My thought is even though he's not paying and he may not return from his w/c leave I can't tell him he can cancel his insurance, because then I have to allow anyone else the same option. Need your thoughts.

NYS DOL Regulations require 30 minute unpaid meal periods -- should that be interpreted to mean "required to provide" or "required to make employees take" -- the later seems very difficult to enforce -- Any insight?

I retired last year from a state govt job. I'm 53, collect a pension, and have no earned income. My wife (over 50) makes $70,000 in salary. We file jointly. Can we contribute to a spousal traditional or Roth IRA for me for 2004? The IRS publication seems to say not if I am "covered" or participating in a retirement plan. I am not earning additional retirement benefits or otherwise able to contribute to my future as a retiree. Can the contribution be put into my existing Roth? Does the word spousal indicate an account designation or just a description of how a person with little or no income qualifies to contribute (or have contributions made on his behalf)?

Can someone direct me to a site that illustrates which states conform (would allow the catch-up be deductible) with the catch-up contributions on IRAs?

Thanks.

Am I doing this right? Seems strange.

Non Highly Comp'd ADP is 2.96%. Highly Comp'd limited to 4.96%.

Four Highly Comp'd.

         Defer                  Salary       ADRHC1 12000.00   98935.45   12.13%HC2   9000.00	200000.00     4.50%HC3   9000.00	172315.98     5.22%HC$   9000.00	195827.82     4.60%  ADP              6.61%

Reduction of $6,520 of HC1 deferral makes his ADR 5.54% and the ADP 4.96%.

Take $3,000 off HC1. This makes all HCs deferrals $9,000. Next, take the remaining $3,520 and split it between all HCs ($880). So all HCs are limited to $8,120. HC1 gets distribution of $3,880, all others $880.

Employer match goes in with each deferral, 50% of deferral. What do I do about the match? ACP problem is not as bad as the ADP.

For 2002, a plan issued the safe harbor notice, and the TPA calculated the amount that needed to be deposited based on the match safe harbor formula. Now that we have moved into 2004, it is discovered that the employer has not deposited that contribution! Is it still a safe harbor plan? What are the options/implications of this?

Thanks in advance for any help.

Is it possible to create a DER to enter the plan level information? I'm using version 8.3, and looking for legitimate shortcuts where ever I can find them!

A business has a safe harbor nonelective 401(k). Does NOT use the "wait and see" approach. Has not yet contributed the 3% for 2003, and has already provided the safe harbor notice for 2004. Business is going down the toilet.

First advice is for him to contact his legal counsel. But for my own edification, not being versed in bankruptcy issues, there are a few issues I'd like to explore briefly.

First, for the 2003 nonelective, this is still required, but I assume the plan has to "stand in line" as a bankruptcy creditor? Are plans usually given priority in such a a situation?

For 2004 - since there is no money, client wants to relieve the 3% nonelective obligation, insofar as that is possible. Only way I can see to avoid this is to terminate the plan - which should allow 3% nonelective obligation only on the compensation earned up to the termination date. I think. IRS Notice 2000-3 is helpful if the safe harbor is a match, but on the nonelective, I can't find much to enlighten me in this situation. I don't find any authority that simply allows him to "revoke" the 3% nonelective by simply notifying the employees that that is what he is going to do.

Any thoughts? Thanks.

Situation:

Distribution processed December 2003 and 20% federal withholding was taken. The 20% w/h was not deposited until January 2004. Okay, the 2003 1099-R will reflect the distribution and withholding, but do I need to wait and report the withholding on the 2004 945?

Thanks.

p.s. Called the client and asked why the w/h was not deposited in 2003, he said "I was waiting for you to call and tell me what to do.". Go figure.

Hi,

I have read the instructions to the Form 5500, but still need some help (if possible) in understanding the increased bonding/audit requirement for small plans.

An individually directed account plan has a participant who wants to invest in rental real estate. Despite the problems with UBTI (of which I still need to research) would this type of holding require an increased bond if more than 5% of assets? I think yes, but item 4 of the definition of Qualifying assets on the Form 5500 confuses me.

It defines qualifying assets as assets held in participant directed accounts for which a regulated financial institution (as described in #1) provides annual statements to the participant. Does this basically mean that even if the account is participant directed, qualifying assets must still be held by one of the institutions described in item 1? If so, then why even have item #4?

Any help in deciphering this is greatly appreciated?

Thanks

Under HRAs the employer can impose a cap on carry-overs from one plan year to the next -e.g., max carry over is 50% of the annual reimbursement budget.

Is it permissible to cap lifetime accruals, as well? E.g., maximum accrual under the plan limited to $50,000.

An employee approached me regarding an issue. I have very little to go on, so bear with me. Her sister is a manager in CA and one of her employees is taking intermittent FML to care for a sick parent. It sounds like most of these leaves are taking his parent to the doctor. However, he comes and goes as he pleases due to this leave and won't let the manager know his schedule. The manager has talked to the HR dept but she has received very little information or help from them. The CFR states:

Employees needing intermittent FMLA leave or leave on a reduced leave schedule must attempt to schedule their leave so as not to disrupt the employer's operations.

I wanted to know if I'm interpretting this incorrectly or if CA interpreted this another way. They seem to be more generous when it comes to adjusting laws.

Thanks for any insight! Greta

We have a 125 plan, plan year 1/1/04-12/31/04. We would like to add dependent care benefit. Can we add now and enroll for that additional benefit? Or, would we need to establish a second 125 plan with a different plan year?

Is there an ADEA issue when the total premium cost for retirees is greater than the total premium cost for active employees?

I wasn't sure if the tax credit for covering the expenses of starting a new plan phases out. In other words if I have a company who wants to start a plan in 2005, can they still get the potential $500 credit for 05, 06, 07? Does it ever phase out?

Can the owner of a S-Corp who currently pays her children (under age 18) as employees include them in the Simple 401k?

I have been trying to catch up on my reading as I am VERY behind.

In the Mar-Apr 2003 ASPA Journal in an article written by Brian Graff and Danea Kehoe the following was stated:

"Treasury's Benefits Tax Counsel, William Sweetnam, Esq. warned that guidance on 412(i) plans is of 'paramount importance.' James E. Holland ... suggested the government may soon issue two types of guidance: a notice warning of the government's concern about these plans and then later, more substantive guidance laying out proposed rules aimed at shutting down abusive practices."

"By the time you read this article, it is quite possible the notice outlining IRS's recent concerns respecting certain 412(i) plan designs - referred internally within the IRS as 'yellow-light' notice - will have already been issued."

Then in the Sep-Oct 2003 ASPA Journal, Larry Deutsch wrote, "Further guidance should be available soon, possibly even available already as you are reading this article."

My questions is, has this pending guidance ever been issued? If not, what is causing the delay? Both Larry Deutsch and Brian Graff are certainly Washington insiders and were clearly expecting its release almost a year ago.

I'm starting to feel like the boy who cried "wolf".

This plan has 3% match, 4.5 profit sharing and 4.3 percent over social security wage base discretionary contribution. This is pretty straight forward for W-2 employees, but plan compensation for the LLC members is their share of net earnings (business ordinary income plus guaranteed payments). Ordinary income is after the deduction for all plan contributions.

Help - I'm going in circles trying to calculate this!

A Safe Harbor 401(k) plan utilizes the Basic Safe Harbor Matching Contribution of 100% on the first 3% of deferrals plus 50% on the next two with no other employer contributions being made to the plan. The document (PPD Prototype) says "compensation for this purpose is compensation for each payroll period."

I have always taken this to mean that you do not true up the match contribution at the end of the year based on total deferrals and total compensation. This would not bother me so much if it was not a safe harbor contribution. Some participants are getting more (or less) than a 4% match when they defer a total for the year of more than 5%.

What about the guy with 200,000 in comp that defers up to the 12,000 limit and ends up with more than 8,000 in match.

Can anyone point me to a reference comparing HRAs and HSAs?