A new (calendar tax year) business is established 7/1/2003 say.

Q1. Can a plan, adopted during 2003, be made effective 1/1/2003 to make the first plan year a full 12-month year?

Q2. Does the answer differ if the new business is a Corp or a Sole Prop?

Q3. If a 12-month initial plan year is ok, Is the deduction limited to 50% of the annual(ized) 404 cost because the initial tax year is a short yr?

Any and all cites would be appreciated.

Help! My study partner has gone on vacation and took the C-2 DB Guide with her. I will be without study materials for the next ten days. boo hoo. Is it legal to fax me photocopies of Chapters 6 & 7? I hate to lose momentum!

Thanks (I hope)!

Laura Hartnett

fax (518) 785-0134

Q: Employer has a DB and DC plan and we would like to test the plans using the ABT for 410(b) and utilize the special rule to separately test plans of the "same type" for the ABR purposes [1.410(b)-5(e)(3)].

I just want to make sure if I do this I'm not precluded from using cross-testing under the DC plan for 401(a)(4) purposes (DB is safe-harbor), since I read under above reg you can't use cross-testing with this special rule. I'm hoping that means just not for calc'ing the 410(b) ABP, and not that we're precluded from using cross-testing for 401(a)(4) purposes. FWIW, I can pass 401(a)(4) cross-testing for each rate group on a ratio/percent basis (without needing to utilize the ABT), though this may not be relevant.

Do anyone think the 410(b) "special rule" precludes me from using cross-testing for 401(a)(4) ? Also I assume I don't have DB/DC combo plan subject to higher gateway threshold since I'm not aggregating for testing, right ?

A friend of mine lives in Florida and her brother who just retired at age 53 from his practice, was in an accident that was his fault and is now paralyzed. He has a small group plan for 1 (permitted there). Florida has min-COBRA for small groups not covered by Federal COBRA. My friend said that his broker said that he was not eligible because he was part of P.A.

I am assuming that means physicians association. It is through United Health Care PPO plan. Does anyone know what this means as far as COBRA is concerned. Someone said maybe it is an individual plan sold by out of state brokers that are ineligible under Florida mini-COBRA since association plans are not excluded from COBRA. I try to get info from the carriers but everything is confidential even more so now and it is also a convenient way to side step any issue and not do anything. If anyone can shed light on the term P.A. (it is on his ID card as well). The id card states small group PPO plan and the group name is his name. The costs are astronomical and he will be completely broke, besides everything else.

Thanks!

Our general practice is to discontinue all services for a client once they are more than 90 days behind on paying their bill to us. If we turn off the Web and VRU access should a blackout notice be issued to the participants?

One person company maintains a SEP and a MPPP. Combined assets are over $100,000. SEP alone does not require 5500, and MPPP with assets under $100,000 does not require 5500 but are SEP assets combined with MPPP assets to require a 5500-EZ filing for the MPPP?

One person company maintains a SEP and a MPPP. Combined assets are over $100,000. SEP alone does not require 5500, and MPPP with assets under $100,000 does not require 5500 but are SEP assets combined with MPPP assets to require a 5500-EZ filing for the MPPP?

I have a SH 401(k) plan with 70 doctors. Each one wants to decide what amount of discretionary PS contribution he/she will get each year. Some want to max out, some want to have no contributions to the plan (they want it as comp instead) and the rest are somewhere in the middle. One recommendation that I've received for the plan design is to set up several groups, each with a specific dollar amount assigned to it. The doctors would have to decide which group they want to belong to and their name would then be listed in that group in the document. Has anyone had a plan designed like this? Can you do this?

Another option is to set up 70 groups; each doctor would be his own group. I know this is one of those gray areas. Does anyone know if the IRS has clarified whether you can do this or not?

I am reading a 2003 report on trend that our broker sent to us. At the end, there are ideas for different cost management strategies. Under Plan Management, it says "Provide coverage incentives for support services and complementary care to motivate employees to improve their health".

What do you think that means? Examples?

Thank you.

We have a married Dr. (Dr. X) who owns 100% of his LLC (Co. A), there are no other employees...there is no pension or p/s plan.

We have a Partnership owned equally owned by 6 LLCs' Dr. X's LLC is one of the 6. The Partnership pays Dr. X compensation dirctly to his LLC, i.e., the check is cut by the partnershp, payable to Dr. X's LLC. The Parnershp sponsors a profit shring plan that covers all 6 partners and all 30 eligible employees (all Drs receiving the maximum $40,000 allocation).

Dr. X's LLC pays $100,000 annually to a Management Company (a C Corp); it's only employee is the owner (the owner is Dr. X's wife or Mrs. X). A DB plan is to be established and sponsored by the C-Corp for Mrs. X (Dr.'s wife)... see any problems?

Does anyone know of any restrictions (aside from the double counting ones) on shifting elective deferrals to satisfy ACP testing???

I am being told that in order to shift elective deferrals, the adp for the nhce's must be at least 2%. From my understanding, as long as the adp test passes before and after the paper shift, the plan can "shift" elective deferrals to satisfy acp testing. The only reasoning I could see for the 2% would be for the MUT which was eliminated by EGTRRA.

Any comments would be appreciated.

Is a Non-Erisa 403b considered an "employer retirement plan" that precludes Traditional IRA contributions and the tax deduction thereof, for a married couple earning more than $54,000?

Thanks

A 501©(3) org. has maintained a non-ERISA 403(b) arrangement since 1990.

In 2002 the plan is "restated" as an ERISA 403(b) plan with employer matching contributions.

Is this in fact a restatement, or is it a creation of an entirely new plan?

More specifically, should the plan document/Form 5500 identify the initial effective date as being in 2002 or 1990?

I am thinking the former, but cannot recall any statute, regulation or guidance that is directly on point as to the correct answer.

When does a spouse have to give consent for someone other than the spouse to be a beneficiary of a 401(k) plan? I have a situation where the couple is in the process of a lengthy divorce and the husband wants his two daughters to be the beneficiary of his interest in his company's 401(k) plan. It is fairly certain the wife would not want this to take place if she can help it.

Does the wife get first crack at the money while she is still married? And what happens once the divorce is finalized?

Please provide suggestions/guidance on this issue.

First year of plan (large plan, hundreds of participants) -

Intended that HCEs would not defer for first year - did not want to have an ADP/ACP test issue - however, employer failed to consider family members and therefore son of owner deferred to plan.

Can these deferrals be returned to the employer as "mistake of fact"?

It would appear that if within 12 months of plan year end, they could be returned and any gain may be distributed to employee. Any loss would reduce amount returned to er. (?)

What if paid directly to participant rather than employer? (no distributable event has occurred.) I'm thinking this isn't an option - cleaner if paid back to employer.

Please provide reference info, if any.

Thanks!

What would the procedures be (assuming they exist) for requesting from both the DOL and the IRS a waiver of all late filing fees due to facts and circumstances, rather than using the DVFC?

I have heard several conflicting opinions regarding changing enrolled actuaries.

Is it considered a change of enrolled actuaries if:

1) A different actuary inside the same firm signs the Sch. B.

1b) If 1 is "no", what if it's a national firm and the work moves from the NY office to the LA office, so that a completely different group of people work on the case?

2) The actuary leaves one firm and joins another, but retains the case.

Anyone have any additional information?

http://www.plansponsor.com/pi_type10/?RECORD_ID=22021

http://www.fasb.org/board_handouts/08-20-03.pdf

(pages 14-23)

I have a controlled group situation were there are two separate plans. I have a participant who terminated employment with one of the companies in the controlled group and was hired by the other company in the controlled group.

His job will be completely different. Can this participant transfer his money from the "prior employer" to the "current employer" as a rollover to another qualified plan? (Basically considered a "Trustee to Trustee transfer" type of distribution)

The issue I am having is that the investment company is telling us that the distribution has be labelled as a "cash" distribution and my concern is that they will withhold the mandatory 20% withholding and not complete the 1099 correctly. They are indicating that this is the way they need to handle the distribution since no distributable event has occurred.

Thank you in advance for everyone help on this one.

I have an interesting situation. During 2002, Company S had a 401k plan-not safe harbor. On Dec. 23 of 2002 Company G started a new 401k plan. At that time all of the employees of Company G had been participating in Company S's Plan. All of the participants moinies were moved from Company S to Company G early in 2003. Deferrals did not start for Company G until early 2003 also. The 2002 5500 for Company G was a bunch of zeros.

Company G's document says they use the prior yr testing method. There are not any prior yr numbers to use because they did not defer from Dec. 23-31. I am hesitant in using the deemed 3% because 2003 is not the first yr of the plan.

Basically, I am trying to find out how much the HCE's of Company G can defer for 2003. They use the prior yr testing method so what numbers do I go by????

Any help would be greatly appreciated.....

Thanks,

Carson