Company X files for VCP listing, among other issues, the failure to impose plan-imposed and regulatory suspensions following in-service withdrawals. The proposed correction, refunding deferrals and forfeiting match, is accepted by the IRS and a compliance statemetn is issued. During the period given to implement the correction, it is discovered that due to depletion of account balances by loans and subsequent in-service withdrawals, the correction cannot be implemented for many, if not most, of the partcipants. I know it is possible to modify a correction statement if you go back to the IRS within 30 days and pay a $3,000 compliance fee. Is there any other alternative short of a new VCP filing?

A client had a plan year of 5/1 - 4/30, short plan year of 5/1 -12/31 & a calendar year plan going forward.

For the discrimination test, do we look at total compensation from 5/1 - 12/31 or 1/1 - 12/31? Where can I find this information?

An employer has decided to terminate their VEBA. If any assets remain after the outstanding claims are paid, can that money revert to the employer? If so, would the employer be subject to an excise tax?

An Indian tribe has a prototype 401(k) (non-standard) and would like to allow an entity that has a close affiliation with the tribe, but which has a different EIN, become a participating employer under the adoption agreement. If they were affiliated corporations, the controlled group rules would apply and the affiliate could sign on. What kind of analysis would apply to a tribe for these purposes?

Can an individual make a non-deductable Roth IRA contribution to someone other than a spouse? If so is it limited to that 1 individual or can it be made to multiple family members?

Probably a simple question, but I'm confused about the 2nd and 3rd design based safe harbors (paraphrasing greatly):

#2 - safe harbor if using fractional method and meets "1/3rd" requirement

#3 - same as 2, but plan must also require 25 years of service

I understand the 25 year rule is a safe harbor and meets 1/3rd requirement since (assume by benefit is 50% of pay):

50% / 25 = 2%

50% / 33 = 1.515%

1.515 * 1.3333 = 2.02% > 2%, therefore safe-harbor

Question is, if I limit the denominator in the fraction, can I use less than 25 years and still fall under the safe-harbor? Say I want to accrue benefits over 20 years. Am I a safe-harbor if I limit my denominator to 26?

50% / 20 = 2.5%

50% / 26 = 1.923%

1.923 * 1.3333 = 2.564% > 2.5%

Does anyone have the January 1, 1995 120% Annual Federal Mid-Term Rate for purposes of accumulating a prior distribution to re-purchase vesting service. I can find the 1996 and beyond rates via benefitslink article and/or IRS.GOV but I can't seem to find the 1/1/95 (Jan.) rate.

A terminated participant in a participant directed account plan was paid his 401(k) balance and profit sharing balance (minus the receivable). The participant was subsequently rehired prior to the profit sharing contribution being funded. He still has the 2003 profit sharing allocation in his account. Is the rehired participant entitled to a distribution of the the receivable that was funded after his rehire?

Company A and Company B are unrelated (not members a controlled or affiliated service group) but are both participating employers in a calendar year 401(k) Plan. Since this plan is a multiple employer plan separate ADP tests have been prepared for each company in prior years.

Company A will be acquiring Company B during 2004.

Questions:

Is the 410(b)(6)© transition period available in this situation? Can separate ADP tests be performed for each company for 2004 and 2005? Or does the fact that this is a single plan and not separate plans for each company preclude the use of the transition period?

The closest analogy that I have considered is a situation where two unrelated employers sponsor separate plans with the plans merging on the date of the transaction. In that situation, I do not believe that the transition period is available and the adp testing for the merged plan for year of the transaction must consider employees of both employers (for at least the portion of the year after the transaction).

Can stock options that do not quaify for the special stock option rule in the 162(m) regulations (because they were issed at a discount or have performance vesting, for example) qualify as performance based compensation under the general rule as a practical matter.

Do the shareholders just have to approve the stock option plan and not the individual agreements?

While I understand if a married qualified beneficiary who terminates employment when he has family coverage can elect single coverage, can he and his spouse each elect single coverage?

Since every qualified beneficiary has an election right under COBRA, I would think the former employee and his spouse can each elect single coverage; however, the insurance company is telling us they cannot. Does anyone have any thoughts - preferably some authority I can show the insurance company?

client has a 401(k). a distribution was made to an HCE of amounts attributable to his deferrals. he has not attained 59 1/2 and there is no hardship. what would the proper correction method be? i cant find it in the revenu procedure.

If an employee gets married in the middle of the year, and chooses to increase their Health FSA annual election, can that employee be reimbursed for claims incurred prior to their change in status? Does anyone know where I might be able to get some sort of definitive information I could refer to regarding this topic?

Any all replies are greatly appreciated. Thanks.

Under the terms of the plan, a participant reached Normal Retirement Age in 1997, a year in which he was eligible to participate but waived participation. The plan was frozen for the years 1999 through 2002 and restarted effective 1-1-2003. In 2003, he elected to participate in the 457 plan. What is the maximum he can contribute for 2004? Which years are used to determine the 3-year limit? 1994-1996? or 1997,1998,2003?

Hi,

It's been a while since I've done a leveraged ESOP allocation and I was hoping someone could confirm how the allocation is run.

Company makes contribution to the Plan to cover the note payment for the year.

ESOP makes scheduled note payment consisting of principal and interest. Encumbered shares are released based on prin/total principal at the encumbered price.

Participants receive cash contribuition then purchase stock at the encumbered price? The encumbered price is higher than the current market value, so they pay more for the stock then it is currently worth. Is this correct?

The interest payments on the note go out of each participant's account as an interest expense? Is that correct?

No one was paid so there is no stock to buy back from terms.

Any help is greatly appreciated.

In an individual (owner only) 401k plan, is the owner/participant exempt from the required beginning date if he is still employed? Obviously, in solo(k) the participant would be a >5% owner. I can't find specific clarification on this particular type of arrangement. Also, if the owner/participant is exempt from the RBD, if he rolled an IRA account into the solo(k) plan after attaining age 70 1/2, would the IRA distributions no longer be required until the owner retired?

We are being asked to cut a check to pay UBTI tax today. Is it okay to pay this tax with plan assets?

The special Section 402(g)(8) 15 year catch up is available to qualified employees of a qualified organization. Qualified organization is defined as including health and welfare service agencies. Does anyone know if this definition has been interpreted to include ambulance associations or other providers of emergency medical services?

Are there any issues associated with switching from a fiscal plan year (may to may) to another fiscal plan year (july to july) with respect to making a profit sharing contribution. Would you end up with a short may and june plan year before the new july to july kicks in?

You have a safe harbor 401(k) plan effective 10-1-03, so first year is a short plan year. Employees, obviously, are only allowed to defer on income on or after 10-1-03. But what about the sole prop owner? Can he defer based upon entire year schedule C income? Since this income is earned technically on 12-31-03, a literal reading would seem to indicate that he could. But this also produces a result which appears discriminatory, in that rank & file get to defer based upon 1/4 of their income, and the sole prop gets to use 100%. Any thoughts?