Our TPA firm has been in the process of revising our checklists for performing annual testing, etc. We have a Quality Control checklist and various others for 410(B), HCE and Top-Heavy. We would be interested in knowing what other firms were using. Would anyone be willing to share their checklists or advise us of a source to obtain good reliable checklists that have been updated with the any new tax law changes for 2002?

mom and dad have a C Corp, only employees are mom, dad, and kids. SEP plan in place and being maximized.

kids have an S Corp (which was created to service the C Corp) and all the employees. kids (owners) do not take salary from C Corp

the C Corp and the S Corp were initially one company now carved into two

S Corp has a SIMPLE

I believe this is an affiliated service group based on my research, as one corp exists only to service the other

Should these two corps have one plan? rather than a SEP for the family and a SIMPLE for the employees

I feel there is a problem here.... what are the problems and where do we go from here?

please advise

:confused:

C Corp owned exclusively by mom and dad has SEP plan

S Corp owned exclusively by children has SIMPLE

children are paid salary in C corp, hence all family members are 'filling' up the SEP

all employees are in the S Corp where the SIMPLE exists

There appears to be no common ownership. Yet sole owners of the S Corp have salary from the C Corp

appears one company was carved into two in order to be able to do this. we presume there is a problem here, just cannot decide where....

the family has managed to discriminate in favor of themselves by the structure they created with the two corps

what if any problems exist? :confused:

Short version: If an affiliated service group exists at the beginning of a given Plan year, does it exist for the entire Plan year? Or is it broken down the way that the control group rules do?

Long version: Employer A, an S-corporation, and Employer B, a personal service corporation, are an affiliated service group. Employer A contracts with Employer B and other personal service corporations to provide services to a third entity. Employer B is wholly owned by Employee B, who is Employer B's sole employee. Employee B also owns more than five percent of Employer A and is a participant in a 401(k) Profit Sharing Plan organized for employees of Employer A (and by definition, employees of Employer B are included notwithstanding the fact that Employer B does not actually adopt the Plan).

Employer B is terminating its contract to provide services with Employer A in March of 2003. Employee B will receive W-2 compensation well in excess of the compensation limit under Section 401(a)(17) in 2003, mostly in the form of collectibles/receivables for services rendered prior to the termination date which Employer A will continue to collect for 18 months after termination and will pay to Employer B on a monthly basis. Employer B, in turn, will continue to pay Employee B wages related to such services after the termination date.

Does Employee B need to remain a shareholder of Employer A until the end of the Plan year to receive a full profit sharing contribution from Employer A or can Employer A redeem Employee B's shares upon the termination date without worrying about running afoul of the affiliated service group rules or other prohibitions? I assume that no proration of compensation is required because this is not a short plan year.

when determining the earned income for a self-employed dude, we have always taken the net earnings from self employment number and subtracted the 179 expense. in reading the sal tripodi definition of earned income, he seems to imply that you do not subtract it. what's right?

mr

I've tried to edit an existing report in Crystal Reports, and I've mucked it up beyond repair. I'm trying to create a one page plan specs report in portrait format.

Has anyone else tried to create such an animal?

Is there any rule to having to stop 401(k) contributions when a participant receives a court order to pay Child support?

Our firm has been debating this issue for some time, keep getting different answers and don't even agree amoung ourselves! Can anyone help?

If a safe harbor 401(k) p/s plan allows discretionary p/s contributions, is the plan exempt from the top heavy rules in a plan year the basic match is made and no p/s contribution is made?

Example: A plan provides for safe harbor matching contributions and discretionary p/s contributions. The company has made p/s contributions in the past and will again in the future. However, they will not make a p/s contribution for 2002. A participant didn't defer in 2002. Does the company need to give her a 3% top heavy minimum?

Thanks.

A participant in a DB plan turns 70-1/2 in 2003. The participant is also the sole plan participant and the plan sponsor. He terminated the plan effective as of 12/31/2002. He receives a lump sum distribution from the DB plan as a result of the termination in 2003. He makes a rollover contribution of the entire amount of his DB distribution to an IRA. He must take his first MINDI by April 1, 2004. For purposes of determining his 2003 MINDI (which might be made in 2003 or between January 1, 2004 and April 1, 2004), what account balance is used? Is it the present value of his DB benefit as of the determination date in 2003, even though the distribution is being made from the rollover IRA? Or, is the account balance something else, e.g., the account balance in the IRA at some point in time during 2003? Thank you for your help.

[Full text of the press release with first details of the proposal:

http://benefitslink.com/cgi-bin/pr.cgi?dat...tabase_id=33984 ]

Good grief. check these suggested changes out!

Yes. The proposal includes the following provisions that

would greatly simplify the administration of all defined

contribution plans:

1. There would be a single test to show that the plan meets

the nondiscrimination rules with respect to coverage --

ratio-percentage coverage. Under this test, the percentage

of an employer’s nonhighly compensated employees covered

under a plan would have to be at least 70% of the

percentage of the employer’s highly compensated employees

covered under the plan. The other coverage testing

alternatives would be repealed.

2. Permitted disparity and cross-testing would be

prohibited for defined contribution plans.

3. The top heavy rules would be repealed for defined

contribution plans.

4. There would be a uniform definition of compensation for

all purposes for defined contribution plans – the amount

reported on form W-2 for wage withholding, plus the amount

of ERSA deferrals.

5. A simplified definition of highly compensated employee

would be adopted under which all individuals with

compensation for the prior year above the Social Security

wage base for that year would be considered to be highly

compensated employees.

Does the ERSA proposal have any effect on defined

contribution plans that do not involve employee deferrals

or employee after-tax contributions? In other words, does

the proposal affect pure profit sharing plans, stock bonus

plans, and money purchase pension plans?

Other than the simplifications discussed in the preceding

question, the ERSA proposal would not affect the rules

applicable to employer contributions to defined

contribution plans, other than safe harbor nonelective

contributions or matching contributions.

Does the ERSA proposal have any effect on defined benefit

plans?

No, the proposal would not affect the rules applicable to

defined benefit plans.

Suggestions regarding good printed resources on executive compensation would be appreciated.

I have a plan that has been in existence since 1994, but

did not have any fidelity bond until very recently. This arose as a misunderstanding between the insurance company and the plan as to what coverage was required.

The plan is administered and the assets are held by a large bank. The bank is properly bonded. However the trustees of the plan are not bank employees.

My question is whether this is a problem that needs to be reported to the DOL? Doesn't the 5500 form require the administrator to confirm the bonding requirements?

Any suggestions on how to proceed?

Does anyone have a suggestion as to a ESOP seminar geared towards attorneys? I can't seem to find one anywhere (ali-aba, PLI, etc.)

I know the NCEO offers seminars but those seminars appeared to be geared towards businesses, hr personnel, officers, directors, owners and such.

Any insight is appreciated. Tx.

I have a plan would not pass 410(B) testing under the safe harbor (not benefitting) due to a top heavy minimum. I know you can then see if it passes 401(a)4. It looks like the prototype doc they are on does not allow this but rather states that you keep giving EEs with the most hours a contribution until they do pass. Is this typical of most prototypes?

Treasury put out a press-release regarding Bush's new pension/ira proposals. It can be viewed here:

http://www.ustreas.gov/press/releases/kd3816.htm

Does the budget proposal related to ERSAs affect any other defined contribution plans?

Yes. The proposal includes the following provisions that would greatly simplify the administration of all defined contribution plans:

1. There would be a single test to show that the plan meets the nondiscrimination rules with respect to coverage -- ratio-percentage coverage. Under this test, the percentage of an employer’s nonhighly compensated employees covered under a plan would have to be at least 70% of the percentage of the employer’s highly compensated employees covered under the plan. The other coverage testing alternatives would be repealed.

2. Permitted disparity and cross-testing would be prohibited for defined contribution plans.

3. The top heavy rules would be repealed for defined contribution plans.

4. There would be a uniform definition of compensation for all purposes for defined contribution plans – the amount reported on form W-2 for wage withholding, plus the amount of ERSA deferrals.

5. A simplified definition of highly compensated employee would be adopted under which all individuals with compensation for the prior year above the Social Security wage base for that year would be considered to be highly compensated employees.

Is it possible to set up a safe harbor 401(k) for a sole-prop with no employees? His income is $130,000. He wants to be able to get a $40,000 contribution. He can't get there with a SEP or Profit Sharing because of the 25% limit on employer contribution.

But if he had a safe harbor 401(k), he could defer $12,000, match 3% ( or 4% if using basic match) of $130,000 ...$3,900 then contribute $24,100 as a profit sharing contribution. Can this be done??? Would it be practical? Or am I way off course?

Any input is greatly appreciated.

We have a client who works for two separate unrelated companies. Assume he has $200,000 comp from both plans. I understand that the $12,000 salary deferral limit is a personal limit, so that if he defers $12,000 in one employer's plan, he cannot defer in the other plan. What about the $40,000 annual additions limit? If the two separate plans warrant it, can he actually receive $40,000 annual additions from both plans?

what is required for documenting a change in plan trustee? just a corp reso or do i also need a plan amendment?

Does anyone know whether for a participant's initial year of participation, the profit sharing contribution may be allocated based on compensation earned only after an employee becomes a participant in the plan rather than on all of the employee's compensation for the initial year? Is anyone aware of any authority - statute, regs., cases, plrs.

Thank you.

Are benefits under a stand-alone section 129 plan included in the definition of section 3401(a) compensation? The plan definition of compensation does include amounts under sections 125, 402(e)(3), 402(h)(1)(B), 403(B), and 457, but in this case, the employer does not maintain a section 125 plan-just the dependent care arrangement.

The compensation definition also does not include reimbursements, other expense allowances, fringe benefits, moving expenses, deferred compensation, or welfare benefits.