We have 2 related DB plans. One plan's trust has had good invesment performance, and the other plan's trust has not. Benefits from one plan have been paid out of the wrong trust, the trust with poor investment performance. How should we correct the trusts' balances?

For example, if $100,000 in benefits is incorrectly paid out of the trust which had negative invesment performance (it should have been paid out of the trust with positive investment performance), do we simply take $100,000 from the trust the benefits should have been paid from and deposit it in the trust in which the benefits were incorrectly paid from? How do we factor in the fact that the trusts had very different investment results?

Any suggestions are greatly appreciated!

cstrong

Can anyone refer me to guidelines on interest owed health care providers if thier claims are paid "late"? I have heard of calls from doctors demanding such.

Is this ERISA, HIPAA, some other reg?

I have a non 5% owner who attained age 70 1/2 in 2002. He terminated in August 2003 and rolled all of his money to an IRA. Should he have received a minimum distribution from the 401(k) plan even though his RBD is 4/1/04? What is the remedy?

An ESOP is established with the intent to be a leverage esop, but the loan is never obtained. It is now the Plan Sponsor's intent to purchase shares of stock from a terminated employee. Two years has passed and no stock has been purchased for this plan. How long can this plan be in existence without stock in the plan?

(Posted by Dave Baker for Thomas Mulloy, who's having trouble with the message board.)

I went back 3 years on the sep/sarsep/simple board with no luck, so I'll ask

the experts. Situation:

Partnership operates a SARSEP. HCE and NHCE deferred during 2003.

Partnership changes to Sub S Corporation 10/1/03. Business name will change

as will the employer ID number.

Client wants to start safe harbor 401k 10/1/03.

Two questions:

1) Can the s.h. harbor 401k be established 10/1/03 (for a 3 month short plan

year)?

2) They don't want an open enrollment (i.e., anyone employed 10/1/03 enters

the 401k plan). Any problem counting prior service with the partnership and

using it satisfy a 1 year service (and 750 hours worked) eligibility

requirement?

Thanks.

We have a situation whereby an ERISA plan will become a church plan (due to various restructuring matters). There is a bit of a disagreement on whether the church plan must protect the benefits accrued under the ERISA plan.

In the PLRs that I have read (e.g. 200036051, 200048050, 9717039, etc), the plan sponsors have represented that the resulting church plan will be amended to provide that no present or future plan amendment will reduce any benefits accrued while the plan was subject to ERISA.

The argument against this is that the IRS did not require the amendment, but that the plan sponsor offered the amendment.

Any insights? Suggestions? Opinions? Thanks

Does anyone know the length of time that an administrator must retain the records of an individual after the plan has terminated? If so, please provide the cite, also. Thanks in advance for your help.

What is partnership income for purposes of determining compensation for making an employer SIMPLE IRA contribution? Is if the amount reported on the k-1 or must the k-1 amount be reduced by expenses deducted on the partner’s tax return in order to determine compensation.

Does anyone have a cite or source where i can find info regarding which GASB reports need to be prepared for a govt. DB plan? Thanks.

Has anyone had experience with getting an IRA back from a state's Office of Unclaimed or Abandoned Property?

If so, did the state take taxes out before giving you the money?

What was your experience generally?

Thanks

We have an employee that has enrolled her child in medicaid. Does this constitute a change in family status to release her from the cafeteria plan.

An employee retired in 2002 (at the normal age under the plan). Her entire account balance consists of stock purchased with an ESOP securities acquisition loan; therefore, no distribution has yet been made to the employee. The loan will be paid in full at the end of 2004. What is the timing of the distribution that must be made to the employee under 409(o)(1)(B)? Does the employer have to make the first payment on the last day of the plan year in which the loan will be fully repaid, or does the employer have a reasonable time in which to begin distribution?

Final Catch Up Regs in IRS Bulletin # 37

http://benefitsattorney.com/cgibin/framed/...gi?ID=41&id==41

A corporation has a tax year ending September 30, 2003. It will elect a short tax year for federal income tax purposes for the period October 1, 2003 through December 31, 2003 and then become a calendar year taxpayer as of January 1, 2004. The corporation is a LLC, taxed as a partnership.

The corporation has never had a qualified retirement plan. It plans to establish a plan by 9/30/03 with an efective date of 1/1/03, a Plan Year of 1/1 through 12/31/03 and a limitation year of 1/1/ through 12/31/03.

As the first plan year will not end during the current fiscal year end of 9/30/03 but will be effective before the close of the 9/30 fiscal year how much may it deduct and when?

I believe it may not take any deduction, other than start-up and administration costs, for the tax year ending 9/30/03. But how much may it deduct for the short plan year ending 12/31/03 - 25% of the Compensation paid during calendar year 2003 or 25% of the Compensation paid during the short plan year? May it adopt a first Plan Year of 1/1 through 12/31 or must it adopt a short plan year as its first plan year? If the latter, may it use calendar year Compensation or short year compensation?

An S Corp has a self-insured health plan. The Company is currently paying the premiums for several minority owners who are not employees. It would appear that the company should charge these people for their coverage. Actual premium amount? Premium amount + administrative cost (same as COBRA participants). Or some higher amount representing fair value of benefits?

Obviously some other issues to be raised - do they meet plan document eligibility conditions. Covered (probably not) under any stop loss insurance.

Anyone deal with a solution - other than discontinuing the practice?

I am doing my first cash balance plan and it was terminated by amendment effective 12/31/02. The plan credits interest based on the 30 Yr Treasury rate in effect for the plan year. I have calculated the AB at 12/31/02 based on the 2002 interest rate. Would I use that 12/31/02 AB to cashout the participants in 2003 (using the 2003 interest rate and mortality basis for the lump sum) or would I project the account balance to NRA and discount it back to the date of distribution based on the rate in effect for 2003 to get the AB and lump sum? The results are different. The document doesn't seem to address this specific issue.

I would think I should use the 12/31/02 accrued benefit (at the date of plan term) to calculate the lump sums just like any other DB plan.

Any input is appreciated!

Incidentally, the client expressed in writing that they don't want to file the plan term with the IRS.

I'm not sure if this is the right forum for my question, but here goes...

Our client was a corporation owned by two individuals, 51% and 49%. They have changed the entity to a partnership. The partners are individual corporations. Each corporation is owned by one of the original shareholders of the original corporation. One corporation owns 51% of the partnership, the other 49%.

The only income of each new corporation is the partnership income.

My question is, are these three entities related?

We would like to continue the current plan but are not sure if the two corporations can participate in the partnership's plan as related employers.

Thanks.

My understanding is that a self employed can defer the 402(g) limit and contribute 25% of the adjusted SE comp. Is this correct?

We administer a 12 participant DB that has benefit liabilities that exceed assets by about $600K. The plan is covered by PBGC. The owners (stockholders) would be happy to waive a portion of their benefits to terminate as a standard termination. The majority owners are brothers. One has 50% of the stock, the other has 30% and his daughter owns 20%.

Clearly the one who owns 50% can waive his benefits, but it is less clear as to whether the 30% and 20% family members can waive their benefits.

Although the constructive ownership rules of code section 318 appear to aggregate family members, resulting in two 50% owners, PBGC reg 4041.21(b)(2) references the constructive distribution rules of IRC sections 414(b) and © when defining a majority owner. 414(b) and © deal with controlled groups, which we do not have here.

Anyone have any thoughts as to whether the family members can waive their benefits?

Thanks.

Can a sponsor require employees to fill out a form affirming the fact that they do not want to participate in a 401(k) Plan? The point would be to prevent that employee from coming back and suing for not being offered the Plan.

Any technical references would be ideal.

Thanks