Under the new EGTRRA definition of a key employee, is it a 5% shareholder or a MORE THAN 5% shareholder?

Participant earns $65,000/year from a plan sponsor. Participant makes elective deferrals of $12,000 into his SARSEP plus an additional $2,000 in catch-up deferrals since he is over age 50. For purposes of determining the ER's maximum deductible contribution, I'm hopelessly confused between IRC Sections 402, 404, 414, and 415. For purposes of the 25% limit under 402(h), is the EE's compensation based on $65,000, $53,000, or $51,000 and are the elective deferrals (including the catch-ups) excluded from the 25% limit? Any insight would be greatly appreciated.

I left my position voluntarily 3 years ago at a large company in Georgia. I was an independant consultant during that time. They have always wanted me to return, and I'm now considering it. What benefits are required to be reinstated, and which are negotiable. I'm specifically wondering about affect/reinstatement to pension funding and time worked calculation (a guaranteed benefit plan based on last 5 years salary.....but how does that work with two employment periods of 15 years and x years and when does 100% vesting now occur), vacation time, time wait to be enrolled in 401k and health plans etc. What else should I consider?

Company A has profit sharing plan A and Company B has profit sharing plan B. The companies merged together (Company C) from Feb 1, 2003 to August 2003 and then split again into Company A and Company B.

Company C never maintained a retirement plan. Company B is now asking how do they fund their individual plan? The employees actually have 600 hours with Company B (rest of time and compensation is with Company C). Company B's plan has 1000 hour / last day rule. Company A has the same issue.

If a participant, who receives pay in the form of commissions only, is unable to contribute the amount elected, how do you handle this situtation? My guess is that you reimburse him only for the amount he has contributed.

Thanks, Joe

I currently have a Roth IRA, but I would like to know if a single person and/or a married couple can have more than one Roth IRA. For instance, can I open up a Vangaurd Roth account and then open up another Roth IRA account with another company?

Are there any yearly deductions(reductions in balance), taken from an existing Roth IRA account for those at age 72+ ?

My clients have $400,000 real estate in their Keogh. Now it's retirement time. They wanted to distribute the land to themselves next year until I told them the tax consequences. Now they would like to do partial distributions every year; impossible with their real estate. Any ideas or suggestions? I've thought of mortgaging the property for cash flow but then they wouldn't have monies to pay the mortgage payments. Is there any wriggle room for distributing land out of a Keogh? Thanks.

We just aquired a new company, and I'm trying to find out what, if anything, we need to do with their COBRA participants. They didn't file bancruptcy. Do I have to enroll them on our plan?

Any help would be greatly appreciated.

My local government (City of Los Angeles) does not allow buy-back of retirement service for serious disability such as stroke, cancer, etc. Why is this? I was disabled in 1993 - 1995 for a severe stroke that caused paralysis on one side of my body. I have since fully recovered and have worked from 1995 - 2003 without any absences. I have worked for the City of Los Angeles for 25 years, and will retire in 5 more years.

The two years lost for disability will greatly affect my pension. Our retirement plan allows for buy back of uncompensated maternity leave; it seems like penalizing members who get cancer, stroke, kidney disease or similar serious disabilities, yet who go on to recover and retire from the City are being treated unfairly for something totally out of their control. Could this be an ADA issue?

Company A sells one of its divisions on 4/1/2003. A new entity is established with the stock of the division. The new entity wants to establish a 401(k) plan effective January 1, 2004. However, the employees of the division, now the new entity, are continuing to defer into Company A's 401(k) plan. Is there a one year "grace period" that these employees can still participate in Company A's plan without making the plan a multiple employer plan?

How would testing be performed?

Or are there problems with the employees of the new entity participating in Company A's 401(k) plan?

I have an Employer with a 401(k) Plan without a separate Trust EIN #. Earlier in the year (calendar year plan) the Employer processed a direct payment distribution with the appropriate withholding under the Company EIN #. The Employer applied for & received and EIN for the Trust around mid-year. Once they received the Trust EIN, they had another distribution requiring withholding. They withheld and deposited using the new Truste EIN number. What will I use on the 1099-R forms? Should I do 2 different forms using the different numbers? What about the #945 form in January? Also 2 filings? I'm thinking that for the IRS to reconcile the deposits made, separate forms will need to be filed for 2003. Any comments/suggestions appreciated! (P.S. I did not know the client had done this, or I would have had them continue to use the Employer EIN for the balance of 2003 and the Trust EIN for 2004 going forward!!!!)

I was wondering if anyone has a Roth IRA with Vanguard. Im only 22yrs old and would like to get more information, So far I have put in $1,000 and was wondering if I picked the right fund.

VQNPX - Vanguard Growth and Income Fund Investor

Client has not historically recognized the current year's liability gain/loss to determine the amortizable amount in the NPPC. For example:

- The Fiscal year is calendar year

- 12/31/02 disclosed PBO = $100 (based on 1/1/02 census)

- 1/1/03 PBO = $110 (based on 1/1/03 census)

- Therefore, liability loss = $10

Assuming PBO exceeds MRV, the corridor the client currently uses is: $10. I would argue that it's more appropriate to use $11. Valuation software supports my approach.

Questions: Is the current approach even acceptable under GAAP? Is changing to my preferred method a change in accounting method I need to have approved by the auditors? Note that in my specific situation, by making the change I'm reducing the expense since I'm creating a larger corridor and deferring more of the outstanding loss.

I'm not sure if these even has any impact on your opinion, but the interest cost is determined using the $110 PBO, ie. the new census is reflected in the service cost and the interest cost.

Let me know your thoughts. Thanks.

If your document supports it, can you use a different 414(s) definitions for ADP, ACP, and 401(a)(4) testing? The regulation quoted below seems to indicate that consistency is only required in satsifying the "applicable provision" and you would seem to have different "applicable provisions" under 401(a)(4), 401(k) and 401(m) However, I suppose that someone could make an argument that the ADP and ACP tests are really “part” of 401(a)(4) under 1.401(a)(4)-1(b)(2)(B).

(2) Consistency rule.--(i) General rule. A definition of compensation selected by an employer for use in satisfying an applicable provision must be used consistently to define the compensation of all employees taken into account in satisfying the requirements of the applicable provision for the determination period. For example, although any definition of compensation that satisfies section 414(s) may be used for section 401(a)(4) purposes, the same definition of compensation generally must be used consistently to define the compensation of all employees taken into account in determining whether a plan satisfies section 401(a)(4). Furthermore, a different definition of compensation that satisfies section 414(s) is permitted to be used to determine whether another plan maintained by the same employer separately satisfies the requirements of section 401(a)(4). Although a definition of compensation must be used consistently, an employer may change its definition of compensation for a subsequent determination period with respect to the applicable provision. Rules provided under any applicable provision may modify the consistency requirements of this paragraph (b)(2).

I administer a Cafeteria Plan that allows employees to be reimbursed for outside

health insurance premiums. Is Medicare paid through Social Security a reimbursable health insurance premium if the employee is legally blind and

that is the reason he is on Medicare? This person is also covered under his

employer's group health insurance plan, Medicare is his secondary insurance.

Does anyone know of a resource that discusses the taxation of domestic partner benefits at the state level? Is there a list of states that exclude those benefits from taxable income?

When determining the participant's account balance as of the prior plan year end, do I include receivables?

I recently quit my job to stay at home with my kids. I have about $10,000 in a 401K plan, 100% vested. As I understand it I basically have three options at this point.

1) Rollover to a retirement account. (Lots and lots of questions here!!)

2) Leave account in plan. (Not sure on this one.)

3) Single sum payment. (Definetly not.)

I don't plan on going back to work for atleast two years, maybe more. I do not need or do not plan on touching this money till I'm old 'n gray, which doesn't "feel" that far off sometimes. BTW, I'm currently 33 years old.

Anyhoo, I'm thinking I probably want to go with option #1 but I've got tons of questions. Obviously I don't expect someone on here to plan my retirement but can someone recommend a good website that explains, in layman terms, Roth IRA's, conventional IRA's, and the process involved in a rollover from a 401K. Of course any and all suggestions, advice, and explanations are most welcome.

Thanks.

Had a proposal roll across my desk in the last couple of days and seem to have lost my train of thought.

1) 1-Man Sponsor, previously maintained a DB plan. Plan was terminated in 1997, distributed LS in 1998 to successor PS plan. Plan at that time had NRA of 60, participant was age 59 at time of distribution. Lump sum received to PS plan in 1998 was 1.078m. AE in old plan was 1983 IAM, all ages setback 4 years, pre-ret i of 7%, post-ret i% of 5%.

2) Looking to establish a new DB plan to take advantage of increased 415 limits. Plan would be effective 1/1/2003, age 64 at start, NRA of age 69 (5 years of part rule for NRA).

What is throwing me for a loop is how to calculate value of prior LS received, as far as assessing a SLA annuity value.

Do I:

- Determine SLA AB based on actuarial equivalence assumptions in effect at time of distribution (looks like GATT played a little into benefit at that time), using LS paid, attained age at distribution, and retirement age under prior plan, and then actuarially increase to new NRA based on prior plan assumptions?

- Determine SLA AB under proposed plan assumptions (say 94GAR @ 5.5%) using attained age at distribution and NRA of 69 under new plan?

Help (trying not to get caught up too much in minutae as far as exact age - principals on nearest age would be fine to get back on track).