I have a client with a participant that is ready to take her pension, but the participant does not have a birth certificate as she was born at home and one was never issued. I suggested a baptismal certificate or passport, but no luck there either.

Has anyone run across a similar situation?

Are SIMPLE IRAs eligible for EPCRS yet? It looks like Rev. Proc. 2002-47 includes SEPs but not SIMPLEs.

But my real question concerns an employer who has not made matching cntributions for 2000,2001,and so far for 2002. Employer is willing to self-correct using the priciples of 2002-47 if not formally covered by the proc.,but Smith Barney (DFI/Custodian) won't accept the corrective contributions without a PLR. Any idea why? Any alternatives? Might another DFI be more flexible? Or is the PLR required?

For purposes of determining how much a minister may contribute to a 403(B) plan, has the 20% of compensation gone away? I notice now that the limit is the lesser of $40,000 or includable compensation. But I don't see anything about 20% any more.

Hello everyone. Seems I somehow find my way through to this site (via Clarkhoward.com). Not really sure where I am, but this site seems pretty good so thought I would see what happens.

So....here is the story:

I am a 28 year old married man. Got married a year ago and my wife and I just had our first baby 6 weeks ago (yeah!). We have zero credit card debt, no car payments, school loans, or other loans. I just built our own house and did most of the labor myself so I have a new house with market value of around $175K that has a mortgage of $105K. The only payments I make every month are my new mortgage and utilities/food. Despite my traveling before getting married, I saved a lot when I worked so we have savings. We live on one income (mine) and I make $48K a year. I work for a non-profit so no retirement benefits or 401(k) or 403(B). I at least have a car and insurance provided though! I am a home builder by trade and now do residential land development- taking raw land and doing the subdivisions, etc. Besides my own home I own two other building lots that are appreciated nicely (and looking for more).

We are looking at starting a ROTH IRA but I have no clue about investing in this manner. I am good at real estate and part of me says to just stick with what I know best, but I want to diversify so that when the real estate market tanks and interest rates rise I have something else working for our future and for the family. So I went to Vanguard.com thinking I could just get a nice simple "Roth IRA" and that there was only one kind of Roth IRA. HA! Simpleton me had a nice little surprise! How on earth do I decide how to invest in an IRA? How do I choose? How do I make this happen? Most importantly, how do I research this so that I know I am making the best decision? I see the % drop in all the IRA's and look at how my few real estate deals are doing and well...makes me think twice. But I want something long term and it seems like now might be a good time to buy into a ROTH IRA since they are down and isn't that better than buying when it is expensive? Obviously I have a lot of educating of myself on this type of investing before I proceed!

Anyone have some good advice? Sorry if this post is extremely basic (not to mention long) and I know I should take the time to read through the archives b/c I am sure I am not the first to pose this question. But, 6 week old babies, at least ours, are not known for giving adults lots of free time!

Thanks to all.

-"Israel" (Gensis 32:28)

Does anyone know the best way to begin a search for a GOOD insurance broker? I am representing a small company as an HR consultant and need to acquire coverage for a group of 7 professionals. I am not pleased with the broker I have used in the past and the internet is of little help.

I would appreciate any assistance or advice:confused:

I'm looking for a little advice -- a potential client called today looking for an audit regarding Schedule H of Form 5500 (401(k) plan). Plan has approximately 145 participants w/approx $1.35 million in assets & 12 fund investment options. This is the first time an audit has been required.

Our firm has done numerous small business and non-profit audits, but never one of these. I am wondering whether this potential engagement is worth pursuing -- how much background (PPC guides, etc.) do I need? - any specialized govt/DOL requirements I need to meet? - how much difference between this audit and a typical audit of financial stetements?

Any help would be greatly appreciated -- Our firm might be interested in pursuing and developing these audits as another line of practice, but not if the cost of the prerequisites might outweigh the potential fees.

We have a client who was just notified by the IRS that 2 of their plan participants have given false social security numbers (by using the social security numbers of unknown individuals living in another state). The question is what should the employer do with these two "participants'" deferrals and the employer's contributions? Thanks.

In 1998 I converted a $4000 Non-deductible IRA to a Roth IRA & paid tax on the full amount. This was my only IRA at the time. Looking through this site it seems that I should only have paid tax on the earnings. Is this correct? If so, is there anyway to get this back or is 4 years too long?

My question may not have a complete clear cut answer. Can a Christian Day Care service set up a 403(B). It does both education and religion. I have a feeling it depends on how it files for taxes(as in 501c3 an so on). At what point does the govt distinguish between just plain day care and an actual educational center. Is it the amount of kids, employees, size of building or does it just boil down to tax filing.

We are looking at putting in a cross tested plan with following contributions:

1. 401(k)

2. 3% Nonelective Safe harbor

3. Match 2/3 of 401k up to 4% of pay

4. Profit Sharing Cross tested

It is our understanding the only discrimination test to apply are 401(a)4 as follows:

First--2 & 4 are subject to Ratio test under 401(a)(4)

Next--if ratio test fail fo any group, all sources are included in Average benefits % tests.

ADP and ACP are not applicable. Correct? If not, help.

I've never prepared an SPD for a health plan, but I need to do one now. Does anyone know where I might locate a sample?

A 401(k) Plan Document reads distributions are to be processed as soon as administratively feasible.....the participant has been waiting 2 years and now receives remaining distribution check when the market is all time low. Is there any recourse the participant has since the plan administrator has taken so long to process this distribution??

Can you see a problem with a plan sponsor directing a 100% tax withholding on deminimus payouts for participants that whose whereabouts are unknown and all efforts have been exhausted? Plan Sponsor would rather see the money go directly to the IRS under the participants SSN than to forfeit the money only to have to deal with the hassle /concern of the participant resurfacing later, having to rebuild accounts, etc. They also concern over having to keep a balance in the forfeiture account due to this issue.

The document says that the money should be forfeited but they see this as a round about way as a deminimus paid to the participant. Any thoughts?

:confused:

Two plans with over 100 participants each merge as of 1/1/02. The assets are merged 3/1/02. There are currently 180 participants in the merged plan. Is there any way that this plan would not be subject to the 5500 Audit?? Thanks.

We have two companies. Company A is owned equally by six people and Company B is owned equally by four people - three of which are also owners in Company A. Each Company has a 401(k) Plan. Are the three who are owners in both companies affiliated employers?? Thanks again for your insight!

If a plan includes a safe-harbor matching contribution for ACP test purposes but also allows for employee contributions, the employee contributions remain subject to the ACP test. In performing the ACP test, Notice 98-52 provides that the employer "may elect" to disregard the matching contributions if the ACP Test Safe-Harbor was satisfied. This language would appear to allow the employer the option to include the safe-harbor matching contributions with the employee contributions in the ACP test if the employer so desires.

However, I found a resource material that cites the 1996 Bluebook and provides that matching contributions cannot be included in the ACP Test with the employee contributions except to the extent that the matching contributions exceed safe-harbor amounts. Can anyone clarify the rules on this issue?

An Owner Only Business has become incorporated and wants to establish a qualified plan. The way the CPA explained this to me, the owner has become incorporated to help with social security taxation and limits the salary and dividends (draws/distributions) that he receives so as to not exceed the taxable wage base. In doing so, the owner wants to limit compensation to the taxable wage base, but will only have a W-2 salary of roughly $40,000 and the remaining $40,000 will come in a dividend as reported on form K-1. Is there a definition of compensation that will capture the W-2 and K-1 dividend? Possiblty 3401(a)? Or is there no way to report the dividend as compensation for plan purposes?

Thanks!

ERISA section 408©(1) provides that it is not a prohibited transaction to pay benefits to a fiduciary (to the extent entitled as a participant under the terms of the plan). Where in the Code or ERISA is a similar exemption allowing a plan to pay benefits to non-fiduciary participants? Participants are parties in interest. Paying benefits to participants (pursuant to the plan document) is a transfer of plan assets to a party in interest. This is a prohibited transaction absent an exemption. Can anybody help me?

Similarly, an employer that maintains a plan is a party in interest with respect to the plan. An employer's contributions to the plan (in accordance with the plan document) would constitute an exchange of assets between the plan and a party in interest. This is a prohibited transaction, absent an exemption. Where does ERISA or the Code exempt this transaction from the 406(a) rules? Thanks, EK

ERISA section 408©(1) provides that it is not a prohibited transaction to pay benefits to a fiduciary (to the extent entitled as a participant under the terms of the plan). Where in the Code or ERISA is a similar exemption allowing a plan to pay benefits to non-fiduciary participants? Participants are parties in interest. Paying benefits to participants (pursuant to the plan document) is a transfer of plan assets to a party in interest. This is a prohibited transaction absent an exemption. Can anybody help me?

Similarly, an employer that maintains a plan is a party in interest with respect to the plan. An employer's contributions to the plan (in accordance with the plan document) would constitute an exchange of assets between the plan and a party in interest. This is a prohibited transaction, absent an exemption. Where does ERISA or the Code exempt this transaction from the 406(a) rules? Thanks, EK

I was really hoping I would find the answer to my question nested in the multi-page "Gateway" thread that ran for over a year! But it didn't . . .

We are putting together a Safe Harbor 401(k) with a 3% SHNEC. We are supplementing with a New Comp allocation. Let's just say that it is possible to pass cross-testing if we give each NHCE a 2% contribution, but, that the 2% is less than 1/3 the highest HCE allocation . . . can we combine the 3% Safe Harbor contribution with a 2% New Comp contribution to arrive at our Gateway minimum?