Can contributions to an ESOP be considered to satisfy the non-elective safe-harbor contribution for 401(k) purposes. I know this can occur in other types of plans, but are there any restrictions applicable to ESOPs?

What are the ramifications for a TPA refusing to pay plan participants until the TPA receives payment for fees incurred? The client is now bankrupt and refuses to make payment for any past due fees or for plan termination and states that their bankruptcy attorney will not allow any fees to be paid from plan assets. Any suggestions on how to make this situation hassle-free?

Can distributions be rolled over from SIMPLE IRAs to qualified plans?

Can distributions be rolled over from qualified plans to SIMPLE IRAs?

From 1982-1986 deductible employee contributions were allowed in DB plans & they are sometimes referred to as qualified voluntary employee contributions.

I have acquired a plan that has mandatory as well as these deductible contributions.

Should these contributions be combined in determining the "EE Provided" or should only the mandatories be used ?

My mind has gone blank - can IRA contributions continue to be made after age 70 as long as person has earned income? Can min. distributions from IRA's be then delayed? Thanks...

I have a client whose union employees are covered under the Central States Southeast and Southwest Areas Pension Fund. A representative of the Fund has contacted my client with a request for information under ERISA 4219(a). The request seems to be a form letter asking for what appears to be routine information about the nature of my client's business. I don't do multiemployer work, but I know that 4219 deals with withdrawal liability. He's not withdrawing. Are they just compiling a list of employers who might be assessed the wdrl liability? Or something else?

Does anyone know of a tax planning strategy using Roth IRAs to own C corporations???

We have an employee who has long since "retired". As he is the founder of the company, we have continued his benefits and have insured that his benefits would continue until some years in the future by signing a termination agreement. The termination agreement says that we will provide equivalent coverage to what he enjoys now, which, with individual plans and such, is impossible. This was done some years ago before anyone checked the healthcare contract to see if that was possible, which it isn't.

So, here we are trying to sort out the mess of continuing his benefits through means other than our group health plan.

Fly in the ointment #1: He is over 65 and entitled to Medicare.

Fly in the ointment #2: He has a family.

Fly in the ointment #3: The company wants to continue to pay for his and his family's coverage.

We have decided that we will terminate him from our group plan on June 30. He and his family will go on COBRA for 18 and 36 months respectively. And the company will pay for it.

We have decided that we will pay the former employee's Medicare and any supplemental Medigap insurance and any individual health plan for his family for the length of the employment agreement.

Now, the meat of the problem. Are there any tax issues relative to the employee if the company pays all of these premiums?

Any help, direction, with or without snickering, is appreciated.

John

Participant and spouse divorce in 2002. It is a bifurcated divorce where the equitable distribution of marital property follows the divorce. Under the divorce decree, the court retained jurisdiction of any claims raised by the divorce action for which a final order had not yet been entered.

An equitable distribution trial is held after the divorce. Participant dies before equitable distribution order is issued.

After the participant's death, the court issues equitable distribution order awarding ex-spouse 65% (or 100%) of the Participant's profit sharing plan account. The participant was not married at death, and his designated beneficiary was his mother. The ex-spouse is now seeking a QDRO for distribution of the participant's account.

Question: Would this be a valid QDRO?

I have read a number of the nunc pro tunc and posthumous QDRO cases. There seems to be some basic trends. A pre-death equitable award and/or pre-death notice to plan will often result in a valid QDRO holding. A second spouse with statutory mandated death benefit often will result in an invalid QDRO holding. A QDRO requiring increased benefits for defined benefit plans will generally be invalid.

None of these clearly applies in my instance. So I go back to the statute. A QDRO is an order which creates or recognizes an alternate payee' right to, or assigns to an alternate payee the right to, receive all or part of benefits payable with respect to a participant under a plan.

The basic question then I think is whether there are benefits payable with respect to a participant under the plan once the participant dies, from the perspective that as provided by the plan terms, upon death, the participant's account became payable to the designated beneficiary. Thus, after death, there would be no benefit payable with respect to the participant to assign, and I do not think that the QDRO should be able to divest the beneficiary of the death benefit to create the benefit to be assigned. But, as usual, I am not sure.

Any thoughts? And, would it make any difference if the court retains jurisdiction over economic issues?

Can an employer legally deduct insurance premiums from a disability check while the employee is out on STD or LTD? Is there a regulation someone can cite related to whether this is permissable or not? Thanks in advance for any replies.

I realize that there is the "2 1/2 month rule" that can be applicable for including deferrals from after-year-end bonuses in the ADP test for the preceding year. However, what is the rule for the purposes of 404? If this bonus is paid on "account" of the prior year are the deferrals deductible in the prior year as long as the bonus is paid and the deferrals remitted in the 404 "grace period (until the date for the return)? I have read Rev. Rul 90-105 which prevents certain "gaming" of the grace period with regard to post-year-end deferrals but it doesn't seem to take on this question of a post-year-end bonus that is based on the prior year's performance of duties.

We have a client that is a Professional Employer Organization (PEO). The PEO sponsors a 401(k) Plan that is funded entirely with employee contributions. The PEO charges its clients a fee for the activities associated with the 401(k) Plan including the processing of payroll deductions and remittances to the full-service, turnkey provider. The PEO now wants to receive all or a part of the commissions generated by the mutual funds in the Plan. Ignoring any licensing issues for a minute, it seems to me that this would constitute a prohibited transaction and would be a breach of the "exclusive benefit" rule. Any comments?

IRA owner is duped by broker-dealer custodian.

IRA owner loses everything due to bad investment suitability from broker-dealer.

IRA owner sues and wins. Check is issued to IRA owner.

Are the settlement proceeds eligible to be put back into the IRA as a rollover, or some other means?

Thanks in advance,

Eric B.

We have discovered that an employer allowed participants to enter the plan too early for the last two years. Based on the EPCRS procedures, it looks like we can retroactively amend the plan's entry date provisions to cure the problem. A determination letter would also need to be requested on the retroactive amendment. Since this plan has not yet been restated for GUST, is it possible to fold the retroactive amendment into the GUST restatement, file for a DL and still meet the EPCRS requirements? Or is a separate DL required for the SCP retroactive amendment?

From the Ziff-Davis WHAT'S NEW NOW email newsletter:

NASTY BUG IN LATEST XP UPDATE SLOWS SYSTEMS DOWN

While rushing to get Server 2003 out the door, the Windows

team made a major blunder with its latest interim release of

Windows XP, which is automatically downloaded using the

Windows Update feature. Reports from all over the Web verify

that this latest version actually slows many systems to a

crawl. Ouch! We've got details on which XP version to watch

out for and how to get it off your system.

http://www.microsoft-watch.com/article2/0,...,1037305,00.asp

(This happened to my XP machine a few days ago when I installed the update, and I had noticed the slowdown ... I uninstalled the update today and my computer is back up to speed again. -- Dave Baker)

It seems reasonable to me to disregard the sunset provision of EGTRRA for purposes of the FASB valuation. As far as I know, FASB has not taken a formal position on the issue.

(For ERISA purposes, the IRS clearly said to disregard the sunset provision in EGTRRA for funding purposes both under 412 and 404 in RR 2001-51)

I have heard different interpretations from other practioners with respect to FASB, and I am curious if anyone has heard that FASB has taken a position on the issue.

C-corp that has sole shareholder plans, for tax reasons, to create a wholly owned subsidiary and transfer all employees, assets, and benefit plan sponsorship to the subsidiary.

Subsidiary may be purchased by third party some time in the future.

Other than amending plans/insurance policies to name subsidiary as adopting employer, are there any other steps to take, or potential pitfalls?

My firm would like to hear from a registrant that has successfully marketed general financial consulting to a Company on behalf of their top-level executives or here comments regarding this service from a benefits consultant/sponsor. Thank you

Shortly after turning 70 1/2, a 40% owner withdrew his entire balance from his 401(k) plan. He's still an eligible, active employee. On the determination date of 12-31-02, wouldn't we add back his dist. in 2000? I contend that this is an in-service distribution and should be added back until the determination date of 12-31-2005. My asssociate disagrees. Any thoughts?

http://www.irs.gov/pub/irs-pdf/i1099r03.pdf

1099-R:

Removed code H (Use code G)

Removed code M (to 1099-Q)

Code Q for qualified Roth distributions

5498:

RMD checkbox

Still no guidance on 1099-Q / 5498-ESA .. :angry:

-D