A Plan requires last day employment to receive matching contributions (no hour requirement). A number of participants terminate during the year so that the match now does not pass coverage. The Plan uses a Fail Safe to correct coverage. None of the participants added back under the Fail Safe rules made salary deferrals.

Is it just the number of participants added back that matters, or would a contribution (QNEC?) need to be made for the added back participants?

As always thanks for any insight.

Group has FSA with Premiums, Medical Reimbursement & Dependent Care Reimbursement categories.

If I do the discrimination test individually for each category they only pass 2 of 3

But, if I do TOTAL pre-tax benefit amounts then the the test passes.

(ex)

Premiums - Pass

Medical - Pass

DC - Fail

Total plan key ee amounts = $900.00

Total plan pre-tax amounts (all ee's including key) = $3800.00

900 / 3800 = 24%

Is it ok to use TOTAL BENEFITS OF THE PLAN???

Thanks!!!

I have a situation where a consulting firm was bought by another consulting firm. The buyer bought the business and the employees. As a result, it is business as usual since the same Enrolled Actuaries will be signing the Schedule B for teh same clients regardless of who they work for. The enrolled actuaries would include the new firm's name on the B.

Does this change necessitate disclosure on Schedule C where the entity that employs the Enrolled Actuaries has now changed? The sold consulting firm would no longer exist.

Thanks

We have a Plan on a prototype document. A participant insists that he is allowed to rollover his monies to an IRA. He said that his accountant told him that he could. Is there ever any circumstance in which a participant who is not disabled, terminated, age 59 1/2 or passed away, that this would be correct??? Thanks for the info!

A small employer is entiitled to a tax credit equal to 50% of the first $1,000 in expenses for plan administration and retirement education. A "small employer" is an employer whose plan covers at least one NHCE and has 100 or fewer ee's earning more than $5,000 each.

With that said, are co-employers of a PEO eligible for the credit? I would think that they would not because the "plan" has more than 100 ee's due to the other co-employers that have adopted into it.

Any thoughts/guidance is appreciated.

Client failed to make 2002 3% safe harbor or Profit sharing contributions. Of coarse he made his $11,000 401k!

Obviously the 2002 tax return is wrong and the 5500.

However, is the safe harbor a required contribution for 2002 and subject to penalities for failure to fund? My reaction is "no" this is still a profit sharing plan!

However, can we make the safe harbor contribution now and allow us to skip the ADP test for 2002?

Thoughts,comments and resources are appreciate.

ED

I am Canadian who just left the US for another position in Canada. I am becoming a US non-resident at the end of 2003. I am probably paying US income tax for the last time for the year 2003, never to earn a dime again in the US.

I am considering making a one-time $3000 contribution to a Roth (for 2003) and leave it there until I reach the age of 60, so that it grows tax-free. Is it legal? What are the possible implications since I am likely never to file for US income tax again?

Frank

I think this may be a stupid question, but here goes...

I have a client with a plan that matches 100% of the first 3% of deferrals and 50% of the next 3% of deferrals. Forfeitures are to be used as a discretionary matching contribution.

In this situation, would the forfeiture allocation be based on all deferrals or should it be based only on deferrals over 3% since the first 3% has already been matched at 100%?

Can contributions under a prototype SEP be considered in the testing of a 412(i) plan for 410(b)/401(a)(4) DC/DB aggregation when carving out employees using the 7.5% gateway? If so, must the DC(SEP) be adopted by 12.31.03 to be considered with a 2003 412(i) plan, or can it be installed by tax filing due date?

My gut says "no," but does anybody have any cites, logic, or reasoning, one way or another?

THX.

Can contributions under a prototype SEP be considered in the testing of a 412(i) plan for 410(b)/401(a)(4) DC/DB aggregation when carving out employees using the 7.5% gateway? If so, must the DC(SEP) be adopted by 12.31.03 to be considered with a 2003 412(i) plan, or can it be installed by tax filing due date?

My gut says "no," but does anybody have any cites, logic, or reasoning, one way or another? THX.

On this link, http://www.irs.gov/retirement/article/0,,id=96450,00.html, I think the 2004 columns have been reversed from prior years (2001 and before).

I just had a client fax me a page from what appears to be the DB Answer Book.

QA 28:19 states that for plan years beginning after 1/1/2003 that GAR 1994 is REQUIRED for RPA calculations. This is per Revenue Ruling 2001-62.

I do not believe this is true based on my reading but am interested in other's opinions. I thought the ruling applied to lump sums for 415 purposes. We are still using the GAM 83 sex distinct tables (pending IRS issuance of regulations)

I've just read Rev. Rul. 2004-13 and there is a sentence in it that has me cunfused. The sentence is in the 4th paragraph under LAW AND ANALYSIS. It states "Also, a plan does not meet the requirements of 401(k)(12) if, under the terms of the plan, a nonhighly compensated employee is eligible to make elective contributions but is not eligible to receive either a safe harbor nonelective contribution or a safe harbor matching contribution".

I've always thought that a safe harbor 401(k) plan could have a more liberal eligibility period than one year for deferral purposes, yet require a one year wait to be eligible for the safe harbor contribution. The sentence in the Rev. Rul. seems to be saying something different. Has anyone noticed this or have any comments?

A plan administrator is required, under Section 402(f) of the Code, to provide each distributee with a written explanation of the plan's distribution options, including the direct rollover provisions and the mandatory withholding requirements. Must this notice contain the value of the distributee's total account balance?

I have an interpretation question. I've always just assumed the 410(b)(6)© exception to coverage testing was taken literally - so if you don't amend or change your plan during the transition period, you'd automatically pass. However, after reading 2004-11, I'm not so sure. It repeatedly refers to a "significant change in the plan or in the coverage of the plan."

Take the following example: Corp A sponsors plan B. Corp. A, in 2003, purchases Corp C, but does nothing to its plan, relying on the "free pass" for coverage during the entire transition period. However, let's look at this census scenario in plan A - 1 HC, 20 NHC. You need 14 NHC to pass 70% test, which you do before the acquisition/merger. Then in the plan year 2004 following the merger, you drop to 8 NHC covered, because the plan has a 1000 hour/last day requirement, and several folks go part time. I do not think the free pass applies. But it might be argued that if you drop to 13, this isn't "significant."

But maybe I'm looking for trouble where none exists, and the free pass still applies. It just seems wrong. Any opinions? Thanks.

How does vesting work for USERRA for hours counting plans for vesting?

For example, say:

2001 works full year 1000+ hrs

2002 works 1000+ hrs, gets called up in Oct

2003 comes back in May and works 900 hrs thru Dec

1 yr vesting = 1000 hrs

Does this person get credit for 2003?

my company has to deposit my 401k contributions into the account. The money was deducted from my paycheck, but is not showing up in my 401k online account. My company has been evading phone calls concerning this. I checked with another employee and her contributions aren't showing up in her account either. Just wondering how much time my company has! The deductions from December aren't in there yet!!!

The following article is located at: http://www.woodyswatch.com/office/archtemplate.asp?v7-n53. The main address for Woody's Watch is http://www.woodyswatch.com/index.asp

OUTLOOK 2002'S PRIVACY BUSTING "FEATURE"

If you've been following along with the privacy revelations in the latest issues of WOW, you know that any Office file sent as an attachment to an Outlook 2002 or Outlook 11 message contains a ten digit number that can be easily traced to the machine on which the message originated. The originating PC has a file called c:\Documents and Settings\\ApplicationData\Microsoft\Office\AdHoc.rcd which contains the ten-digit "brand" number.

Outlook 2002 and 11 also put your Email address and your name in the Office file's File | Properties | Custom variables.

Outlook 2002 doesn't respect any of Word's settings. That ten digit number, and your email address and name appear even if you've told Word 2002 to remove any personally identifiable information (Tools | Options | Security | "Remove personal information from this file on save"). They appear even if you've told Word 2002 to not assign a merge number (Tools | Options | Security | "Store random number to improve merge accuracy"). Outlook 2002 runs roughshod over your Word settings, and the only way to stop its privacy-busting behavior is by digging down five levels and disabling one of the most obscure options in Outlook (Tools | Options | Preferences | Email Options | Advanced, uncheck "Add properties to attachments to enable Reply with Changes".

As far as I can tell, none of this is documented anywhere, so I'm going to give it a shot here in WOW - Let's call it WOW's Security Bulletin WOW02-001.

This only happens in Outlook 2002 and Outlook 11.

1. When you compose a message and press Send in Outlook 2002 or Outlook 11, Outlook looks to see if there are any Office files (Word documents, Excel spreadsheets, or PowerPoint presentations) attached to the current message.

2. If there are Office files present, Outlook looks at Tools | Options | Preferences | Email Options | Advanced, and if the box marked "Add properties to attachments to enable Reply with Changes" is checked, it "brands" all of the Office files attached to the message. The "Add properties to attachments to enable Reply with Changes" is checked by default - that is, your files will be branded, unless you specifically go in and turn that setting off.

3. Outlook brands the files by inserting your email address, your email "display" name, and the Subject line of the message into File | Properties | Custom variables. (Valerie Mallinson, Microsoft's planted "Mac to PC Convert" lady, had one of her files branded with her display name.) Then Outlook looks for a File | Properties | Custom variable called _AdHocReviewCycleID.

3.A. If there is no _AdHocReviewCycleID variable, Outlook generates a random 10-digit number, and sets up a variable called _AdHocReviewCycleID, assigning it the value of that 10-digit number. The _AdHocReviewCycleID number and the full file name of the attached file (including its path) is placed in the file AdHoc.rcd. AdHoc.rcd is an old-fashioned INI file that can hold 100 entries, so it keeps track of the last 100 files that have been attached to email messages.

3.B. If there is an _AdHocReviewCycleID variable, Outlook looks to see if the 10-digit _AdHocReviewCycleID value is already in AdHoc.rcd. If it's already there, Outlook doesn't change anything. If the 10-digit number isn't in AdHoc.rcd, Outlook creates a new File| Properties | Custom variable called _PreviousAdHocReviewCycleID and assigns it that 10-digit value. Then Outlook creates a new random 10-digit number, puts it in File | Properties | Custom

| _AdHocReviewCycleID inside the file, and adds the10-digit number to AdHoc.rcd.

4. After the Office file is branded with this 10-digit number, the message with attachment gets sent along to the output queue, where it will ultimately go to the intended recipient.

5. When Word opens a file, it immediately looks for a File | Properties | Custom _AdHocReviewCycleID value (or, I assume, a _PreviousAdHocReviewCycleID value). Word looks up the 10-digit number in AdHoc.rcd. If Word finds the value in AdHoc.rcd, it retrieves the original file name and path, and asks if you want to merge changes back into the original file.

The rules for branding files that are sent from inside Word, Excel or PowerPoint (using File | Send To | Email recipient as attachment) appear to be different. Not sure what's happening there.

Trustworthy computing.

"Mitigating factors": Anyone who wants to trace an Office document back to the PC that originally sent it must have access to the AdHoc.rcd file on the originating PC.

Outlook only keeps track of the last 100 Office files sent as attachments to email messages.

"Unmitigating factors": Ask Valerie Mallinson.

Bottom line: This is different from the "unique identifier" problem that Richard Smith discovered in Office 97 (see, e.g., http://news.com.com/2100-1001-223200.html?tag=bplst). But there are a lot of chilling similarities. Microsoft promised it wouldn't permit "unique identifiers" into Office files in Office 2000. Why did it relapse in Office XP? And will the problem continue in Office 11?

I would like to start a Roth IRA and have been looking at Templeton World A (temwx, nasdaq) http://biz.yahoo.com/p/t/temwx.html

I would like to hear peoples opinions of this fund and if it would be a good investment for a Roth IRA.

I’m 26 and trying to start saving for the future as early as I can. Lets just say I have seen many older people who work all their lives and are in financial strains. I do NOT want to ever be there. One way I have been combating it is by staying Credit Card debt free. I don't even have one. I did but needed to get rid of it (bogus late fees and financing charges). When I get a real “steady” job, the one that pays every friday. I will get one only to have it help me build up my credit.

Thank you in advance.

Does anyone have or know where I can find information on the pros & cons of using debit cards in a 125 plan?