I am having trouble thinking this through so any input would be appreciated.

As I see it:

If a Top Hat plan were found to be disqualified -

the choice would be to continue the arrangement with all of the expense and hassle of a QRP OR

cease operation.

I can not imagine "qualifying" the arrangement so what happens if the employer stops the plan? Please tell me those things I am missing.

Any vested accounts would be taxable to the executive and the employer (assuming reasonable comp) would get a deduction - right?

Executives who were not vested would lose their account balances but no tax - right?

The employer would do some accounting and log the NQDC funds back onto the books as cash and extinguish a liability - right?

Is there any penalty to the employer if IRS/DOL rule the Top Hat plan is not qualified?

Any and all inputs will be much appreciated.

This is a fairly fundamental question, but I will asks it anyway. We have a Doc and his spouse in a Profit Sharing plan. Doc makes about $350K and spouse makes $40K. We are converting the plan to a 401k safe harbor with a comparability ps formula.

Since we no longer have to worry about family aggregation, I assume the spouse is an HCE due to ownership attribution, but the spouse is tested totally separately for 401k and 401a4 as a separate HCE. The spouse will defer $11,000 of salary and we could, but have chosen not to, include her in the comparability additional amount.

The interesting thing is the spouse actually helps with the a4 testing since (1) she was not getting the extra comparability contribution; (2) she is one of the older employees; and (3) she was at the bottom of the ABRs as an HCE. Seems to good to be right?

We are attempting to self correct the failure to make RMDs for multiple years. According to ECPRS, the correction method is to essentially get the RMDs out of the plan. Under ECPRS, RMDs are calculated by dividing the adjusted account balance by the applicable divisor. I understand that the adjusted account balance is reduced by the amount of total missed distributions, but I can't tell how earning and losses are factored in.

Could someone please tell me how earnings or losses are factored into calculatiing RMDs under ECPRS? For example, is a correction made if the RMD is distributed, but the gains on the RMD for the period in which those amounts were suppose to be out of the plan are not?

We provide employer paid group life up to $50,000. We also offer supplemental life, 100% employee paid.

My understanding is that there would be no imputed income issues under this scenario, since the employer does not provide over $50,000 in life insurance.

I am being told by my payroll dept. that imputed income should also be calculated on the employee paid supplemental and spouse supplemental.

Can anyone offer any guidance?

Form 5330 questions/verification of understanding:

1-A small plan (Schedule I) with late employer contributions is required to file a Form 5330 but not Schedule G

2-Form 5330, Section VII requires that the amount involved in the transaction be input ($50,000.00) and Relius automatically calculates a penalty of $7,000.00. Is this correct? Prior threads have discussed the penalty appling to interest on the late contribution amount. Can anyone site a clear resource for either?

3-Plan files on an accural basis. Late contributions are for 2001, due 1/15 but not sent until 1/18. Therefore, the 2001 filing needs the 5330 (and Schedule G, if a large plan).

Thanks!

Laura

As of 7/1/02, we are setting up a 401(k) plan for a company which currently sponsors a 403(B) plan. [There is no change in the status of the employer, only a desire to use a 401(k) vs. a 403(B) and a different investment company.] This (403(B)) plan includes an employer discretionary contribution and pre-tax deferrals. The employer would like to terminate the plan, but my understanding is that there is no basis for termination. Given that the 403(B) will continue to exist, it would appear that an amendment should be made to the 403(B) to take the contribution to 0%. With respect to the deferrals, the adoption agreement simply states that deferrals are limited to statutory levels [402(g) and 403(B)(2) are listed]. So, there is no way to modify the adoption agreement to discontinue deferrals. May deferrals be prohibited by including a paragraph in the resolution to amend the employer contribution, or must employees be permitted to make deferrals to the 403(B)? Thanks.

A provider of administrative services has stated that a 403(B) plan sponsor's public school plan might be discriminatory because the Plan will not allow life insurance as an investment of the 403(B) plan

1. What are the plan sponsors rights in setting investment policy?

The plan sponsor's payroll system is not geared to handling incidental reporting of income, etc. and will be forced to incur substantial expense if required to include life insurance.

2. Has anyone seen this approach simply as a method to sell life insurance product previously?

To determine whether a cafeteria plan is exempt from filing, one of the "tests" is to find out if the plan is funded. That is if the plan assets have been deposited in the name of the "Plan" rather than remain as part of the general assets of the company.

I have a situation where the client is self funded and deposits into an account in the name of the medical plan NOT the cafeteria plan. (Example: ABC Employee Benefit Plan--name of medical plan. The cafeteria plan name is ABC Cafeteria Plan)

Does this constitute funding in the name of the "Plan"?

Question regarding a Plan that allows for both after-tax and pre-tax contributions.

A participant has contributed both pre-tax and after-tax funds for many years and is now withdrawing them. If the participant's after-tax basis is greater then the market value of the after-tax funds, can the additional basis be used to off set the taxable amount of the pre-tax portion of the distribution?

I know this is an odd situation, but any thoughts are appreciated especially if you can point to guidance.

Thanks.

When is this filing required, and when is it due if required?

We have a client who has a one-person Profit Sharing Plan.

In 1999 she "terminated" a predecessor Profit Sharing plan by rolling the assets into an IRA, and she started a new Profit Sharing Plan with a new account. The reason for this is murky, but it had something to do with going from being a "P.C." to an "Inc."

In 1999 she filed her final 5500 for the old PSP, and filed the first 5500 for the new PSP.

With all the restatements going on this year, Vanguard sent her an Adoption Agreement package for both plans, though the one hasn't been alive for a few years now. Vanguard says that if the client had intended to terminate the plan, she should have updated the plan back in 1999 and gone through the formal termination process with the IRS(!) (I didn't know this was necessary with DC plans . . . ). Because it wasn't done in 1999, it needs to be done now(!) says Vanguard.

Is this true? I feel so uncertain about what needs to be filed, etc., because this isn't like a DB plan termination, right?

What are the compliance requirements for premium only plans? (i.e. 25% concentration test, discrimination test, etc.)

I have a client who has a Welfare Benefit plan that has medical and dental insurance partially paid by the employer and employee. The employee portion is reported pre-tax through a cafeteria plan on a separate 5500 filing. The Welfare plan reports the employer portion and Sch. A. The company also has STD paid after tax by the employee and LTD paid in total by the employer. My question is this must the STD & LTD be reported on Sch. A under the welfare benefit plan? Neither of these coverages have 100 or more participants. HELP!!!!!

Can anyone give me direction toward finding ERISA/HIPAA or like regs on the information that is required to be reported on an explaination of benefits (EOB)?

For those of you who offer ongoing after-tax employee contributions in your 401(k) plans, aer you limiting them? If so, what %?

I have read in other threads that for purposes of calculating the 4975 15% excise tax for late contributions, the "amount involved" is the lost earnings. Does anybody have any authority/cite? In my search for some sort of definite cite, all I have came up with is commentary (which all agree with the thread postings). If anybody has a cite, I'd greatly appreciate it.

Thanks

Assume an ESPP is being implemented in the context of an IPO. Because of administrative difficulties in rolling out the ESPP and the timing of the IPO, it will likely not be possible for participants to enroll in the ESPP until at least one month following the date of the IPO. Is there any permissible means by which the initial offering period can begin on the date of the IPO, so that participants can have the benefit of the IPO price in determining the exercise price of their options?

Any insight on the foregoing would be appreciated.

Does anybody know anything about Mobious? What types of servcies they offer, what part of VA are they located in? What system are they using for the administration?

Thanks

Opinions please as to whether "educational assessments" for ADHD (which are not covered under our medical plan) would be eligible for reimbursement under the HCRA?

I've looked all through the message boards and can't seem to find the thread I wanted to review. What is the story with an employee who might opt to defer 100% of pay? As has been mentioned, I'm thinking of the second income earner making, oh let's say $11,000 a year. How would the FICA taxes be paid? I know that in today's economy, we probably won't see much of this, but how to address it when it happens? I know that prior threads mentioned putting in a document limit (for example 75% of pay) for administrative ease, but what about those few clients who insist on the 100% of pay limit? I thought a CPA responded that the employee would then have to "pay" the FICA taxes to the Employer, but that doesn't seem acceptable. What would go on the W-2 then? Any input is appreciated.