I just took over a 401(k) plan whose previous administrator notified them (correctly, by the way) that they needed to make a 3% Top-Heavy contribution for the plan year ended 12/31/02. I just got the accounting records for 2003 and the contribution was never made, and the client just verified that it never got done. I have normally treated this as a Form 5330, failure to meet minimum funding, 10% excise tax. It's been so long since I've had a client not meet their contribution requirement that I want to make sure that I report this correctly.

Thanks for any replies.

When an employee goes from subsidy status to non-subsidy status with an employer due to employer rules (commissioned sales person not meeting sales targets to get subsidy), is this a qualifying event that starts the COBRA process? With notice of the loss of subsidy does the employee have 45 days to opt out of the plan if they are paying the full freight from the time the subsidy is lost?

If one of the plans in a multiple employer plan has a disqualifying event, does it make the whole multiple employer plan disqualified?

Thanks

Could someone tell me if, based on the following information, do any of the companies constitute a controlled group?

Co. A Co. B Co. C Co. D

Jim 19% 0% 27% 25%

Steve 19% 0% 0% 25%

Joe 40% 100% 0% 0%

Tim 13% 0% 0% 25%

Mike 0% 0% 0% 25%

John 3% 0% 73% 0%

Thank you so much!

Auditor sent typcial FAS 132/87 request to us on a client's 412i plan. I'm having a hard time imagining that much (or any) of FAS 132/87 would apply to a 412i plan since benefits are as provided under the contract (except maybe top-heavy if greater) so would there be any required disclosures under FAS 132/87 for a 412(i) plan ? Should they show a pension expense on financial statements equal to the premiums of the 412(i) contracts ? Thanks for any thoughts/opinions.

T’is the season where a taxpayer may be just realizing that he/she is ineligible for that IRA contribution, and that the contribution must either be removed or recharacterized.

The final regulations for calculating the income of these contributions (and Roth conversion that are being recharacterized) are available at http://www.irs.gov/pub/irs-regs/td9056.pdf

An X-spouse of a participant in a 401(k) is about to get her QDRO distribution... question, can she roll it into her Simple IRA where she works???

We have company AB, PC and BD, PC (individuals) who each own 50% of EF, LLC. AB's husband owns 100% of GI.

2 employees split their time between AB and GI. GI has a plan and EF has a plan. Which plan do these 2 employees belong to? GI is an eye doctor and EF is plastic surgery. (AB and BD are also plastic surgery)

In addition, AB has $75,000 in compensation from EF, LLC and $100,000 from AB, PC. For EF, LLC's plan, do AB, PC and BC, PC need to adopt the plan in order to use compensation related to the individual entities?

July 2003, an ER cut a manual check for a participant's commission and the ER held $270.02 for his 401K... but somehow it did not get transmitted and sent in to the plan's trust.

The participant's 401k earnings on his W-2 includes this amount, but it is not included in plan's trust statements as an amount contributed because it was not.

Late deposit of a 401k deferral is a fiduciary breach that may be corrected under the VFCP by having the ER contribute the amount delinquent plus earnings (greater of plan's actual earnings or the interest rate under Code 6621(a)(2) [currently 6%]).

Late deposits are also prohibited transactions which, to correct, require a filing of Form 5330 and payment of a 15% excise tax.

My question is that since the late amount was segregated from the ER's assets, is this still a prohibited transaction requiring the above corrective measures? Is the PT itself the late deposit or the failure to segregate the deferral/assets or both?

Part 1: Participant divorces, ex-spouse receives QDRO but leaves amount in the Plan. Participant and spouse remarry while participant is still active and not eligible for distribution. What, if any, impact on the QDRO?

Part 2: If the Participant in #1 was an executive of Plan/Sponsor and possibly subject to claims of fiduciary liability, should/could the plan trustee freeze the plan assets currently subject to that QDRO?

Toss-up: Is there a duty on the trustee to investigate the "purpose/validity" of the divorce which resulted in the QDRO?

Thanks for any opinions.

An employer determined the employee contribution for health insurance to be 5% of premium. The employer notified employees, and set out the per check dollar amount for each benefit option. Then the employer realized that the insurer had reconsidered the rate, and slightly lowered the premium. Based on the new premium, employees would be paying 5.09%, instead of 5%.

I know this raises alot of issues. Potential breach of fiduciary duty if the employer doesn't somehow "correct" this: potential prohibited transaction, potential loss of trust exemption, section 125 change rules, etc etc etc.

On the other hand, the cost to correct might exceed the dollars involved.

The employer would like to use the actual rate for COBRA purposes, but leave the active employee population alone.

Has anyone confronted this in the past? I don't think I can recommend doing nothing, given that the employee contribution was communicated as a percent of premium. I'm thinking perhaps the easiest approach is a premium holiday if refunding to individual employees is not practical.

Any suggestions are appreciated.

card

At http://www.plansponsor.com/pi_type10/?RECORD_ID=24311 (free registration required) addresses a question that has been asked quite often on this board. In a nutshell not receiving your quarterly statements is no excuse for not making your loan payments

When a participant chooses to repay a deemed loan, do they have to repay the 1099-R amount (which included accrued interest through the cure period) as well as all accrued interest from the end of the cure period to the date of payment?

hello. There are numerous topics pertaining to this problem but I could not find one that exactly fit mine.

In 2002, I made a Roth IRA contribution of $2000, but I was only allowed $1300 (due to unexpected rise in income). So I withdrew the excess ($700) from my roth account on time (only received $515 though from the losses).

My question is: Do I need to fill out any additional forms such as 8606, or should I just attach a note along with my 1040 explaining the situation?

Thank you ahead for your advice.

Does PERS reduce wage base and cause a reduced benefit formula because of contributions to 457b in Govt's plans reduced taxable gross income?

Hi I'm new here. I am wondering if I can still contribute to a ROTH for 2003 tax years. I have no other retirement funds for 2003.

Thanks

Terry

Here's the scenario...Employee was laid off and elected COBRA. A few months later employee is rehired, and he wants to elect coverage under the employer's health plan as an active employee. (Coverage is totally voluntary, and paid completely by the employee.)

I need to know what happens to the COBRA coverage when the employee elects coverage as an employee. We are facing situations where sometimes the preexisting condition limitation period is satisfied, and sometimes there's a remaining limitation period.

One of the conditions under which COBRA coverage will end (according to the federal regs) is the first date after the date of the election upon which the QB is covered under any group health plan THAT IS NOT MAINTAINED BY THE EMPLOYER. This condition appears to prevent termination of COBRA coverage if the group health plan election is made through the same employer that provides COBRA coverage.

The subject group health plan pays stated dollar amounts for health care services and does not contain a COB provision, so we are concerned about double coverage. We do, however, have a provision in the eligibility section of the policy that states that no one may be covered more than once under the policy. If we can't force the employee to drop COBRA coverage, this may be our "out" for not providing both COBRA coverage and coverage as an active employee.

Any insight would be most appreciated! (And sorry to be so long-winded!)

Most are familiar with email acronyms such as LOL, IMO, BTW, FYI, etc.

I got to thinking that BenefitsLink posters could save a lot of typing (and possible carpal tunnel syndrome) if some BenefitsLink acronyms were adopted. For example:

CPP - This topic has already been discussed ad nauseum. Use the forums search capabilities and check prior posts.

PD - What does the plan document say? OR You must follow the plan document? OR Have you read/referred to the plan document? OR It depends on the plan document? etc.

LC - You should obtain competent legal counsel on this matter. OR Sorry, you're going to have to pay for this advice. OR You may already be in a lot of trouble!

These seem to be the three most popular responses. Any other suggestions?

(P.S. Please do not take this post too seriously. It is all in good fun.)

I seem to recall a previous thread that discussed this but I need someone to point me in the right direction. When a company that offers health insurance to its employees changes insurance companies, are there any certificate of creditable coverage obligations by any party? I say no cert of creditable coverage, because coverage is not lost. The new insurance company is requesting for pre-ex purposes. Can't they get this information from the employer without a cert?

I am cross-testing a profit sharing contribution to a plan that has a 401(k) safe harbor match. There are employees (nonexcludible) that terminated during the plan year that did not meet the 1000 hour requirement for an allocation and they did not defer any compensation (ie no match). Do these employees have to receive a gateway contribution?

My understanding is that they did not benefit under the plan and no gateway is required. If the safe-harbor was a nonelective 3% and they were eligible to defer, then the gateway would be required.