A partnership has two partners and five employees. Partner #1 wants the partnership to establish a retirement plan, partner #2 wants no retirement plan.

Partner #1 has been told that he and partner #2 should dissolve the partnership and each of them should establish their own sole-proprietorship. The two sole-proprietorships would continue to operate the business as usual at the same location, same five employees, they would establish a joint checking account to collect fee income and pay operating expense, all income and expenses would be split 50/50, each would file an annual Form 1040 Schedule C. However, since the two sole-proprietorships would share the five employees and each would pay one-half of the employees' annual salary.... then each employee would be receive two W-2s each year (one from each of the two sole-proprietorships). This would then

allow the former Partner #1 to establish a plan for himself and the employees, but the eligible compensation for those employees would only be the salary that his sole-proprietorship pays them. Will this work? Does IRS and ERISA allow such a "shared employee" arrangement ?

It would make things a lot easier if the partnership remained in place and Partner #2 simply elected out of any plan. Does IRS and ERISA allow a plan document to state that someone who meets the eligibilty requirements of a plan ... can elect-out of participation ?

I guess it depends on the type of plan. This plan would be a PSP(discrtionary contributions) with a 401(k) feature.

Does anyone know how to obtain text of 1996 letter from DOL to Evelyn Petschek of IRS that, to my understanding, states that participation in EPCRS program by an employer offering a 403(b) program does not necessarily subject the program to ERISA? BNA, Lexis, and checkpoint do not have it. Is anyone aware of a website or other resource that might have it? Thanks.

Has anyone seen any information regarding the tracking of the basis in an IRA when after tax dollars are rolled in from a Qualified Plan. The 8606 and instructions don't seem to address the issue.

Thanks for any input.

A participant had a stormy relationship with

his wife and were constantly separating. He died

and she has come forward to claim a QPSA. However,

some coworkers believe they may have been divorced

prior to his death. She says they were not.

How does an admin effectively research this issue?

There is no record of a divorce on the county records,

but they could have done it elsewhere.

We have a corporate entity that is an instrumentality of a state government. The entity plans to "spin off" and become a stand alone 501©(3) entity; no longer an instrumentality of the state. What happens to the vested interests in the 415(m) qualified governmental excess benefit arrangement under its 401(a) plan? What happens to the excess benefit arrangement? We plan to put a 457(b) in place,but we can't rollover from the 415(m) arrangement into the 457(b) plan, can we?

A company has changed from an S-Corporation to a Partnership during 2003. In the first part of the plan year (1/1 to 12/31) the shareholders received W-2 compensation. In the second half of the plan year the shareholders will be reporting K-1 income. The K-1 earned income is going to be reported at a loss exceeding the W-2 compensation reported in the beginning of the year. IN order to determine the compensation for plan purposes, is the loss combined with the W-2 compensation and the sharholders have zero compensation for 2003 or do the shareholders have compensation in the amount reported on their W-2s?

Any help would be appreciated.

Jane F

Hello everyone,

I have searched the boards but could not find an exact answer so I am posting.

My mom has a 403(b) plan from her former employer of 20 years, a non-profit hospital. She quit that job either at the end of 1999 or beginning of 2000, and has been working for a private lab since August 2000. I believe she has a 401(k) with the new employer.

Can she rollover her 403(b) plan into a new 403(b) plan with a different provider, or to an IRA? Is there a penalty associated? Has she waited too long? By the way she will be 50 years old in July and she lives in Tennessee. My dad is a schoolteacher/coach who has taught for 31 years and is retiring in May - he is 53.

From what I tried to decipher of the IRC Sec. 403 (I'm graduating in May with my Bachelor's in Finance so this is fairly new to me), she should be able to rollover at any age to another 403(b) without penalty of any kind. But the real question is could she rollover into a 401(k) or an IRA and what would the associated penalties be (and would she want to?).

Most importantly, she did have a qualifying triggerable event (severance from employment), but that was in 1999/2000 and this is 2004 so does that matter?

Thank you in advance for your assistance, it is greatly appreciated.

Yours,

Nicholas Young

ps I can't add, the triggerable event would have been 4 years ago even though my title says 3 yrs.

I took out a 401k Profit Sharing Plan loan 5 years ago with my company for $10,000. I terminated my employment soon after and I was unable to payback the money for the loan. I couldn't get the rest of my money from the plan because their contract states that they can hold the money for 5 years after you terminate employment. All my statements up to this point stated my loan balance as $9,969.63. So what they did this year was charge me 5 years interest at 9.5 on the loan money and sent me a 1099-r that has a gross distribution of $13,921 on it for the loan. And another 1099-r that has the balance of the account $68,971.00 that I rolled into another 401k. This doesn't seem right. Why should I pay taxes on interest money I didn't receive. Can anyone explain this to me please.

Client is a partnership with two partners, no employees. It has always been our understanding that the partner's elective deferrals into their SIMPLE IRA can be made up to their tax filing deadline.

I have researched 29 CFR 2510.3-102. It says that deferrals must be submitted no later than the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash.

However, since we have not yet determined what the partner's income is, what becomes the deadline for depositing the deferrals?

I have also read some prior posts, but am still having difficulty in determining when the deferrals must be made.

I was told that the "preamble to the DOL Plan Asset Regs" addresses this issue. I am having difficulty locating the preamble. Can someone please point me in the right direction. Thank you very much.

I have a plan that has always used a non-safe harbor definition of compensation. When we converted them to our company and restated their document we defined their compensation as a safe harbor definition of compensation even though this was not what they intended.

Three year have passed and it has jus now been discovered that they have been operating outside of the way we drafted their document. What is the appropriate fix here? If we go back and do a compensation ratio test for the past three years and they pass, is it necessary to file for a retroactive amendment though VCP or can an amendment be done going forward? And if an amendment can be done going forward is it necessary for the employer to do a QNEC for deferral and match that were not made on the excluded compensation pieces for the past three years?

When an employer changes from an LLC to an S corporation, what needs to be done with the plan document? There is only one employee who is the sole owner of both the LLC and S Corp.

The plan sponsor is in bankruptcy. Although the GUST restatements were sent to the sponsor in plenty of time to meet the GUST deadlines, his bankruptcy attorney insisted that the bankruptcy court needed to authorize the sponsor to adopt the restatement. Finally on February 16 the court issued this approval.

It is my understanding that the only way to keep this plan in compliance is through a VCP filing since the January 31 deadline was missed. My questions are:

1. Is the VCP filing permissible if the plan is already under a DOL audit due to an unrelated matter?

2. The restatement is on a non-standardized prototype document...does a determination letter application need to be submitted along with the VCP filing?

3. Since the company is in bankruptcy, can the VCP filing and preparation fees be charged to the trust?

Thanks for your insight.

I am working with a construction company that is considering becoming 100% owned by an ESOP. The principal owners of the company have routinely guaranteed or individually committed themselves on performance bonds for the company. If we go the ESOP route, and these principal owners are no longer shareholders, there is a lot less incentive for them to do this. I would think that similar issues exist with other types of companies, i.e., a shareholder who, prior to the establishment of the ESOP, personally guaranteed the company's debt. I suppose that we could adjust the compensation of these individuals to take into account the risk that they are taking on behalf of the company, but are there other approaches to the problem?

I have a 1500-life plan that excludes "productivity pay" from the definition of eligible earnings. By and large, it represents an annual bonus paid to mid-level and production employees, not one of whom is an HCE.

I ran a "smell test", and found that for the group that gets paid a "productivity bonus", about 2% of total earnings are not eligible. So, about 98% of possible earnings are counted toward computation of the pension benefit. On the other hand, for my HCE group, about 99.5% of total earnings (ignoring the $205k limit) are included in the pension calculation.

On the face of it, I don't think this is discriminatory, but cannot find any hard and fast rule in the Code or regs. that specifies what the threshold is for a discriminatory definition of pay.

Any thoughts, short of submitting a demonstration to the IRS?

A participant who is over 70-1/2 and is still employed has delayed RMDs from the plan until termination of employment. However he has an IRA that he's been getting RMDs from.

He'd like to roll that IRA into the DC Plan. Would he then be able to cease and delay the RMDs from the amount rolled in? If the answer is yes, what reg can I print to support the finding?

Thanks

Is anyone familiar with the following scenario:

U.S. employer sponsors a 401(k)/profit sharing plan. Presently, none of the U.S. employer's wholly-owned foreign subsidiaries have adopted the plan. May the plan be amended to provide that only employees of adopting employers who are citizens or permanent residents of the U.S. will be covered by the 401(k)/profit sharing plan? In other words, could the plan exclude nonresident alien employees from coverage?

Thank you for any comments.

D.L.

We have 2 office location, in VA and PA

I am familiar with the federal FMLA requirements

Can you refer me to a good source of state family leave & pregancy disability leave laws

Live-in boyfriend of an employee in our PA location will be undergoign substance abuse treatment and will undergo tretament in a facility for the next 30-60 days

Employee was wondering if she can take FMLA leave to care for the boyfriend's child who is in need of daycare while he is in the facility ; she wants to leave 1/2 hour early each day to be able to pick the child up from a daycarecenter

Woudl this answer be differnet if boyfriend was a common-law spouse?

thanks

DB practitioners know that, in addition to amortization bases, the reconciliation account is eliminated when the ERISA FFL is reached ; but how do we know that ?

officially that is ?? Anybody have a cite ??

I have a cross tested plan which is also top heavy. This plan allowed a special entry date of 11/01/03 for deferrals and entry into the profit sharing plan.

It is my understanding the final regs (1.401)(a)(4)-9b(b)(1)(vi)(b) made an important clarification of what comp could be used for the one-third and the 5% test. That being at least 5% of section 415 comp, measured over a period of time permitted under the definition of plan year comp, thus allowing the 5% test to be satisfied by limiting comp to the portion of the plan year that the participant was eligible.

If this plan is top heavy and participants are getting a top heavy allocation of 3% on full year comp, can you test the allocation on mid year comp for the 401(a) general test as well?