We have someone asserting that for self-employed, the 5500 MUST be prepared using the modified accrual method. But no one can find any guidance or instruction that says this. Has anyone ever heard this, or have a reason why someone would think this? I've checked 5500 instructions going back years and years, and can find no such requirement. Thanks.

Plan is determined to be top heavy for 2003 plan year. When must an employer make the top heavy contribution (please include authority)?

Can one use the 401(k) deferral data from W-2 forms to do ADP testing?

A calendar year top heavy 401(k) plan has 3 month eligibility for the 401(k) portion and 1 year for the nonelective portion. The cross-testing is done using compensation from date of plan entry as an acceptable definition under 414(s). Say a participant enters 10/1/02 for the 401(k) and 7/1/03 for the PS. For 2003 testing would you agree that for the determination of the nonelective EBAR, I could use compensation from 7/1/03 - 12/31/03, but for the 401(k) EBAR for average benefits, I would use full 2003 compensation?

If you agree to that, move to this next question. For those participants that just enter the 401(k), but have not met the nonelective eligibility and are thus just receiving a TH minimum, what compensation is acceptable to use? I have no entry date to the nonelective portion.

Thanks for your time and thanks for the vine. (If you know what this means, then I salute you.)

I have two situations of clients turning in claims for the tea tree oil shampoo (to treat psoriasis on the scalp) and also for the Proactive system for acne treatment. My supervisor says on the shampoo that we should deny the claim and ask for proof of what they use normally and subtract that from the cost of the shampoo. Aren't we opening a can of worms here?

I have another person that has been using the Proactive system for a few years now and it has kept her acne at bay as long as she uses it faithfully. Would you accept it?

I am finding the OTC's are going to take up a lot of my time and am fearful of that as I have other duties to get done too. I wish someone would come up with a good list that we could follow. I did get the one from www.125plan.com, but it leaves a lot open for interpretation.

I appreciate any input on these. Thanks!

Jane

Can anyone comment on the following excerpt from Sal's ERISA Outline book?

Chapter 7: Taxation Rules - Section XIV (Death benefits): Part D (Rollover by surviving spouse)

9. Elective transfer of a beneficiary™s inherited benefit. IRC §411(d)(6)(D), as added by EGTRRA §645, allows an elective transfer from one defined contribution plan to another, where the transferee plan need not protect the forms of payment options that were available under the transferor plan. This rule is effective for transfers made on or after January 1, 2002. See Section III (Part D.3.) of Chapter 6 for more details. The statutory language refers to a participant or beneficiary consenting to such an elective transfer. Thus, after 2001, a nonspouse beneficiary is able to have inherited benefits under a qualified plan electively transferred to another qualified plan, even though a rollover option would not be available.

If I am reading this correctly, a non-spousal beneficiary could potentially (if allowed in plan documents, and all other requirements are met) transfer their inherited benefit to their own qualified plan and avoid tax consequences.

It doesn't seem right to me. I attended NUMEROUS EGTRRA recap sessions, and I don't remember this coming up once. I would think it would have been big news. I obviously need some help understanding this one!

Question:

We are contemplating beginning delivering Prototype Adoption Agreements, Plan and Trust Documents, and related SPD's to Plan Sponsors via CD Rom, as opposed to hard copy. Please provide input on any pitfalls I should be considering. Thanks.

Can one name a Non-profit Corp as a secondary beneficary?

Thanks in advance.

The assets are at fidelity and they issue check payable to the trustees on 12/29. The trustees deposit into corporate account and write the check to partipant in 2004. What year is he/she 1099'd?

2003 publication 590 beginning on p. 55 states "you can contribute to a roth ira for your spouse provided the contributions satisfy the spousal ira limit and your modified agi is less than 110,000 for married filing separately and you did not live with your spouse at any time during the year"

using the above facts and putting a 3000 roth contribution on the return of the spouse with no compensation using turbotax results in 180 excess contribution tax.

hrblock does the same thing.

who is right?

If i use prior year testing for ADP & ACP, can i use top paid group election to determine prior year's HCEs if I didn't use top paid group election last year???

Does a plan that is setup in the plan document as a cross-tested 3% Safe Harbor and makes a 100% up to 4% match subject to ADP/ACP test? The safe harbor notice was also done as a 3% Safe Harbor.

I am a college student that works during breaks from classes. I don't earn $3000 a year at these jobs and therefore not able to contribute the maximum to my Roth IRA. I have some money in a savings account and also some money in stocks. My two questions are: 1.) Does the interest from the savings account count towards my earned income, abling me to contribute more than I made at these jobs. And 2.) does the dividends and/or captial gains count toward my earned income, allowing me to contribute more than I earned at my job? thanks for the help.

I just opened, contributed and transferred some of my ROTH IRA

mutual fund to a brokerage account.

I would like to know if I make profits (capital gains) meaning selling

individual stocks, options, mutual funds or dividends/interest rates,

are they taxable even I have not withdrawn/distribution from

the brokerage account.

What about wash sale rule and 3K loss for the year does that apply

as well for ROTH IRA-retirement accounts, maybe only if withdrawn

earlier or before 59 1/2 years old?

I would appreciate any comments, advises and suggestions on this matter.

Is buying individual stocks/stock options/possibly selling short a good strategy to make on ROTH IRA accounts to save paying taxes, of course when

only realize a capital gain?

JG

Our client is the plan sponsor and plan administrator of a multiple employer 401k plan (not collectively bargained). In 2001 the plan was a safe harbor plan and safe harbor matches were required to be made by each participating employer pursuant to the participation agreements. There were about 20 participating employers in the plan in seven control groups. The participating employers in one control group have refused to make the 2001 safe harbor match for their employees - now over 1 year delinquent.

Any suggestions for what actions are available to pursue the delinquent contributions? Are Participating Employers fiduciaries as to their employees? Can the Plan Administrator bring a breach of fiduciary action? Should the plan sponsor just cough up the money and seek recovery from the delinquent participating employers through litigation or go straight to litigation and leave the obligation outstanding? Ugh.

Is an Accountant's Opinion required for a funded welfare benefit plan with fewer than 100 participants?

Just starting to get in data for 1/1/2004 valuations and wanted to make sure that I am up on the changes effective for 2004 in the current liability calculations (absent any corrective legislation).

To confirm:

EGTRRA repealed the "OBRA" Current Liability Full Funding Limitation effective for plan years beginning in 2004, right or wrong (so I assume that I still need to calculate RPA '94 Current Liability for the 90% threshold).

The RPA '94 CL range goes back to 90%-105% as the 120% change was only in place for 2002-2003 years, barring any future legislation.

PBGC variable rate premium goes back to 85%, rather than 100% of prior year's 30 year treasury rate.

I figure that some valuations may need to be redone (at lease as far as CL goes) if future legislation provides relief, but I would like to make sure that I'm not missing anything on the CL calc side.

Customer establishes brand new SIMPLE IRA w/an effective date of 12/31/03 and mails check w/a check date of 12/31 but instructs us that the contribution is for 1st payroll in 2004.

When are SIMPLE IRA contributions "deemed" to have been made? The date the check was cut or the date in which the financial institution received the funds?

Highly comp employee over age of 50, makes $270,000. Employee defers $12,000 + $2,000 catch-up contribution. Employer's match is dollar-for-dollar up to 6% of wages. My feeling is the employer match is limited to 6% of $200,000, which is $12,000. There should not be a match of the $2,000 catch-up contribution.

Is that correct? Thanks.

Does an employee participating in a 401(k) Plan who is still working, but not an owner, have to take the 70 1/2 Required Minimum Distribution? Thanks!