In a calendar year plan, is it possible to adopt an amendment on 3/15/04, 2-1/2 months after the end of the 2003 plan year, which substantially reduces future accruals (and requires a 204(h) notice) and recognize it in the 1/1/03 valuation?

Employee A is laid off in July and reports in Sept. that he is going on medical leave for an unknown amount of time. He is on workmans comp. He has not been on payroll since July and does not know when he will be able to return. He is asking to be terminated from the plan. Can he do this if he is on workmans comp? Thanks

does anyone know an ira "trustee" who will accomodate restricted stock? most brokerages, perhaps all, will only hold stock that is a "member" of the depositoy trust corp. would appreciate help.

does the irs have a list of rgistered trusties? thanks

1. Can an owner put a cap on the compensation used in determining the Profit Sharing contribution, that will only affect himself, even though they are using a standardized document that does not address this issue??

2. The vesting for matching contributions is restricted to a 3 year cliff, but can the Plan still allow a 5 year cliff on discretionary contributions?

Thanks!

A participant in a defined contribution plan has elected to receive $700 a month. She is eligible for a total distribution. She just prefers to do it this way rather than rolling to an IRA.

It's a series of substantially equal payments but not calculated on her life expectancy.

So which withholding rules apply? Is it the rules for periodic payments which are like withholding on wages, the 10% on non-periodic payments or 20%?

Is the specific type of situation discussed in the IRS Code? Reference?

Thanks!!

Under the post EGTRRA rules, we are to add back the in-service withdrawals that occured for the the determination year and the previous 4 years. This does not distinguish between Key and Non-Key, so I read this to mean you add back all in-service distributions for the period regardless of their status as key employee or non-key. Did I read this wrong? And is it still a grey area regarding ADP and ACP corrective distributions? I see where the IRS made a comment at the ASPA conference, but has there been any other clarification on this issue?

Thank you for submitting your responses.

Before I start, I have already referred the client to their attorney, I'm just looking for opinions. I have a 401(k) plan with 14 HCEs due deferral refunds due to a failing ADP test. I advised the client of the refund amounts (along with the QNEC amount - however, the client doesn't want to contribute the QNEC). A broker is telling the client that each HCE due this distribution can have the Employer put the refund in a deferred comp plan AND AVOID TAXATION. This just isn't possible according to all I have ever learned! These $ were already reported on the participant's W-2 forms as deferral, and FICA may have been withheld on some. Has anyone heard of this? Seems to me that if this were a way to avoid taxation on a failing test refund, it would have been all over Pension news in the 14 years I have been an administrator. All opinions welcome!

Does anyone know the status of the COBRA notice regs that EBSA proposed last May? When first published, it seemed that EBSA had them on a fast track, but I don't recall seeing any discussion of the proposals for quite some time.

Thanks.

A portion of NJ State Disability payments made to an employee is taxable and included in the employee's W-2 in Box 1. It is a temporary disability program partially funded by the Employer and partially funded by the employee.

Does anyone know if type of payment is included for contribution purposes or do we have to carve out this part?

Compensation for contribution purposes in the doc is defined as wages defined in Section 3401(a) and all other payments of compensation by th eEmployer (in the course of Employer's trade or business) for a Plan Year for which the Employer is required to firnish the Participant a written statement under Code Section......

includes all deferred compensation in definition

Thank you

My understanding is that ESOPs can not be aggregated with Non ESOP plans and Non ESOP portions of plans for coverage and non discrimination testing with the exception of calculating the average benefits percentage test.

A company sponsors an ESOP (actually an ESOP and a Money Purchase ESOP) and a Cash Balance Plan. It appears that the plans have been aggregated for general testing purposes for the Cash Balance Plan (since testing the benefits in the Cash Balance Plan alone does not resemble anything close to a passing test).

I will be getting more information (such as what was submitted with the determination letter), however I do not believe that this is permitted according to the 410 and 401(a)(4) regs. Agreed?

Periodically added money to my wife and my Roth IRA during 2003. I had contributed the max for each of us by the end of the year. Just visited with my CPA on taxes and he informed me that my income was too high to be eligible for contributing to a Roth IRA (due to the sale of a property). :angry: How do I handle this? The money is already in the account and the return did quite well last year. I'll call the firms that handle our accounts tomorrow, but I just thought someone on this board might have some advice. Thanks

Can I write off the amount of the money lost in an illegal investment fund closed down by the SEC in 2003 against funds withdrawn in 2003?

Can each shareholder establish/participate in a SEP IRA? Dividends are paid to each. Can one shareholder participate if the other does not? If both are covered by a 401K with another employer (max contribution being made)?

Thank You

In a 6 person new comparability plan with:

1 HC (principal)

4 clerical EEs (non principal)

1 NC sales/engineer ($80,000, not an owner or officer)(other category)

can the sales/engineer be placed in his own allocation category? Could his allocation rate be greater or less than the allocation rate for the non-principal clerical EES? I guess I'm asking, can a new comp plan use different allocation rates for different Non-highly compensated employees?

Employees retiring prior to age 65 can continue their healthcare coverage until they are Medicare eligible. Is the COBRA "event" the date they retire, or the Medicare eligibility date? If the event is the retirement date, would the Medicare eligibility date be considered a second qualifying event?

Maybe I read this wrong in the the ERISA outline book but the correction to this is not a distribution, but rather done via a negative contribution in the payroll and a forfeiture of the match. Is that correct? If so, what's to stop the participant who doesn't max out his deferrals anyways, from simply raising his deferral percentage for a payroll to turn around and get the money back into the plan? If the plan document allows for deferral changes on a payroll by payroll basis, is this a viable option?

Also, I read nothing about income...do I return income in this correction? Seems silly to do if they are going to put it right back into the plan. But, not so silly if they don't put it back in given the gains the participant had.

Employer pays premiums on retiree medical/life insurance for certain retired executives and will continue to do so for 9 years.

Such premium payments are considered imputed income for purposes of FICA/Medicare withholding in each year that the premiums are paid.

Is there any argument for determining the present value of the 9 years of premium payments (9 years of imputed income) and applying FICA/Medicare on that present value in 2004 (the year of retirement)?

I think the argument for this approach is similar to that of a SERP ("pension-like" deferred compensation), in which FICA/Medicare are withheld in the year of retirement based on the present value of the lifetime stream of retirement payments (under Code section 3121(v)), but I don't really know if a parallel can be drawn (i.e., I don't believe we can withhold for FICA/Medicare on the imputed income for life insurance and medical until the imputed income is actually incurred).

I know this sounds crazy, but any ideas would be greatly appreciated!

This is a multi part question,

First the owner was over contributing on the employer contribution for his own account, how can we withdraw the over contribution from his account? The problem is he no longer is employed with the plan sponsor and has moved his simple ira to a traditional ira with the same mutual fund company.

For the participants who were shorted in past years how do we reconcile their contributions. Should we factor in their investment options returns during the years their contributions are being reconciled for?

Employer A provided group health coverage through its group health plan to employees of a non-related employer (no relationship to employer A). An employee of this non-related employer (Employer B) terminated employment. Is Employer A required to offer COBRA coverage to employee of Employer B. This employee of Employer B did not perform any services for Employer A (cannot be considered agent, independent contractor, etc. for Employer A).

In a 401(k) plan with profit sharing contributions subject to a vesting schedule, if a terminated participant takes a distribution of his salary deferral contributions and then is rehired, does he have to repay his salary deferral contributions in order to have his profit sharing forfeiture account restored? Does the cash out buy back apply on a subaccount basis or based on the entire account basis?