In an earlier post I concluded that aggregation would not occur in the following setting (repeated here for ease of reference):

Two employees are each exactly fifty percent owners of a professional service corporation, which maintains a 401(k) profit sharing plan. Each employee will receive a contribution equal to the 415© maximum for 2002, $40,000. None of this amount is attributable to a 401(k) elective deferral. Both individuals are also highly-compensated employees of a non-profit organization, which provides a voluntary 403(B) Retirement Plan for the benefit of its employees. Under this particular plan, employees may elect to defer all or some portion of a yearly bonus of $16,000 into the 403(B) Plan. Neither employee has an ownership interest in the not-for-profit.

My earlier reasoning was as follows. Treas. Reg. Section 1.415-8(d)(2), which provides that if the employee owns or controls more than 50% of another business that maintains another plan, the contributions to the Section 403(B) Plan must be "aggregated" with the contributions to the outside plan or the 403(B) employer's other plans. Given that neither employee owns more than 50% of the professional corporation, I concluded that aggregation under Section 415 will not be an issue under these circumstances or otherwise.

I am now uncertain as to whether or not 1.415-8 has been superceded. I have been alerted to the existence of Section 415(k)(4), which was added by EGTRRA. 415(k)(4) appears to reiterate some but not all of the guidance provided by Treas. Reg. Section 1.415-8(d)(2), which described special rules under which the employer is deemed to maintain the annuity contract. So, I'm not sure the underlying rule has changed much.

Reading Section 415(k)(4) and notwithstanding Treas. Reg. Section 1.415-8(d), I still maintain that, unless an employee has "more than 50%" control of the for- profit employer, the 403(B) plan will not be treated as being owned by the for-profit employer. Thus, no aggregation. Correct?

I am having some confusion regarding the 80-120 Participant Rule. I have a plan that had 108 participants (line 6) in ’99, 104 in ’00, and 84 in ’01. For all plan years that I have information on the participant count never exceeded 120 and the 5500's were filed as large plans complete with audits. My client wants to know if he can forgo the audit for the 2001 plan year and file a Schedule I. (He, of course waits until 2 weeks before the filing deadline to inquire.) Off the cuff I told him that I thought that we would have to file the H as always, but now I am interpreting this rule differently.

***80-120 Participant Rule: If the number of participants reported on line 6 is between 80 and 120, and a Form 5500 was filed for the prior plan year, you may elect to complete the return/report in the same category ("large plan" or "small plan") as was filed for the prior return/report…….***

The word “may” is what is throwing me. Does this mean I “may” elect to file as a small plan for 2001? I know that this rule is usually used so that a small plan can remain filing as such (why ever would you want to file as a large plan if you don’t have to?). But does it also work in the reverse way? Because the count has dropped below 100, is that a way to file as small plan this year? Any guidance would be greatly appreciated.

:confused: :confused:

Have a dental group with 3 dentists that wants to establish a new-comparability class allocated profit sharing plan. Are there any considerations and/or adverse repercussions to defing a participant class specifically by name for each of the dentists, with a fourth class for all other eligible participants?

Thanks for any and all responses!

Hi,

I'm on the run and embarassed that I don't remember this:

Is an 'S' corp a partnership that elects to be taxed as a coproration, or a corporation which elects to be taxed as a partnership?

Is anyone aware of a reason why a plan sponsor may not eliminate a social security supplement (that is not a QSUPP) even for employees who need only to resign in order to receive the supplement and for participants already in pay status?

Please ignore HR and labor law issues.

Thank you.

PS: I am not referring to an "early retirement benefit" or a "retirement-type subsidy".

Must a previously terminated plan 1997 forward be amended for gust. What if the business has terminated.

Just need clarification...

I have an employee who turned 70.5 in june of 2002. He retired in August and requested a rollover distribution. I understand that he must take his MRD before he can roll his money over, since he is required to take it by 4-1-03. However, the amount is less than $100 and I was wondering if anyone knows of a "diminimus" amount which doesn't need to be paid??? I don't think there is one, but I am curious.

As a result of EGTRRA, would someone be able to give me a practicle example of how someone who has seperated from sevice would still be able to defer into a 403(B) plan for up to 5 years after seperation.

Also, could anyone explain in simple english how a participants "most recent one-year period of service" is defined for 403(B) deferral purposes. Thanks.

Is it accurate to state that contributions that originate in a Governmental 457 Plan are never subject to a 10% premature distribution penalty ? I would apprecicate any help here.

Plan participant executed an election not to participate going forward effective 1/1/03 (beginning of plan year). Turns out that the Plan has a life insurance policy on the same participant. Since the participant will no longer be participating in the plan, it would seem that the Plan will have to pay the premiums from the participant's account balance going forward given that no contributions will made on the participant's behalf. Does this present any problems going forward?

The AICPA's guide on audits of employee benefit plans clearly says that an audit of a funded health and welfare plan is an audit of the PLAN and not the TRUST. A plan may establish a trust to hold assets to pay all or PART of the covered benefits. We have been auditing and reporting on plans for years where we show stop loss premiums paid and stop loss refunds received by the Plans. For Form 5500 purposes, the stop loss premiums do not have to be reported if they are in the name of the Plan Sponsor, which is usually the case. Because of this, we are including them on the face of the financials, excluding them on the Form 5500, and preparing a reconciling footnote in the notes to the financial statements. Is this the proper treatment? Shoud we be showing them in the financials at all?

The AICPA's guide on audits of employee benefit plans clearly says that an audit of a funded health and welfare plan is an audit of the PLAN and not the TRUST. A plan may establish a trust to hold assets to pay all or PART of the covered benefits. We have been auditing and reporting on plans for years where we show stop loss premiums paid and stop loss refunds received by the Plans. For Form 5500 purposes, the stop loss premiums do not have to be reported if they are in the name of the Plan Sponsor, which is usually the case. Because of this, we are including them on the face of the financials, excluding them on the Form 5500, and preparing a reconciling footnote in the notes to the financial statements. Is this the proper treatment? Shoud we be showing them in the financials at all?

This is one of those questions that I'm embarassed to ask because the answer seems so simple. But, here goes:

Are voluntary after-tax contributions to a qualified plan subject to the 402(g) limit, or are they subject to the 415 limt???

Need help from anyone who has been in this situation. I recently underwent an operation, and 2 months after the operation, I come to find out that the anesthesiaologist who administered my anesthesia was an OUT-OF-NETWORK provider, and now I'm faced with medical bills cause the insurance only covers 80% after a deductable is paid. I had asked everyone (my doctor, admitting staff at the hospital) if the insurance would pay everything. No one told me there were no in-network anesthesologist at this hospital!. Thanks! email to softwaredynamics@hotmail.com if you know what my rights are??

I am trying to determine if I can do in one profit sharing plan, what I know I can do in two. Assume a profit sharing plan where all employees employed on the last day of the plan year are eligible for a contribution allocation. Assume two different and distinct nondiscriminatory allocation formulas, Formula A and Formula B, with each one covering all eligible employees and each one satisfying all nondiscriminaiton requirements standing on its own. Can the Plan be drafted so that the Formulas are alternative formulas for any given Plan Year -- i.e., allocations will be made under A (unless made under b) or will be made under B (unless made under A). The Employer would then choose which one to use, perhaps making the determination after Plan Year end, but prior to due date of Plan contributions for the year? This certainly can be done with two different Profit Sharing Plans covering all employees, with the Employer choosing which one to fund on a year by year basis...so it would seem that it should work in one plan as well. Any thoughts on this would be appreciated. Thanks.

The new Blackout Period notice requirements are effective January 26, 2003. Does this mean notices must be given 30 days prior to January 26, 2003 for blackout periods that start January 26, 2003? Or does it mean notices must first be given starting January 26, 2003 and will first apply to blackout periods starting after January 26, 2003? Or do we have to hope that the coming guidance (by October 13) will clarify this issue?

Can Summary Annual Reports be delivered electronically, for example, through e-mail? I think they can, but I would like to know for sure. Is there a cite for this, if the answer is yes?

Thanks.

I'm new to Quantech/Relius and I've got a situation where I need to code a father and son as key employees. I've indicated in the census data that the son is an officer, and that the father is an officer and 100% owner. Both are HCEs, not that that makes a difference for TH testing...

The son shows up as a Former Key in the TH test.

What am I not doing to make this work?

If due to a change in ownership, an employer is no longer a member of a controlled group and had originally adopted the sponsoring employer's prototype, would this employer have to adopt their own plan as a single employer due to the fact that multiple employer plans cannot adopt prototypes? I would like to avoid having to draft an individually designed document.

Also, at what point does the status of the plan change from a controlled group to a multiple employer plan? As of the date of the change in ownership or beginning of next plan year?

Can a participant who has had money in simple plan transfer money from simple ira plan to employer qualified plan? or does it have to go to a conduit ira? does the 2 year limit apply to when plan opened or when participant began participating?