Is it a prohibited tranaction and violation of the "exclusive benefit" rule if the owner of a business is also the trustee of the plan and is also the registered representitive (broker) on his company's 401(k) plan?

What if the owner/trustee/broker makes commissions? And what if he/she does not?

We are looking at adding 457 options for our employees of a public school system. We offer 403b plans but don't have a SPD or any written plan as it is not required by 403b rules. We have several vendors who provide TSA products for the 403b plan.

Are we required to have a written 457 plan? If not, how do we handle the requirement for 457 contributions being put into a trust? Our 403b vendors sign a TSA plan agreement and hold harmless but there is no requirement for those funds going into a trust.

If no written 457 plan is required for public school employers as is the case with 403b plans are there sample 457 vendor agreements available?

Any one know where I can get prior C-1 exams? ASPA does not offer them for purchase anymore.

I have FIL method, changed the asset method to an approved asset method in Section 3, and the result is a small negative unfunded. Does section 6.02(6) prohibit this change (that is, under automatic approval)? or does it, in conjunction with Section 4.01(2), automatically entitle (require?) me to set the unfunded to zero?

I think this is the answer: since the unfunded is negative, automatic approval is denied. Period. However, I might still have automaitc approval to change to something else anyway, including changing from FIL to FIL.

Am I reading correctly? Comments?

Suppose an individual has funds in an IRA and wants to start a new business. The individual directs the Trustee to use the IRA assets to capitalize an S Corporation (the IRA is the sole shareholder). Three questions:

1. May an IRA hold S Corporation Stock?

2. If so, is the S Corporation's income UBTI?

3. Are there any prohibited transaction issues?

A 401(k) plan is top heavy and the sponsor does not intend to make a discretionary contribution, but is required to make a top heavy minimum contribution for all employees under the plan's top heavy section.

Because the top heavy minimum does not go to terminees, it happens that the top heavy allocations would not pass coverage.

Are top heavy minimums by themselves subject to 410(B)?

Would they be reportable as a dissagregated money type for 5500 Schedule T purposes?

Where in the Code, Regulations or IRS Rulings is the requirement that a plan must operate in accordance with its terms in order to remain tax qualified?

I have a 501©(3) organization that established a 403(B) plan in 1989. A plan document exists which requires an employer contribution equal to 4% of compensation.

From the reading I have done it appears the plan document does not need to be amended for GUST as it is not a qualifed plan - true?

And, if the sponsor wants to take advantage of the new catch-up contribution rules under EGTRRA (subject to IRC 402(g)(7)), would a "good faith" amendment be appropriate and if so, when should it be adopted assuming a calendar year end plan?

I defaulted on a loan to one of my annuities. I claimed the money on my taxes many years ago and now I am being told by the company that the remaining money will be eaten up by the interest on the loan before I am eligible to withdraw it. I don't know what to do...please give me some advise.

My understanding is that spousal consent for a distribution or loan is NOT required in a profit sharing (or 401(k) plan) that provides only for lump sum and installment payment forms, makes the spouse the 100% beneficiary of the death benefit, does not have transfer money from a J&S plan, and is not used to offset a DB plan. Is that correct? Did I miss any other requirement to avoid spousal consent? Is there any problem with a plan adopting a policy of requiring spousal consent if it truly is not required by the terms of the plan?

Can anyone provide a cite showing that spousal consent is not required in the situation listed above?

My understanding is that spousal consent for a distribution or loan is NOT required in a profit sharing (or 401(k) plan) that provides only for lump sum and installment payment forms, makes the spouse the 100% beneficiary of the death benefit, does not have transfer money from a J&S plan, and is not used to offset a DB plan. Is that correct? Did I miss any other requirement to avoid spousal consent? Is there any problem with a plan adopting a policy of requiring spousal consent if it truly is not required by the terms of the plan?

Can anyone provide a cite showing that spousal consent is not required in the situation listed above?

I could have sworn that I had read that an employer could not have a SARSEP and a qualified plan in the same year. I have a client that wants to adopt a 401k mid year but something tells me this can't be done. I have no basis for this conclusion except to say I though I read something. Can anybody confirm or deny this?:confused:

I received some mixed information regarding the appropriate use of participant forfeitures in a section 125 plan.

I understand that forfeitures can be used to offset administrative expenses or to reallocate dollars back to plan participants.

However, I'm not clear on whether the forfeitures may be used to reduce payment of future claims. For example, can we use last years forfeitures as a deposit in this years Flex account and reallocate participant payroll deductions ?

What do most organizations do?

I've been searching for Proposed Reg 1.125-2 Q&A 7 that is mentioned in Question 60 of the Section 125 Q&A that on this site but I'm having trouble finding it.

Any input is appreciated.

I have a Safe Harbor plan document that states the employer will use the 3% Nonelective Contribution. However, the employer (part of a PEO) made a 100% up to 15% Match Contribution (which is the old allocation - prior to SH).

Apparently there was a lack of communication and the payroll department did not stop the match contribution when the SH amendment was signed changing the allocation.

I'm looking for confirmation or further suggestion on how to correct this defect/administrative oversight...

In the ERISA Outline Book - Pg 15.541 - I've found that under "Misapplication of allocation formula" that I would in so many words - forfeit the Match contribution and reallocate as per the plan document as a 3% Nonelective Contribution.

Any suggestions or further comments are appreciated.

Also, this plan is failing 404 & 415 and is Top Heavy. Therefore, if I can correct the "Misapplication of allocation formula", then 404 and 415 will pass and the Top Heavy minimum is taken care of - this was the employer's intention.

I have a client who owns about 25% of his employer and participates in his employer's 401(k) Plan. In addition, he is a director of an unrelated entity and received directors fees for that work which he reports on Schedule C of his tax return. He has had a 25% pension plan for several years with respect to the directors fees.

In addition, he has many personal investments and this year he rented office space and hired an employee, just to keep track of these investments. The expense of the employee and office space are treated as investment expenses and deducted on Schedule A of his personal income tax return, subject to the 2% of AGI floor. The pension plan he maintains for his director fees has an immediate eligibility provision in it. My question, as you've probably guessed by now, does he have to make a 25% contribution to a pension account on behalf of this new employee?

If the Schedule C buisness is a separate business form the investments (which I think they would be since one generates SE income and the other does not), would the investment business have to specifically adopt the plan before she would be eligible. If so, would the investment entity have to adopt the plan to keep it qualified? If so, could they adopt in 2002 and use the otherwise excludable employee exception to keep from failing the coverage test for 2001. Thanks for any help you can give.

We have a client that has a cafeteria plan that provides a "benefit allowance" to each participant to help offset the cost of their benefits. Each participant makes their elections prior to the beginning of the plan year, but some of the benefits are pending approval by the insurance company. Please advise if there is any guidance anywhere on whether the participant should be allowed to use the "benefit allowance" toward other benefits if they are denied coverage for the benefits that they originally elected?

We have a relatively new, to us, Taft Hartley client who maintains a benefits bank which often produces large $ bank amounts that are often not used up by age 65 .... Medicare has indicated that the plan not medicare is primary until the bank is used up ... this makes NOOOOOOOO sense to me ... does anyone have experience with this type of medicare ruling??

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jlcowden

We took over the record-keeping for a plan in 2001. I was reviewing the outstanding loans with the client and they said that they were unaware of one of the loans. In researching this, they discovered that an employee took a loan in 2000 but never made any payments on that loan. I have determined that the loan defaulted in 2001.

The participant wants to leave the loan in default and receive a 1099 for the deemed distribution. I have explained that the amount of the loan is taxable for the 2001 calendar year and that if she has already filed her tax return, she will have to file an amended return. I have also explained to her that although she must report this income for 2001, she will not recieve her 1099 until next year because it is too late to receive a 1099 this year.

This seems fairly simple to me, which always gets me worried. Have I missed anything?

Thank you.

I have one management company and three other companies for which it performs services. I believe that makes the management company a B-Org and the three other companies FSOs. There are three owners. If Owners A and B each own 50% of the Mgmt Co. and 4% of each of the three other companies and Owner C owns 92% in each of the three other companies, would that be considered an ASG??? Thanks.

When can a sponsor change the integration level for a SEP? I know that with a qualified plan there are two camps, one that says prior to the end of the PY and one that says before the contribution is due. But what is the rule for SEPs?