A company recently amended its VEBA to add an offshore captive insurance arrangement as a new investment vehicle. In trying to determine whether a new Form 1024 must be filed, I came across this thread:

Thread

In the discussion, vebaguru and Kirk Maldonado believe that a new 1024 is required when a VEBA is amended, but I'm wondering what the authority for that position is. When I read Treas. Reg. section 1.505©-1T, Q&A-12, it doesn't appear that a VEBA that has received a determination ever has to file again.

Any thoughts?

Client maintains a combination cross-tested p/s and 401k plan. Prior to 2002, participants who either were not employed at year end or did not work 1,000 during the plan year were not eligible to receive any p/s (or forfeiture) allocation. All participants were, of course, eligible to make 401k deferrals.

Can these p/s allocation requirements be retained for 2002 and beyond in light of the new minimum allocation gateway requirement? In other words, can the plan continue to be cross-tested even though some NHCEs do not receive the gateway minimum (i.e., those who terminated or worked less than 1,000 hrs)?

The preamble to the gateway regs seems to provide that individuals who do not receive any benefit (i.e., no allocation of p/s or forfeitures) need not be given the gateway minimum. Yes/No? Does the fact that these NHCEs can make 404k deferrals and receive a match impact this result?

Thanks.

Employer with money purchase plan has funding deficiency for 2001. We looked into one of the correction program but this fell trhough the cracks because it wasn't participant contributions that weren't deposited, but employer contributions. So they are paying the 10% penalty on Form 5330. Does this mean they do or don't have to pay the accrued interest from the time that the money was out of the plan? I know the correction plans instruct you to do so but I haven't seen the same instructions anywhere for delinquent employer contributions. A citation would be helpful so that I could follow up.

Also, I am assuming that I need to have the client file amended returns for the deficient year (they had said they made the deposit of the employer contribution). Do they report they made the deposit in 2003?

Just when I understood the correction programs .... along comes this! Thanks in advance.

Kristen

Would sunglasses that clip on to regular prescription glasses be reimbursable under a FSA?

The participant would be saving money by purchasing the clip on instead of buying a whole new set of prescription sunglasses yet the clip-on's by themselves are not technically medically necessary.

Opinions??

Thanks,

Rachel

Can anyone provide statistics on the types of pre-retirement death benefits plans offer? In particular, the prevalence of pre-retirement death benefits by level of benefit: % of plans that provide minimum J&S 50, as well as % and types of other benefits.

Thank you!

A Participant terminates employment and takes a cash distribution of his vested portion. 20% is withheld as Federal Income Tax, and the participant receives a 1099 for the distribution. The participant is rehired, and wants to pay back the distribution to have the forfeiture reinstated. Since the participant has already been taxed on the distributed amount, is the repayment now considered after-tax money and has to be carried as a basis?

Someone just told me the IRS is coming out with a rev proc that will extend the GUST deadline beyond 9/30 for a $250 user fee. Has anyone heard anything about this?

Can a partner who receives a K-1 use this income to start their own Uni-k? Or does the partnership have to sponsor a plan?

Income is based on consulting services, not rental income or anything like that.... so partner does actually "do" something to earn the income.

We have two corporations that our attorneys are 'closing'. One had a SEP plan and one had a SIMPLE plan (mostly same ownership, all family). Are we required to give the employees any notification regarding their SEP or SIMPLE plans? A new corp is being created that will hire all the employees and they will start a new 401k.

if we're starting a new 401k, for a new sub-s corp, on 9-1-03 and plan to use short plan year through 12/31. Can we give our notice to employees regarding the safe harbor match as soon as the plan is setup? Or do we have to delay the effective date of the plan to allow for a 30 day advance notice?

Just got word from my VP/HR that we may need to do an AAP (Affirmative Action Plan) since we may be a govt contractor in the near future. I have done one in the past, about ten years ago, without software and it was a nightmare.

Now, I am looking for recommendations for the best (and also read: cheapest) software out there to help with all aspects of the plan so I don't have to figure out cab fare to the halfway point of the Golden Gate Bridge.

Any help or suggestions? Please?

I have a plan that is going to make the Top Heavy minimum as a Profit Sharing contribution--3% of comp for the eligibles. The person who prepared the allocation for me merely took 3% of the eligible comp. The plan is integrated w/ social security. There was no contribution listed for the ecess comp. is that correct--it's just a straight 3% even if it's integrated?

Your thought are appreciated.

We are a TPA firm. Late last year we issued checks to plan participants whose company had gone out of business. We still have quite a number of uncashed checks where funds were paid to participanst & IRS withholding remitted. Rather than re-issue checks to participants we are looking at issuing stop payments & sending funds to an investment account. I don't believe we can set up IRA's since we've already issued a 1099-R for 2002 using code 1 & have sent 20% to IRS. Is anyone aware of situations where a TAXABLE account can be established without an individual participant signature? We reallly need to get these funds cleared as the financial institution holding them is now assesing monthly fees due to the remaining balance being below a set minimum. Any guidance here woule be appreciated.

An employee who has "an old" 403(b) account wants to roll the account into his current employer's 401(k) plan. This can now be done, correct?

An ongoing defined contribution plan purchases and distributes an individual annuity contract in full settlement of the participant's benefit under the plan.

1. On the 5500, does the plan check off box 9(b)(1) (insurance as a plan benefit arrangement)? Proposed answer: No. The instructions say "Insurance" means "the Plan" has an account, policy, or contract with an insurance company..." Here the plan is not a party to the contract.

2. Is Schedule A required? Proposed answer: No? The contract is not a plan asset, and no participants are covered by the contract at year end. (The employee ceases to be a participant by virtue of the annuity purchase).

3. On Schedule H, is Line 2(e)(2) completed for the annuity purchase? Proposed answer: Yes.

4. On Schedule R, is Line 2 completed for the annuity purchase? Proposed answer: Yes, for the year the contract is purchased only.

Thanks for any assistance...

card

(I hate 5500's...)

A man died with all assets in a land portion of a retiment plan. Just prior to his death the land sold for about 4 times the value it was on the books. The land was sold on contract with about 1/4 paid in cash and the balance on contract with the land for security.

3 questions?

All the land in the plan is now sold. Is the fund value equal to the amount of the sale or a percent of that to insure against default of the loan?

In the event of the death what is the time frame of value. The death took place prior to the plan recieving a value for the plan year.

When can the death benifit be distributed and is it taxable?

A teacher participated in his employer's 403(b) plan until he separated from service. It was 1996, and the teacher was age 70 then. The teacher then went to work for another employer who also sponsored a 403(b) plan. The teacher did not participate in the new employer's 403(b), nor did he do anything with the previous 403(b) plan. Are the existing 403(b) assets subject to RMD since the teacher severed employment with the employer that sponsored the plan? Or since the teacher has continued to work with a new employer that sponsors a 403(b) (even though he is not participating in it), can he delay RMD until severence of employment with his current employer. I think the former is the case but wanted to get other opinions. Thanks.

i do not believe this would be considered a controlled group, however i would appreciate a second opinion. employer 1 sponsors a trad. 401(k)

ownership% ownership%

person or entity employer 1 employer 2

A 25% 24.4%

B(family investment trust of owner A) 24% 24%

C 15% 14.9%

D 2% 2%

E 2% 2%

F 2% 2%

G 20% 0%

H 4% 3.96%

I 6% 5.94%

J(grandchildrens trust of owner H) 0% 19.8%

K(employer 1) 0% 1%

owners c,d,e are related. as are owners g and i.

do i have enough information to determine controlled group status?

many thanks.

We have a client, age 68, who has $1,000,000 + in his PS balance. Approximately $950,000 of this balance is from a rollover.

The client takes random taxable distributions each year from his PS balance, usually amounting to around $50,000 to $75,000 yearly.

His plan is held with a brokerage firm and they process his distributions. The brokerage firm has never withheld 20% Federal tax or 4% required state tax from these distributions. The broker says it is optional for the client, and the client always says no tax.

Even though these distributions are coming from Rollover money inside a PS plan, are they not still subject to the mandatory 20% Federal tax?

Here is my scenario...XYZ Corp, for tax purposes, made application in 2003 to change from a C-Corp to an S-Corp. Letter from the IRS, dated May 19, 2003, received by XYZ approving change effective January 1, 2003. Owners were participating in the plan during the first part of the year (as C-Corp) but now will not be able to because of the S-Corp prohibition. My question is this: Must the contributions prior to May 19, 2003 be recharacterized as after tax since the "effective date" issued by the IRS was January 1, 2003 or can the contributions through the date the notice was issued (May 19, 2003) stand and just subsequent contributions be reclassified.

Any help in this matter would be greatly appreciated.

I have been asked to bid on a plan that is

outside of the state in which I am currently

licensed. While the issues that arise under

these plans are primarily under ERISA or

the Code, I am hesitant to provide advice

in a state where I am not licensed.

How do others handle this? Does it

depend entirely upon the PR code in

the state where I will be traveling?