I am working with a Defined Benefit SERP established about 10-15 years ago. The payout formula of 2% of final salary for each year worked for up to 30 years is reduced for early retirement. The reduction results in the individual receiving 75% of the benefit formula if he/she leaves before age 65. Does this sound like a normal preretirement reduction formula? What other preretirement reductions have you see imposed?

We have never filed a Form 5500 for our LTD plan that covers over 100 Directors & Officers

We have been able to get Schedule A data back to 1995 plan year to complete Form 5500's for 1995, 96, 97, 98, 99 & 2000

Using the DOL's DVFC program, we incur $ 25K in late filign fees under DFVC

Is VCP available for late Form 5500 filings?

If so, would it be cheaper to go this route (assume we will prepare the VCP filing inhouse)?

Thanks

A medical group client of mine recently restated to a 401(K) safe harbor plan using the 3% safe harbor. One of their HCE's is the former owner of a business that they bought. In their contract with him, they agree to put $2,250 into the retirement plan for him. His comp is about $180,000. Can a prototype be plan be drafted to limit this one HCE to the contractual amount while the other HCE's receive the 3% safe harbor? Thanks.

An existing P/S Plan added a Deferral and Match provision effective 3/1/2000. Plan has 5 HCE's and 5 NHCE's. Plan failed ADP and ACP Tests and was Top Heavy for 2001 Plan Year (2/28/01 PYE). Refunds of Excess Contributions and Excess Aggregate Contributions were made along with a Minimum 3% Top Heavy Contribution. Owners want to contribute maximum if possible, can they adopt the Safe Harbor provisions effective 3/1/2002 allowing for a 3% Non-Elective Employer Safe Harbor Contribution Formula???? It looks like the plan will fail the ADP and ACP Tests and is Top Heavy for the 2002 Plan Year.

It seems that the 3% Non-Elect. Contribution would satisfy the Non-Discrimination and Top Heavy Tests if adopted.....

We have a new client that has both a MP plan and a PS plan which he wants terminated. The plans have been around over 10 years and he has always been the only participant. The last document updates were for TRA86. After explaining that the IRS requires plans to be current with the laws in effect at the time of termination, he said he thought that seemed silly and thought he might risk not having the plans updated and simply would have a termination amendment.

I have to say that of all the many times I've had this discussion with clients, this is the first one that's balked. Theoretically, what could happen upon audit? Practically, I would hope the IRS would let you correct the problem, but I don't know if or how much financial penalty there would be.

Any help on the potential penalties would be appreciated. Thanks.

My clients are all monthly federal tax withholding depositors, all done via EFTPS. I need help confirming how to complete the month-by-month liability box (line 8) on the Form 945.

Our procedure is to do EFTPS early in the month FOLLOWING the month of distribution, typically within 5-7 business days after the end of the month of distribution. My question is...WHEN is the liability & how do you report it properly on the 945?

If the liability month can be the month following the month of distribution (which is the same as our deposit schedule), then what happens with December taxes deposited in the next tax year? Should they get filed on the 2001 945 or the 2002 945?

The 945 confuses me because we indicated on EFTPS that the January 2002 deposits were for the 12/01 tax year...and I cannot grasp what is supposed to be reported on the 945. Can anyone advise me fast???

Thanks!

We established a defined benefit plan for a new client eff. 1/1/01. As the company also started as of that date, for 2001 we were going to perform the initial valuation as of 12/31/01. As part of the proposal we developed an estimated cost for the year. The client established an account and made partial deposits during the year towards 2001.

Situation that is a little weird is that assets incurred a loss during the year. So:

Deposits $100,000 during 2001

Say credit $2,000 interest on contribution for FSA purposes.

MV of assets as of 12/31/01 was $90,000.

To establish AV of assets as of 12/31/01, I take MV Assets, subtract out contributions paid for 2001 to get IRC 404 assets. I then further subtract out interest for IRC 412 assets. Obviously I am coming up with a negative AV assets as of 12/31/01. Does this seem a little odd to anyone?

The code is clear that a "safe-harbor 401(k) plan" is required to provide the safe harbor match or safe harbor nonelective contribution only to NHCEs. In your experience, do most plans also provide the safe harbor contribution to HCEs?

Is anyone planning to post catch-up contributions to a separate source for recordkeeping (for testing purposes)? What about an election form (at least for those whose applicable limit is a plan level limit)? Lastly, many documents give plan administrators the power to limit HCEs to a lower deferral rate (determined by the plan administrator)- 5-6% or whatever rate they feel appropriate to help pass nondiscrimination. Would'nt this become a plan limit allowing catch-up?

Thanks

A question's come up with regards to when a participant can file a Salary Reduction Agreement and when it can be implemented on the payroll system. Can a participant legally have a salary reduction agreement implemented in the same pay period it is signed? The example would be where the agreement is completed within a pay period and the participant expects that deduction to be taken on the paycheck for that pay period ... kosher or not?

Thanks,

Kerryb@waushosp.org

I realize that:

An employer cannot have a SIMPLE plan, if the employer also currently "maintains" a SARSEP.

But, I'm not sure that I know what "maintains" means.

Here's my actual situation:

Years ago, an S-Corp established a SARSEP. It completely stopped using the SARSEP a couple of years ago and established a SIMPLE-IRA. It never took any formal steps to terminate the SARSEP (because a SARSEP is not a trust plan). All it did was set up SIMPLE-IRA accounts for each of its employees, started making SIMPLE contributions to those SIMPLE-IRA accounts and ignored the fact that the employees still have SARSEP-IRA accounts.

Now the S-Corp wants to switch back to the SARSEP. It wants to stop using the SIMPLE-IRA and start withholding SARSEP elective deferrals and making discretionary contributions to the SARSEP and do away with the SIMPLE-IRA. The reason why is...because the business is making a good profit now and it wants to take advantage of the $35,000 max contribution limits (allowed by SARSEP rules) .... rather than the measly max contribution allowed by its SIMPLE.

1. Since the SARSEP never died (terminated) .... can the corp begin using it again ?

2. What does "maintain" mean ? The corp never contributed to both the SARSEP and SIMPLE in the same year. Did it "maintain" a SIMPLE, while it also had an inactive SARSEP, because the SARSEP was still "available" for use ? Does "maintain" mean "available" ?

3. Can the corporation alternate (every other year) between the SIMPLE and SARSEP, as long as it maintains separate SIMPLE-IRA accounts and separate SARSEP-IRA accounts .... or is it now forced to continue with only the SIMPLE because it allowed the SARSEP to go inactive for a couple of years?

The state noncompliance issues concern me since most of my firms clients are in noncompliant states (NC, SC, GA). What are others doing? Are you sending a mass communication to clients concerning this? Thanks

Can anyone confirm whether or not an employer that sponsors more than one retirement plan must use the same limitation year in calculating the 415 limits even if the plan year ends are different?

I need some info on the 403b amnesty program, RP - 2001 - 17, where can I find this info on the IRS website. Also, info on any penalties and fees associated with this process. Thanks.

Does anyone know where I can get a complete copy of SOP 93-6 on line?

Has anybody heard when the new forms and instructions will be released? I checked the DOL website, but couldn't find anything giving an estimated release date. Thanks.

There doesn't appear to be any requirement in IRC 106 that employer-provided health coverage must be a group policy. The employer can also make tax-free contributions toward the cost of individual policies for its employees. Does anyone know any regulation, ruling, or other cite where this is explicitly stated?

Also, are there any guidelines for the administration of employer-provided individual coverage? Does the employer have to make payments directly to the insured, or can the employee be reimbursed under an "accountable" plan?

Finally, does anyone have a feel for how common such an arrangement is and/or if there are other pitfalls?

I need some guidance on if/how I need to file for my employers health plan.

According to documents received from the insurance company, our plan is a self-funded group contract. We pay the insurance company a "premium/fee" each month based on the number of employees we have. A portion of this fee is funded by our employees. And, we are billed monthly for the benefit checks the insurance company writes each month. We have about 25 employees.

According to 29CFR 2520.104-20, it would seem that we may be exempt from filing form 5500. However, I'm not sure that reimbursing the insurance company for claims paid qualifies us under item (B)(2)(ii) of that section (discusses benefits being paid solely from the general assets of the employer). I am leaning towards being exempt since it would seem we are just hiring the insurance company to administer the plan rather than having them "fund" it.

Any thoughts?

I need some guidance on if/how I need to file for my employers health plan.

According to documents received from the insurance company, our plan is a self-funded group contract. We pay the insurance company a "premium/fee" each month based on the number of employees we have. A portion of this fee is funded by our employees. And, we are billed monthly for the benefit checks the insurance company writes each month. We have about 25 employees.

According to 29CFR 2520.104-20, it would seem that we may be exempt from filing form 5500. However, I'm not sure that reimbursing the insurance company for claims paid qualifies us under item (B)(2)(ii) of that section (discusses benefits being paid solely from the general assets of the employer). I am leaning towards being exempt since it would seem we are just hiring the insurance company to administer the plan rather than having them "fund" it.

Any thoughts?

Top 25 HCE elects lump sum - is restricted ! - gets life annuity payments for a year per restricted rules - a year later he's un-restricted & wants a lump sum - how is the amount he's entitled to calculated ??