I have a client who recently spun off half of his company and re-organized the current company as an LLC. He is the sole owner of the LLC and does not receive any W2 compensation. Is he considered an employee and would he be considered and HCE for ADP testing?

Employer ABC owns 100% of XYZ company. Employer ABC sponsors a 401(k) plan. They want each employer to determine their own match amount (i.e. ABC determines match amount allocated to ABC participants & XYZ determines match amount allocated to XYZ participants). Please confirm this cannot be done on a prototype document. Also, can this be accomplished in a volume submitter or do you have to draft an IDP?

I heard there is a minor exception to the anti-alienation protection. Discretionary contributions (i.e., discretionary profit sharing contributions) which have been made to the plan within 90 days of the employer filing bankruptcy may be undone by a bankruptcy court if they deem it to have been made as preferential treatment to a creditor.

Does anyone know where I can find this exception n the Code or ERISA.

Thanks!

Does anyone know of situations under which a church would be precluded from sponsoring a 401(k) plan for its employees?

We can no longer contribute to our Roth IRA's because of income, and maintenance fees are far more than our meager earnings. Accounts have only been open for 4 years. What can we transfer the funds to without losing a big chunk to penalties and such? We have college on the near horizon for 2 kids.

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We had some confusion as to the correct EIN for a company. We found out now that the 5500 was filed under the wrong EIN (for both 2001 and 2002). I am planning on amending the 2002 return but have never had to amend a 5500 before.

Do I amend the entire return since the EIN is listed on each Schedule? The actual numbers and information will not change.

Also, do I go back and amend the 2001 plan year as well since the incorrect EIN is used there? That was the first year it was filed and I'm thinking it would be nice to have it right from the start.

I appreciate your help- I am new at doing these and trying to find definitive answers in the instructions or even preparer's guides is difficult!

Thanks,

Rachel

I have read that the unfunded current liability for 404 is:

(CL+CLNC)(1+i) - ExpBenPymts(1+13/24i) - (AAV(1+i) - ExpBenPymts(1+13/24i))

(Using the CL int rate and assuming BP's at beg of mo)

My question is: is the interest calculated to the earlier of the fiscal yr end or the plan yr end, similar to what one would do for the 404 NC + Limit Adj calc?

I have a plan where the Sole Proprietor died. I am restating the document for GUST & EGTRRA. Who can sign the document as the "Employer"?

Thanks.

The following excerpt is from some seminar materials I read. Has there been any official guidance on the topic?

An interesting planning opportunity is the use of a rollover from an IRA to a qualified plan, followed by a loan from the plan to the plan participant. An outright loan from the IRA to the IRA owner would be a prohibited transaction, but the liberalized rollover rules mean that even non-conduit IRA moneys rolled into a qualified plan should be capable of being loaned from the plan.

The final loan regs are pretty clear about the ability to extend the pay off date of a loan if it was originally for less than the five years. However, the language, (at least to me ), is pretty muddy regarding a loan that would qualify under the mortgage exception.

If a participant took out a loan to purcase a principal residence that would have qualified for the 5 year mortgage exception, but the participant chose to set up the loan to be repaid in 5 years, and later a) takes a leave of absence or b) wants to refinance the loan, can the latest permissible term be the later pay off date the participant could have had on the loan because of the mortgage exception?

If yes, would this extended pay off date be available in the case of a refinancing only if the new loan also qualified for the mortgage exception?

Thanks to all who respond!

Carolyn

I understand that in an ESOP that contains nonpublicly traded securities, a put option must be granted to the participants. Must this language be in the plan document?

Can you please let me know if an independent auditors report needs to be prepared for a final Form 5500 where the plan year is a short plan year 07/01/02 - 12/31/02. More than 400 participants. The most recent audit report is for the year ended 06/30/02.

Thanks.

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What is the safe harbor formula for calculating gains/losses on excess 401k contribution?

Does anyone have experience with or work with a good plan document software package that an employer can use in-house (as opposed to outsourcing to a consultant)? I have been looking at the software packages offered by SunGuard Corbel but am interested in examining alternatives to compare against. My primary interest is in H&W master plan documents as opposed to SPD software, though I would certainly be interested in combination packages. Any response appreciated!

I have an employer who is being stubborn and does not want to make their 2001 Top Heavy contribution. However, when I filed their 2001 5500, I reported this contribution as being made since I was under the assumption they wre going to make it.

It's now 2003 and I am pushing them to make it... and really hoping they will but am at a loss on how/where it should be reported when they do.

Do I amend the 2001 5500 to show the contribution was not made?

When should the contribution be reported on their tax return?

Thanks,

Rachel

I have read some prior posts about Short Plan Years and wouldn't mind some assurance on my interpretation regarding the following scenario:

Effective Date: 03/31/03 (Apparently there was a Simple Plan prior to this)

Plan Year: March 31

Limitation Year: March 31

Entry: Anyone employeed on or before 03/31/03, enters on 03/31/03.

Plan Comp: Comp from date of participation.

I understand the following to be true:

Short Plan Year - 03/31/03 - 03/31/03 (5500, allocation & testing)

Plan comp to use for P/S Alloc - 03/31/03-03/31/03 (pro-rate $200,000 limit)

415 comp to use - 04/01/02-03/31/03 (do not pro-rate $200,000 limit)

Deductibility comp - 04/01/02-03/31/03 (do not pro-rate $200,000 limit)

Vesting-no proration of hours. However, we need to give credit for 1000 hours worked from 03/31/03-03/31/04 and 04/01/03-03/31/04

There are not deferrals for the first plan year, so ADP is not an issue.

If the above is true, is there any way the plan could have been drafted to get 12 months comp for the P/S allocation? I realize making the plan effective 04/01/02 would have done it but since the Simple plan was in effect, they could not have another retirement plan.

Any input would be greatly appreciated.

Thanks!

The beneficiary of Jane's IRA is listed as "John and Jane Doe Revocable Trust". The trustee of the trust (John) has requested a lump sum distribution (due to the relatively small amount). The custodian has requested the TIN of the trust. John's attorney has advised him not to obtain a TIN for the trust, but to use his own SSN. Is this possible?

While it might suffice for state law, I always thought federal law required the custodian to use the TIN of the trust for 1099-R reporting purposes.

Participant elects Level Income annuity from DB plan. They will recieve payments for 7 years, benefit then reduces to $0. Are distributions subject to 20% mandatory withholding (considered < 10 year periodic payment)?

I have a cite referring to PLR 9429026 indicating yes, but I'd like to read the PLR. So the second question is: where can I do that?