Our employee is on the spouse's employer plan. The spouse will retire soon and have an option of electing a retiree plan. Our employee will be eligible as a dependent on the retiree plan. Will our employee have lost coverage under a prior plan when her spouse retires and therefore be subject to HIPAA special enrollment under our employer plan? I'm not sure because she will still be eligible to be on the retiree plan offered by the spouse's employer.

Hello,

my client and his spouse have no earned income this year, only small amount of investment income, but they have the usual set of itemized deductions that they don't want to waste. Also, this client usually is in a high-income bracket.

My best idea of using their itemized deductions is to have them roll over their 401(k) to an IRA to a Roth IRA before the year-end. The amount of conversion gets taxed but is offset by itemized deductions, personal & dependency exemptions, and the tax is further reduced by the child tax credit (for 3 children).

It sounds like he should be able to roll over about $65k without any net tax cost for either Fed or California.

What I want to doublecheck is that I'm not missing anything here - that there is no disallowance of some kind that I missed based on the fact of NO earned income for either spouse, or child tax credit disallowance based on something in my facts etc. Anything else I missed?

Thank you for your advice,

Mr X is a participant in his own Keogh Plan-PSP (he's self employed) ..and.. also Mr X works for a state agency which has a 457 plan which Mr X participates in too.

Mr X contributes $40,000 to his PSP account and also he deferrs $12,000 of his state salary to the state's 457 plan.

Ooops! That means that his annual additions to all his plans is more than the $40,000 IRC 415 maximum limit.

(Is there a problem with this ? Or does the fact that "his sole-proprietorship & the state agency are two separate entities and he owns an interest in only one of those entities", mean that his total account additions to all his retirement accounts is allowed to exceed the IRC max limit?)

Check this URL

http://www.irs.gov/pub/irs-pdf/i1099r.pdf

OK, so now you've amended your plan for EGTRRA prospectively which increases the PBO, but not the ABO. Should the increase in PBO be amortized as a Prior Service Cost?

Doing this creates a counter-intuitive result - you increase PBO and set up a PSC base so there's no impact on your accrued pension cost. The ABO is uneffected so you have not changed your minimum liability. However, the PSC base can be used as an intangible asset so you effectively reduce your OCI charge. Is this result right? Should I recommend to all my clients that they prospectively increase benefits to avoid OCI charges in the future (kidding, of course). Should you only set up a PSC base if you adopt EGTRRA retroactively?

Our C Corporation has had a SARSEP since 1990. We use the IRS model plan. One of our "non-key" employee wants to make additional 2003 elective deferrals (in addition to the $2000 permitted catch up) which, when added to the employer's contribution, will exceed the 25% maximum 'excludible' amount. However, even with the additional contributions, her deferrals would be less than the $12,000 limit, and total contributions would be less than 25% of GROSS compensation. She points to the current IRS SARSEP webpage (and other non-IRS publications) which says that "contributions to each employee's account are limited to the lesser of $40,000 or 25% of "pay". I point to the 5305A-SEP (March 2002 version) which says "deferral limit is 25% of compensation (minus any empoyer SEP contributions, including elective deferrals)". I am seeking to verify that this 5305A-SEP version hasn't been superceded by new rules that I'm not aware of upon which the IRS web page reference to SARSEP contribution limits is based. Thank you.

I think we messed something up. We have a profit-sharing plan-Keogh (it is called a prototype and it has a base plan document, adoption agreement and SPD).

We have been amended for GUST and EGTRRA - but here's the question: We have the funds managed by one of the partners investment managers. They are not doing any record-keeping, etc. I found about the fidelity bond requirement - but I am more concerned about the trust requirement. We do not have a trust. We do have an account with the investment manager - where the money is held - is that good enough? I'm concerned about this. Any help would be greatly appreciated - you all seem to know so much!

can a plan institute a creditworthiness requirement when deciding whether or not to issue a loan? the regs say there must be adequate security but if the account this is satisfied if the loans is secured by the participant's account balance. does this in effect satisfy any collateral requirement?

Do you guys have any recomendations on a type of mutual fund for me to look into. I am only 19 so I have plenty of time on my side. I was thinking agressive growth, but was wondering what you guys thought. Thanks!

I have some general questions about plans and/or participants that contract with investment advisors to provide advice and/or management of a participant's retirement plan assets. What is the typical arrangement between the plan sponsor and/or the participant and the investment advisor? If there is anyone who has dealt with these types of arrangements, please advise as to what is usually provided for in these arrangements in terms of responsibilities of each party. Thank you.

One of my Money Purchase plans is scheduled for an IRS audit. One of the items the IRS has requested are "copies of the statements required under Code section 6057(e), as given to those who terminated participation in the plan during the year(s) under examination."

I have been unable to find any information concerning this code section. Does anyone know what they are requesting?

Thanks.

I understand a QDRO can not split benefits that accrue after divorce. I have a pretty straight forward order for a DB plan providing 50% of the participant's payments when he retires and begins his payments.

On what basis is this not acceptable, disregarding optional forms and their effect on payment amounts?

Thanks

when her son is 5% owner do 318 attribution rules apply?

We have had an issue come up where a participant is gravely ill but has not yet passed. The participant has designated her sons as 50-50 beneficiaries of her 401(k) account balance. Son1 also has power of attorney over the participant's affairs. The participant is not yet incapacitated and has indicated that she does not want to change the beneficiary. Son1 wants to change the beneficiary with his power of attorney to being 100% payable to him because he believes Son2 to be unworthy. The document makes no mention of accepting a beneficiary from anyone except the participant. Should the plan administrator accept the instruction from Son1, who again has power of attorney over the participant's affairs? Anyone with insights into this situation would be appreciated.

We are currently looking at the option of requiring employees to be automatically enrolled in our 401(k) and needing to make an election not to participate. However, we are concerned about the various state regulations requiring authorization of the deduction. I am looking for state by state information explaining if automatic enrollment into a 401(k) plan is allowed under their regulations. Any information you could provide on this subject or resources you are aware of would be greatly appreciated.

Where could I find information on average mutual fund expense ratios by asset class, for example, large cap growth average expense ratio, small cap value average expense ratio, etc.

I want to compare our 401(k) funds' expense ratios to an average by class.

My client is a sole proprietor, age 40, whose salary is $30,000. He could easily make his salary $200,000, but for income tax purposes he chose frugally.

Can he implement a DB plan where the benefit is the 415 maximum of $160,000?

The benefit formula is based on the fractional rule. NRA =65

NRB = 530% x $30,000 x 25/25 (the accrued benefit formula assumes that 1/25th of the NRB is earned each year).

The NRB = $159,000 . . . close to 415

Is there any prohibition to this sort of benefit formula?

I am reviewing a plan document for a client that is a controlled group. Each of the adopting employers has executed a signature page adopting the plan. The EGTRRA amendment, however, was executed by only the plan sponsor. Should all of the adopting employers also "sign off" on plan amendments? Any citations to support your answer would be greatly appreciated since we have a difference of opinions in our office.

Okay, we have a little discussion going on in the office. Can anyone help us resolve it?

The document says:

On behalf of each Participant who is eligible to share in matching contributions for the plan year, a discretionary matching contribution equal to a uniform percentage of each such Participant's deferred compensation, the exact percentage, if any, to be determined each year by the employer, which amount, if any, shall be deemed en employer non-elective contribution.

This is how we are supposed to allocate it:

Participants with less than five years of service will get 100% of the first $300.00 of deferral, while participants with five years or more of service will get 100% of first $500.00 of deferral.

I can't see how this allocation method complies with the doc.. It doesn't seem to me that it is "equal to a uniform percentage of each such participan'ts deferred compensation".

Am I missing something here? Can anyone out there help me understand this?

Thanks!

I'm interested in opening roth iras for each of seven grandchildren with approx. $100 deposits for special occasions and/or achievements. I need low or no annual fee accounts with low or no minimum contributions.