Non profit organization client insists that his pension plan is not an ERISA plan and therefore not subject to the Form 5500 filing requirements. We reviewed the prototype plan document and it is a qualified plan. Does anyone know of an exception where a non profit organization is not required to file a Form 5500?

A participant is submitting an orthodontia claim for herself and she's being charged additionally for porcelain brackets. We feel this would be considered cosmetic but our client is saying it's not. What is your take on this. We need an answer soon because we're due to process the receipts tomorrow. Their asking for something in writting showing that porcelain braces for an adult is cosmetic. (We already know that the braces are for a medical reason and not cosmetic.) Can anyone guide us in the right direction for something in writting? Thanks.

I have a minister that has rolled monies from his church pension plan in the mid 1980s to an IRA. His CPA is now stating that he can take a distribution from the IRA and designate them as housing allowance which would make the distribution tax free. Two questions:

1. Can this be done out of an IRA?

2. If it cannot be completed out of the IRA, could the monies be transferred back into a 403(b) account and then distributed as a housing allowance?

Thanks!

I've read that the purpose of cross tetsed plans is to be able to allocate a higher portion of contribution to certain employee(s) based on their older age and higher compensation .

I've also read that the purpose of a cross tested plan is to be able to allocate a higher portion to certain employe(s) based on their job classification.

So which one is it? Does the ability to favor certain employees, over other employees, in regards to contribution allocation, come from the [1] age & compensation status ..... or from the [2] job classification status ?

Don't have any specifics but was asked if there was anything illegal with the following -

a Bank offered to double an employer's line of credit if the employer placed their qualified plan with them. Are there ERISA issues? Possible prohibited transaction? Possible violation of banking rules?

Payroll companies trade off payroll services if they have the plan and insurance companies may reduce fees for other coverages if they get the qualified plan, and vice versa.

Any opinions or articles you can post?

Three separate controlled groups in one Plan. The entities are related only through a common ancestry--i.e., a portion of a company was acquired, and two other divisions were spun off and are ownd by two totally unrelated parties.

Does each of the 3 separate employers need a fidelity bond covering the Plan?

Anyone familiar with regs that would prevent a company V.P. from receiving commissions on the plan he is also a participant in? He's not on the board of directors and is appropriately licensed. Thanks for any help you can provide!

I found the following situation humurous and wanted to share it here, since I have no other friends.

The local dairy is running a promotion entitiled, "Fresh or it's Free!"

What exactly does this mean?

Customer: This milk is sour and curdled.

Checker: No charge, Sir.

The not-for-profit ER has a PS plan for ER contributions and a 403(b) plan for EE contributions. Should the 403(b) assets be included when determining the top heavy status of the PS plan?

We have found with a new client that they did not follow the directions of the loan policy when preparing new loans. Policy states prime plus 2....client provided all loans at 7.5%. A bargain when the rates were at 8-10%. However not so good when rates were much lower.

Now to correcting it. Do we reamortize all the loans over the orignal time frame using the current balance? Or do we have to take each loan and calculate the actual-should be balance differential and either force extra payments to catch up or process distributions based upon the balances?

There are a number of loans involved so obviously not an easy chore. A number of participants who have benefited from a reduced rate are almost done with their loans so a large payment would be a bit unweildy for them.

The are allowed multiple loans so new loan/payoff options are possible in some cases.

Are 2% owners still prohibited from participating in a cafeteria plan under an s-corp?

Thanks

TAG

I am researching the limitations on salary deferrals prior to the establishment of ERISA. I understand the limitations went through a few changes prior to ERISA. Any information would be greatly approciated. Thanks.

A couple of quick questions regarding the TH test

1. I get to exclude unrelated rollover balances, correct?

2. Do I consider the balances of former employees? If so do I bring into the test all former employees or only those that terminated during the testing plan year.

I have a plan with balances of employees who seperated from service prior to the start of the testing plan year.

There were no distributions during the plan year.

When using the IRS Model Custodial Agreement or Trust Agreement:

SEPs require that the same percentage of compensation be made for each employee. Partners are considered employees for SEP purposes. Therefore, it appears that each partner must have the same percentage of compensation made to the SEP. Is that correct?

If so, can the partners have different percentages if they set up their own SEPs? That is, can each partner establishes his or her own SEP?

In a safe-harbor floor offset (DB): in determining the amount of the offset from a PS plan, does the interest credited to a participant's account have to be actual or can it be hypothetical? Does this change if the accounts are participant-directed?

Back to my county hospital . . .

Briely, the hospital has a defined contribution plan and a 403(b) deferral-only plan. The DC provides that the employer will only contribute to the it if an employee contributes to the 403(b) plan. The formula is as follows:

"For each Plan Year in which you authorize . . . a salary reduction contribution . . . under the Tax Deferred Annuity Plan equal to 3% of your compensation up to 33 1/3% of the SS TWB and 6% of your comp'n in excess of 33 1/3% of the SSTWB, your employer will make a contribution to the MPP . . . equal to 4% of your comp'n up to 33 1/3% of the SSTWB and 8% of your comp'n in excess of 33 1/3% of the SS TWB."

Any reason why I couldn't merge the DC plan into the 403(b) plan and provide the above as a matching contribution under the 403(b) plan? If I were to do this, any notice requirements to employees?

I am suggesting this option because the hospital currently maintains three plans: the DC, the 403(b), and a 457 plan. The paperwork (documents, SPDs, and amendments) are both confusing and costly.

Any thoughts??

usually we use the account balance as of 12/31 of the previous year to calculate MRD's. i always assumed that this was a cash basis number. one of my clients says that in the past they have used an accrual basis for that number.

for example, say the acct balance is $10,000 on 12/31/02, but a match of $3,000 was made in january for 2002. the client is saying we should use $13,000.

i disagree. but any thoughts would be appreciated.

Can anyone please let me know what you do when an employer wires too much money and it is deposited into the trust account. For example, the payroll file is for $200,000 but the empoyer accidently has $220,000 wired to the trust. Do you force the employer to short their next wire because you can not take money out of the trust account once it is in there, or would you send the money back to the employer?

Anything you could cite would be greatly appreciated!

I have a former employee who wants to take a cash distribution. We live in a community property state which requires the spouse to sign the distribution form. Notary is NOT required. I have reason to believe that the participant is going to forge is wife's signature as I know he is getting divorced (small town!!).

What responsibility do I have, as administrator, to the wife? Do I need to verify she signed? Inform the trustee/employer? The trustee also signed off on the distribution form.

Approximately 2 months ago, Individual A received a termination distribution from the bank trustee of the employer’s plan. He deposited the check into his checking account, which happens to be at the same bank as the trustee.

Individual B filed fraud paperwork on the above check approximately one month later. This paperwork resulted in a withdrawal of the amount of the check from Individual A’s account by the bank/trustee pending investigation.

Individual B and Individual A are related and once lived at the same address. They have the same name and their SSN’s are very similar.

Individual B contends that Individual A stole his identification and Social Security card and assumed his identity.

Incidentally, Individual A apparently does not speak English very well and requires an interpreter. Individual B speaks fluent English.

The bank/trustee spoke with the employer who contended that whomever worked for them spoke fluent English.

Now the bank trustee has decided that it is the TPA’s problem (us) to deal with and are not pursuing the investigation any further. Individuals A and B have been directed to our firm.

It does not seem that we can make a definite determination as to who is entitled to the benefit. My thought is that we should return the distribution and the withheld taxes to the plan and await a court order relative to the distribution.

Does anyone else have any thoughts as to how to handle this? The amount involved is less than $5,000.