A sole proprietor with a few employees incorporates. I had always figured that the proper course is for the incorporated employer to fill out a new 5305 and just count the "predecessor service" with the sole proprietorship for future eligiblity for the SEP.

I then turned to the Code an realized that 414(B), 414©, 414(m) and 414(n)—controlled groups, common control, affiliated service groups and leased employees- all reference 408(k) and apply to SEPs. However, the provisions of 414(a) with regard to successor employers and crediting service with the predecessor only references “plans” and not 408(k).

I can’t imagine that the intent was to “freeze” out everyone and make them requalify for eligibility simply because the sole propietorship incorporates. Has anyone else dealt with this issue?

Two entities controlled by the same church are merging. Both maintain non-ERISA qualified plans -- one a cash balance defined benefit plan, the other a 401(k) plan.

Can the 401(k) plan be merged into the cash balance plan?

If an employer discontinues a SIMPLE IRA plan and begins a 401k Plan the following year, are the SIMPLE assets eligible to be moved to the 401k? I haven't been able to find clear rules on the "termination of a SIMPLE IRA" and have found nothing on termination and replacement by a 401k. Thanks.

I have a client who would prefer to permit deferrals to continue after a hardship withdrawal, rather than forcing a 6 month waiting period. What's the purpose of the waiting period and is there a way around it?

Company sponsors a 401(k) Profit Sharing Plan and is considering adopting a new Defined Benefit Plan.

Key employees will be excluded from 401(k) PS Plan on a prospective basis (have participated in 401(k) Plan previously). Plans will be tested separately for 401(a)(4) and 410.

Treas. Reg. §1.416-1 T-6 indicates that a required aggregation group includes each plan of the employer in which a key employee participants in the plan year containing the determination date, or any of the four preceding plan years.

Question: Do you see any wiggle room in taking the position that the "four preceding plan years" portion of this cite no longer applies (i.e. some portions of Treas. Reg. §1.416 are clearly outdated since EGTRRA)?

Client had a SIMPLE IRA plan to which they were making contributions through 12/31/00. They decided to implement a safe harbor 401(k) plan effective 1/1/02, and went through the necessary procedures to establish this qualified plan and no additional contributions were made after 12/31/00 to the SIMPLE IRA plan.

Client wants to know if they may transfer the account balances in their SIMPLE IRA plan directly into their safe harbor plan. We do not deal much with SIMPLE's, and I would appreciate any guidance on this issue.

Thanks!

Can a plan which allows particiapnts to have individual self directed subaccounts, restrict the availability of those accounts to only participants with balances in excess of $10,000 or $20,000? Has the IRS or DOL issued an opinion on this question and if so, what is the cite?

Hey everyone,

I searched and seached for a specific answer on this and cannot find one. So I'm asking you.

I have someone submitting a receipt for Claritin to the cafeteria plan. Now that this is over the counter I say that I have to deny the claim.

BUT.....

On the other hand, I know the argument will be that there was a script and that the person was submitting it for, and receiving reimbursement.

What now? Are these people just cut off?

Any opinions out there?

TIA

wow? looking at the boards, my question is going to sound stupid, but here it goes.

just say I have a traditional ira with an amount of $2000, and went ahead and transferred the amount to a Roth IRA in May 2001. Then I went ahead and contributed $2000 in the same year, let's say I wrote a check in June 2001.

Was that wrong? Does that mean I am over $2000 for the year 2001? or does the transfer not count in the calculation.

I think i made a mistake. if i did, what should I do to correct the problem?

Thanks.

How to report distribution for nonqualified pension plan.

Plan is unfunded and uses ER contributions (ficticious) only. Is not deferred comp plan. EE's pay fica and medicare based on annual (fictious) contributions.

How do you report? (Plan filed as top hat plan when started)

I remember reading something that mentioned the IRS allowed for up to a $1000 tax credit for 403(B) plan contributions. I think the salary limit was 25K for single or 50k for married filing jointly. Is this correct?

In an asset sale, I understand that withdrawal liability can be postponed if an agreement under ERISA §4204 is executed and the applicable requirements are met.

However, assuming there is no such agreement, if a purchaser buys assets but continues to contribute to the multiemployer plan per a collective bargaining agreement, is the purchaser still required to determine its own withdrawal liability "as if the purchaser had been required to contribute to the plan in the year of the sale and the 4 plan years preceding the sale the amount the seller was required to contribute ... for such 5 plan years"? (ERISA 4204(B)(1)).

Initially I assumed that this only applied if a §4204 agreement existed. However, 4204(B)(1) states that the above calculation is done "For the purposes of this PART..." The "part" is Part 1 (employer withdrawals), ERISA 4201-4225.

4204(B)(2) then goes on to discuss the amount of the bond in 4204(a), which perhaps indicates that 4204(B) applies only to transactions in which there is a 4204 agreement.

Any thoughts on whether 4204(B) applies if there is no 4204(a) agreement? Thanks in advance.

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Can someone point me in the right direction whether or not a new 401(k) can be implemented while currently maintaining a SEP? I know that there can be no overlap of SIMPLE pland and another qualified plans, but cannot locate whether or not this applies for a SEP as well. Thanks!

When must the Top Paid Group election be made for a plan year??

Employer is a partnership "employing" only five partners (no other employees). They are pathologists. They receive partrnership income.

Same pathologists ALSO receive some W2 income from local hospital and participate in the hospital's 403(B).

Can the partners establish a SEP for the partnership even though they participate in the 403(B)??? If so, can they each do $40,000?

From prior research, the ASG/Controlled group rules do not apply.

Using same example, would the partnership be able to establish a SIMPLE???

Can you point me to the citations to back up the answer. Thanks in advance for any input. I've researched this in the past, but it seems that I am getting conflicting information to the point where I am second-guessing myself. HELP! please. Thank you!!!

If an employer currently pays 100% of the cost of medical insurance for its employees, and later decides (mid plan year) to introduce cost sharing, can employees be permitted to pay the increase before tax? Before you jump in, the employer does presently have cost sharing pre-tax for employees buying traditional coverage. I think 'no' but am second guessing my first answer primarily because we know that our first answer won't be the answer the client wants to hear. Anybody got a better answer?

A corporation is owned 65% by a private individual and 35% by an ESOP. The individual wants to sell another 35% of the corporation's stock to the ESOP. The Seller wants to make the sale transaction effective as of January 1, 2003. Closing of the sale will actually occur on June 1, 2003. Individual wants to sell his stock at the price that the stock was appraised on January 1, 2003 Now, realizing that the ESOP cannot buy the stock at a price greater than its fair market value on the date of closing, isn't this transaction okay so long as an update of the January 1, 2003 appraisal is done and the update shows that the appraised value on the date of the closing equals or exceeds the January 1, 2003 price??

Since a valuation study takes time, in a sale to an ESOP, mechanically how do you coordinate the timinng of the appraisal and the closing? How can you get an exact appraisal value as of the date of a closing??

MPP is overfunded by a mistake of fact. The plan has terminated. Would you agree that the overfunded amount can be refunded to the ER?

Is anyone aware of an IRS ruling in re: transfer of accumulated vacation benefits from one employer to another causing constructive receipt of the vacation benefits?