Thanks for any assistance.

We currently have our accountants perform financial audits of our church plans, but due to the recent increase in the cost associated with these audits, we are trying to determine whether we should cease the audits (since we are not required to have the plans audited in the first place). Is there any benefit to performing an audit? Does an audit in any way afford us any protection against possible law suits? Any guidance on this matter would be appreciated.

thanks

Just wondered if most everyone is updating to 9.0 now or waiting. In the past, we've usually held off on updating to a major release until the bugs have been worked out. 9.0 seems more like some of the interim releases we see, so wasn't sure if there was any downside to updating now. Would be interested in opinions.

My document requires me to reduce compensation for allocation purposes by the amount of the deferrals. I have a participant with a salary of 250,000. Do I first reduce the salary to 200,000 or is my starting point 250,000.

The IRS' required information list asks for Form 1120, 1120S, 1040 or 1065 (including all statements, schedules and attachments) filed by the employer for the year under audit.

The information in Form 1120, 1120S and 1065 is limited to the employer's business and giving them to the IRS is not a problem. But Form 1040 (for a sole prop) mostly includes non-business and non-pension plan related info and that could present a problem as the examinar may go on a fishing trip through the whole return!

Can the IRS demand to look at the complete Form 1040 when auditing a pension plan? Can one provide Page 1 of 1040 and Sch C only and refuse to to provide the rest of the return?

Among other items, the IRS is asking for the actuarial reports for succeeding year, year under examination and preceeding 4 years - that's six valuations and takes the audit well beyond the "last 3 years" from the audit letter date!?

I have not seen this before. Is this new and it in the audit guidlines?

Where can I download the audit guidelines from?

Help. I have always thought that when forcing a particpant's distribution from DC plan and their balance is between $200 & $5000, the participant must receive at least a 30-day notice. I have been questioned about this and need to "prove" my stance. Am I wrong? Can anybody give me the reg or guidence? What must the notice include - I've always provided a distribution form, tax notice and the deadline for returning the form or they will receive a lump sum less the 20% w/h. Thanks.

Gary,

The answer to question 2:53 in the latest SIMPLE, SEP, and SARSEP Answer Book seems to contradict itself. It says the following:

"May future employees be required to satisfy an age or service condition not applicable to current employees?"

"No. Provisions allowing current employees to participate whether or not they have satisfied the eligibility requirements applicable to future employees are not expressly prohibited;...."

By the way, the document being used is not an IRS model document.

Shouldn't the answer be yes, because future employees would be required to satisfy age and service?

A client invested in a call as an investment in his 2 participant profit sharing plan. The brokerage house questioned this type of investment. Does anyone know if this is a permissible type of plan investment?

Company A, in the United States, has a 401k plan. The plan is a 1-1 anniversary.

They started a new operation in Mexico in April of 2003 and are now a controlled group. They started with 4 employees and added 40 more in December of 2003.

Will the employees in Mexico be included in the total number of employees for census? Or is there more information needed?

Nothing has changed concerning S-Corp. profits & dividends not being treated as plan comp. has it? I have been hammered by several different people this week disagreeging with me on that issue. So much so that I am wondering if I missed something & all of the sudden they count as comp..

Does a corporation gain a tax advantage by contributing matching funds to employee 401(k)'s as opposed to contributing matching funds to an ESPP? In other words, does a corporation get to reduce its taxable income by the amount they contribute to 401(k)'s, much like an individual would? For that matter, does a corporation get to reduce its taxable income by the amount they contribute to ESPP's? If yes concerning 401(k)'s; Are there limitations to the amount that can be matched?

Here's one I never expected to ask...

I was looking through old CPE articles from IRS, and came across a 1979 article stating that:

"federal credit unions are considered to be instrumentalities of the United States, exempt from Federal income tax under the provisions of the Federal Credit Union Act, 12 U.S.C. S1768."

This reminded me of the definition of "governmental plan" in 414(d):

"…a plan established and maintained for its employees by the Government of the United States…or by any agency or instrumentality..."

So, should retirement plans sponsored by federal credit unions be treated as governmental plans?

I'll be shocked if the answer is yes. Thanks.

company currently has 401k with only employee contributions. because audit costs are out of control (around $10,000) does it make sense to go to a 403(b)? can you restate as 403(b) or will 401k have to terminate giving ee's option to roll to 403(b)? any reasons to not do this?

thanks for any help....

NM

I am retired and recently made accelerated $3500 contributions to my Roth IRA for 2003 and 2004. I have just realized that I will not have sufficient earned income to cover the 2003 contribution and know that I most probably won't have enough for 2004 also.

1) Can the contribution from a fund comprised of 2002 earned income be counted? Don't think so, but worth the ask.

2) Can I just remove the whole and/or excess Roth contributions. Because they were deposited into a money-market fund, there hasn't been any significant time for any appreciation.

For those of you that have never watched our "great deliberative body" in action (actually, they have been on this bill since last Thursday but have only discussed it for about 15 minutes in between babbling about other things not relevant to the bill), the Senate vote is on CSpan:

http://www.c-span.org/watch/cspan2_rm.asp?Cat=TV&Code=CS2

Currently they are in a quorum call (a delay tactic) for Arlen Spector to have time to argue with Finance Committee leadership to allow his amendment to reinstate the US Airway pilot's plan with a 30-year amortization of their DRC, instead of continuing its turnover to the PBGC. Yesterday, the amendment was blocked as not germane.

(The above link tries to use RealPlayer. There is also a link on the right of the screen to use Windows MediaPlayer. This is all on CSpan2 in case you have cable access.)

Business owners son died 2 years ago leaving father as beneficiary. Father has not withdrawn the account--doesnot plan to until close to the 5 year deadline.

Father is now turning 701/2. Does the son's account need to be considered for minimum distributions?

Thanks for your help

ED

I am not a DB number cruncher.... but I want to understand how it all works... the math. Can anyone reccomend a publication.... provide an Excel SS... anything that will help me calculate and understand a retirment benefit for a participant in a DB plan?

I ask because I have been asked questions and I want to be able to answer.

Thanks!

Hello,

Hoping someone might be able to provide me with some insight.

Company has a discretionary match which it has never funded to date. They use Prior Year Method. For 2003 they intend to fund the match. The problem is that with the Prior Year Method, the ACP for NHCEs is 0% for 2002 since they never funded a match. Therefore, it appears that the Match for 2003 will fail ACP and all HCEs will be required to receive a refund of the entire 2003 match.

Since 2003 has closed, it appears that they cannot change methods for 2003 and this causes a problem.

Has anyone run into this? And is anyone aware of a possible solution for this dilemma?

Thanks in advance for your feedback.

Sincerely.

Andmik