HELP!

I had a client just leave me a voice mail message regarding a Rev. Proc. detailing a determination letter filing deadline of January 1, 2004. I cannot access my database and I need to call him back. Does anyone know of the Rev Proc. he might be referring to so that I can print it out and have it front of me when I call him?

Thanx in Advance.

Hi,

I am 50 years old and was laid-off more than a year ago. I had the enhanced pension distribution where lumpsum was transferred to an IRA account. This company discontinued their pension plan about 3 years ago. If this same company wants to rehire me is there a waiting period before I can be hired by them? Can I work as a contractor, can I work as permanent employee at the same company? Is there anything in the IRS rule that says the same company cannot hire me back?

I appreciate your answer.

Employer A and Employer B both sponsor profit sharing plans which permit self-directed investment by plan participants. Employee A, while a participant of Employer A's Plan A, purchased a life insurance policy on his own life, which was held as an asset of Plan A. Vested portions of Employee A's Plan A self-directed account were used to pay the premiums on this whole life policy (all within deductibility limits for PSPs and permitted by Plan A). Employee A terminated employment with Employer, was employed by Employer B and is now a participant in Plan B. Plan B does not permit rollovers of any kind. Plan B does permit the Plan to hold life insurance as a Plan asset (although the Employer discourages this). Employee wants to know whether he may roll the life insurance policy and funds into his Plan B account.

It is clear that the non-life insurance funds held by the Plan may be rolled over into an IRA since Plan B does not permit rollovers. However, the funds attributable to the life insurance policy may not be rolled into the IRA. Employee A is younger than the ERD or NRD for both Plan A and Plan B. The cash surrender value of the life insurance policy is significant (250,000+). The question is, what to do with these funds to avoid a taxable distribution?

My understanding is that, if Employee A pays to Plan A out of his own personal funds (i.e., no Plan A or Plan B funds) the cash surrender value of the life insurance policy prior to rolling the funds into the IRA, there should be no taxable event and Employee A can own the policy outside of the plan. Correct? Any other ways about this?

I have a new 401k plan where plan year effective date is date of new entity or 11/26/2003.

In determining maximum Compensation for the match calculation, how many months do I prorate the 200K limit? 1 or 2?

Employees will defer on Compensation form 12/8 thru 12/19 for the 12/26 pay check. We were not abel to get up & running for the pay from 11/26 thru 12/7.

The match is doone each payperiod (biweekly, i.e. every 2 weeks)

I am looking to plan doc to see if Compensation is based on participation. I don't beleive this is the case though.

Employee (non 5% owner) turns 70.5 and terminates, triggering required minimum distribution. Employee is then rehired. Do RMDs turn off? Does it depend on gap between termination and rehire? For example employee turns 70.5 on February 1 and terminates same day. Employee is rehired November 15. What if rehire is after 12/31 of year employee turned 70.5 and terminated, but before April 1? What if it is after April 1 of year following?

At one time, self-employed persons could not trustee their own qualified plans unless they were incorporated. They couldn't borrow, etc. When the most recent round of changes made these plans essentially the same as qualified plans esablished by corporate entities, did they also allow the self-employed individual to serve as trustee of his/her own qualified plan? Site? Thank you!!!!!!!!!!!

Does an employee continue to accrue vacation and sick days while that employee is covered under USERRA?

Thanks.

I have a client that has brought in a new partner (medical practice). They want to bring in the new doctor as soon as possible. Is it possible to amend the plan to allow "predecessor" service for the practice where he came from? He would not have been an owner of that practice. I don't think you can but I wanted to make sure before I relayed this.

I have a 401(k) plan that excludes collectively bargained employees. I received an e-mail from the HR Director this week informing me that 10 actively deferring participants have been covered under a collective bargaining agreement (that offers its own plan) since May 1999. EEK!

Has anyone ever encountered this kind of snafu? My initial thought is that we'll have to run the plan through VCR or the like?!

Comments and suggestions are greatly appreciated!

A flex plan runs from 7/1 - 6/30. Participants are pre-taxing premium through the plan. Their insurance coverage is changing effective 1/1/2004 with a significant change in premium. They are being told that they cannot switch from family coverage to single coverage through the flex plan at this time. I don't believe that this is correct. Any comments? I know that they cannot change their spending account elections, but I thought the change in status rules allowed for a change in pre-tax premium amounts if there is a significant change in coverage or cost.

A client did not make a contribution to the SEP IRA of a participant for a few years, based upon erroneous information provided to them. We are now trying to rectify that and make a lump sum contribution (including appropriate income) before the IRS catches up to them and makes self correction not an option. However, the IRA Operations Department at the brokerage firm where the assets are held will not accept or allocate (ie label) contributions for prior years saying they are prohibited from doing so. Can anyone provide me some insight on why they would say this? Not doing so would disqualify the plan so something has to give on this one...

Unfortunately it's not so simple as having them deposit and label as a current year's contribution as the amount is well over $100,000. Yes, it was an HCE that was missed...

Any advice would be appreciated

Do we need a written signature for a single participant, in a plan subject to QJSA requirements, for an annuity waiver, or can an electronic signature suffice? So, I guess the questions is, could you have a paperless distribution feature for single participants in a plan subject to QJSA requirements?

Thanks!

We are researching the withholding requirements for resident aliens. My co worker and I are reviewing the same paragraph in the same IRS publication and are interpreting it in opposite ways. Which is correct interpretation?:

Here is an example:

Alien has retirement account. Alien files W-9 (not W-8) to attest that they are resident alien, but does not provide any additional required information as to eligibility for tax treaty (per IRS Publication 515).

If they were NON resident alien, we are required to w/h 30%. This seems simple enough...

But if they are resident aliens and they fail to provide documentation to support an exemption to any type of withholding due to treaty, should our system default the withholding as if they were any other ordinary US taxpayer (thereby withholding at the 20% rate)? Or should the default be the 30% withholding?

One viewpoint is that a resident alien has a special right under tax law to claim an exemption from withholding due to tax treaty. If a resident alien does not exercise that right, we are to treat the resident alien as if they were an ordinary U.S. taxpayer (i.e. 20% withholding).

Another viewpoint agrees that a resident alien has a special right under tax law, but if they do not exercise their rights under tax treaty, we are to withhold as if they were non resident aliens (i.e. 30% withholding)

Your thoughts?

An employer is converting their salaried, non-union employees from an indemnity plan to a PPO plan. Some people from this group are currently receiving their benefits under COBRA. Can they also be converted to the PPO plan?

A SIMPLE IRA Plan (on Form 5304-SIMPLE) provides that all employees are eligible (full eligibility) and allows employees to make or modify salary reduction elections on a monthly basis during the 30 days before that month. When a new employee begins working, he or she is given a SRA form and told may be able to begin deferring in the plan immediately.

So long as the deferral actually begins at the beginning of the following month, the SIMPLE plan is being operated in accordance with the document and federal law, correct?

Feel like I'm missing something (because the broker is questionning the employer allowing employees in throughout the year) ...

Thanks for the assist!

A union health fund currently offers life insurance benefits to its members whose employers make contributions to the fund for these benefits. Currently the contributions are forwarded from the employer to the Fund who pays premiums with an insurance company. The Fund would like to now direct these contributions to another Taft-Hartley Fund for procuring life insurance. The contributions would go from the employer to the Health Fund to the Life Insurance Fund who would then purchase the insurance.

Can this be done without a written agreement from the employers? Are there any violations (ERISA, Taft-Hartley Act, etc)? Do the CBAs need to be amended?

Thanks in advance for any help!

X maintains a 401(k) plan for its employees. Included in the plan are a small number of Puerto Rico residents. The Plan has a separate provision for the Puerto Rico residents based on the Puerto Rico Internal Revenue Code provisions. Under Puerto Rico law, there is no nondiscrimination test for matching contributions. In running the test under US, can the Puerto Rico resident employees be excluded?

Participant dies in 2002. There are three primary beneficiaries, one of which is surviving spouse; RMDs are taken in year of death. In 2003, accounts are separated and survivng spouse rolls over monies into a new traditional IRA in his name (treats as own). Surviving spouse is over 70-1/2 and needs to take RMDs this year.

If a husband and a wife are both greater than 5% owners and participants in the same plan and the husband dies, can the wife "roll over" her husband's account balance into her account balance under the same plan as long as the plan document allows for rollovers?

Husband died prior to obtaining age 70 1/2 - wife will not be 70 1/2 for some time and would like to leave the money in the plan but not be required to receive minimum distributions.

Thank you.

I'm real confused. I recently attended a Corbel Seminar on Cross Tested plans, and I was sure that I heard that in a New Comparability Plan with a 3% Safe Harbor Contribution you could not have a last day requirement. Is this true.