a qualified plan and subsequently gave the money to the employer. The issue at hand was if there was an indirect lending of money between the plan and a disqualified person. The IRS or DOL determined that it was not a prohibited transaction since the participant could do whatever he wants with the money.

Supposedly, this guidance was issued in the last two to three years. If you recall any specific information in regards to this guidance, please reply.

Your help is greatly appreciated. Thanks in advance.

Brian