We have developed our own volume submitter document and have received our opinion letter. We want to develop a searchable data base to automate its production. Does anyone have any suggestions on the best way to go about doing this? We know that there are folks out there with documents and data bases already to go, but we don't want to scrap our document to buy theirs, at least not without checking out the alternatives.

Thanks for any help!

My client has discovered that a member of its controlled group of companies has started and contributed to a SEP. When you look at the controlled group (which the broker did not) the group is ineligible to set up a SEP. An employer contribution has been deposited. How do you correct for an ineligible SEP? Is there any known guidance from the IRS on this?

Do the Section 318 attribution rules still apply when determining Key Employees under EGTTRA? I sit pondering the revised top heavy language for plan years after 12/31/2001, but it's just not clear to me.

Anyone else think they know?

thanks.

Grant

Does an employer have the responsibility to adhere a court order for dependent child health coverage if the employee has not satisfied the new hire waiting period? I say the employee has to be eligible for health benefits before the court order can take effect and the employer has to comply.

When determining if a series of transactions of the same issue is >5%, do I combine buys and sells for the plan year, or keep separate. For instance, say 5% is 100,000. Purchases of the same issue total 60,000 and sales of the same issue total 40,000. Do I consider that this series of transactions is reportable because it exceeds $100,000 (60,000+40,000)?

Are the $40,000 and $60,000 compared to the $100,000 separately?

I have a client who is set-up as a partnership. There are two equity partners and one income partner. Is the income partner prohibited from participating in a 125 Plan.

Thanks,

Joe

Plans with after-tax employee contributions determine pre-'86 and post '87 amounts in the event a participant receives a distribution of after-tax prior to termination of employment for calculating taxable distributions and what portion of the distribution of after-tax needs to be considered a withdrawal of interest.

Now that after-tax contributions can be rolled over to another plan, is there still the need to ascertain the pre-'87 and post '86 after-tax contributions? Or, given the fact that the after-tax is a "rollover," the accepting plan doesn't have to worry about it? Essentially treat the rollover of after-tax as being made Post-'86 and determine whatever needs to be considered interest under Sec. 72?

I understand that under the new proposed regulations, if one member of a controlled group offers catch up contributions, all other employer plans in the controlled group that provide for elective deferrals also must offer catch up contributions. The regulations, however, are not clear on whether the exception for qualified separate lines of business applies. Does anyone have any insight on whether or not the universal availability rule would require all plans of a controlled group, even if they are maintained by separate lines of business, to offer catch up contributions?

Thanks.

Is propecia (medication used to slow hair loss) considered a cosmetic expense under a 125 plan? I think it is not covered, but I cannot find proper support. Please help. Thanks.

An employer's plan has one or two "quirks" that don't fit into a prototype, but they go ahead and, with the permission and approvoal of the prototye sponsor, adopt the prototype document with an addendum for the few "quirky" provisions and the addendum also contains a statement that the plan is an individually designed plan. Are they entitled to an extended remedial amendment period based on the following language from 2000-20?

.06 Certain Employer Amendments Disregarded for Purposes of This Section - An employer that has adopted an M&P plan or a volume submitter specimen plan may have modified the plan in a such a way that the plan, as adopted by the employer, would not be considered an M&P plan or a volume submitter plan. Nevertheless, for purposes of this section, such a plan will be treated as an M&P or volume submitter plan and will be eligible for the remedial amendment period extension provided by this section. For example, an employer may have adopted an individually designed GUST-related amendment to an M&P plan that would have caused the plan to be considered an individually designed plan under section 5.02 of Rev. Proc. 89-9. Despite the individually designed amendment, the plan will be treated as an M&P plan for purposes of this section.

When an employer restores forfeitures for a rehired participant, is the forfeiture restoration counted as an employer contribution for any or all purposes?

Should it be reported as an employer contribution on Form 5500, and if the plan terminated, on Form 5310?

Should it be counted against the deductible limit?

Is it counted as an annual addition?

Any other areas where it is or is not considered an employer contribution?

The idea for this came about a few years ago. Someone in the office was running about saying, "The plan needs an EIN, an EIN"

(back when we were making sure all plans had a trust EIN)

Old Macdonald

Old Macdonald had a plan

He needs an E-I-N

And in this plan he has match

E-I E-I-N

There’s a deferral here a deferral there

Here a match, there a match

Everywhere a match match

Old Macdonald had a plan

E-I E-I-N

Old Macdonald ran a scam

I-O I-O-U

And in this scam he stole the dough

I-O I-O-U

Steal a few bucks here steal a few bucks there

Here a buck, there a buck

Everywhere a buck buck

Old Macdonald ran a scam

I-O I-O-U

Old MacDonald is in jail

D-O D-O-L

He hasn’t got a chance of bail

D-O D-O-L

Steal a few bucks here serve a little time there

Here a year there a year

The judge gave him about 20 years

Old MacDonald is in jail

D-O D-O-L

Old MacDonald’s on parole

And living in RIO

He has a big fat Swiss Account

RIO – R-I-O

With a pretty girl here and a pretty girl there

Here a grand there a grand

He’s got about 500 grand

Old MacDonald’s on parole

And living in RIO

Old MacDonald should be alarmed

E-I E-I-O

His former help will do him harm

E-I E-I-O

There’ a gunshot here and a gunshot there

Here a shot there a shot

Everywhere a gunshot

Old MacDonald bought the farm

E-I E-I-O

ooooooooooooooo. my humor is dry.

I didn't attend the session where this was addressed, but an interesting issue was raised at the conference about how many unknown controlled groups might exist. the example given involved a child under age 21. If the parents have separated and both own businesses then a controlled group exists. In fact, technically, it doesn't matter even if there was no marriage. yeh right. how are you going to ask for that on your data request...

do you have any kids that no one is suppossed to know about whose other parent might also own a business?

I think my biggest highlight is to actually meet with some people who respond to this website- even if it is only for a few minutes. It is always great to connect a face with a name . I missed our fearless leader's talk, as I was off moderating another session.

I got a little carried away and actually had fun giving my talk. I don't know if that's permissable or not. even interrupted the talk with a pension song - I'll get the words posted under the humor forum.

Consider a typical Professional Service DB plan not subject to PBGC. The plan is terminated with $800,000 in the trust. Lump sums will be paid and total NHCE lump sums equal $600,000 and the lump sum to the only HCE is $400,000.

Most plan documents say something like: "In the event of termination of this Plan the rights of all affected Participants to benefits then accrued, to the extent funded, shall thereupon become 100% vested."

For the above situation I have always seen it done where the NHCE's get all of their benefit, in this case a total of $600,000 and the HCE gets the remainder of the trust, or $200,000 which in this case represents only half of his benefit.

The above language could lead one to believe that everyone gets 80% of their benefit otherwise payable, i.e. $480,000 to the NHCE's and $320,000 to the HCE.

I seem to remember a private letter ruling from a few years back that said the HCE cannont short himself to make the trust sufficient but I also know that the PBGC will allow certain HCE's to do just this.

Keeping in mind that my example plan is not subject to the PBGC, what is the correct approach in paying benefits from this terminated plan? NHCE's get all their benefit and what remains in the trust goes to the HCE or NHCE's and HCE's all get their benefit to the extent funded?

Also, what if the plan was subject to PBGC (prior to the provision of EGTRRA allowing for funding upon termination). Would we always pay the NHCE's 100% of their benefit and then short the HCE?

I'll buy anyone, who reads this message, a large ham po-boy sandwich from the best sandwich shop in New Orleans - if they can show me any place in Benefits Link which says that ... the only highly compensated employees & the only non-highly compensated employees that are considered when performing the ADP, ACP, and mutiple use tests are those HCEs & NHCEs that meet the eligibility requirements of the plan being tested.

(For example: If employer has 10 HCE and 30 NHCE ... but only 2 of the HCE & 5 of the NHCE meet the 1 year of service & age 21 requirement per the plan documnet ... then the ADP, ACP, & Mutiple Use tests are only performed on the 2 HCE & 5 NHCE).

Why is something so basic not mentioned in any message or Q&A in Benefits Link ?

Does anyone know whether, after EGTRRA takes effect, it be possible for participants in 457 plan maintained by tax exempt employers to roll their assets to IRAs? Does the isue turn on whether or not the plan is an eligible 457 plan? It would seem that now that after-tax contributions can be rolled to IRAs, it would make less of a difference.

Two questions:

1. I am almost certain that an employee cannot seek tax credit for medical expenses (7.5% of adj gross income) and participate in the medical reimbursement plan too. But someone asked a good question - if an employee elected say the maximum our medical reimbursement plan offers per year of $500, and in the plan year the employee has an unexpected $4000 medical bill, is the employee essentially out of luck as far as claiming that on his/her taxes? It seems unfair if the employee has an unexpected huge medical expense and can't claim that on his/her taxes. Do they have to simply choose one or the other and then hope they don't have a huge expense?

2. I am reading two different things regarding over-the-counter (OTC) drugs and medical reimbursement plans. One items says that OTC drugs are not covered even if your doctor prescribes them (such as pre-natal vitamins) another says that OTC drugs are reimbursable if your doctor prescribes them.

Any help out there?

Has anyone given much thought to the "relief" from the same desk rule offered by EGTRRA's change in the 401(k) distribution event from a separation from service to a severance from employment? It seems that this change will help in asset sales where there is a change in employer, but not in stock sales. Rather, in cases where a subsidiary is being sold, one still has to rely on 401(k)(10) to make a distribution, which means that there remains a problem if the seller or buyer is a non-corporate entity such as an LLC or a partnership since 401(k)(10) is not available in those situations. In other stock sales where the entire company or group is being sold, Buyer has to deal with either continuing the Seller's 401(k) plan, merging it with Buyer's 401(k) Plan or possibly having the Seller terminate it before closing in order to allow distributions. Anyone with additional or contrary thoughts out there about the repeal of the same desk rule? Thanks.

I am interested in contributing to a Roth IRA. What do I need to do?

Employee A at the beginning of the year knows that she will have a baby in March. To prepare for the extra costs associated with child birth, she elects to have $3,000 for her Medical FSA. After the birth she finds out that the medical plan actually covered more than what she thought (this is a made up example obviously!!) and thus owed much less in out of pocket expenses. Since having a child is an allowable change in family status, she decides to change her contributions to $1,000 (at the time she had only paid in $900). The questions is:

1. She can do this, right?

2. Can she only take out $1,000 or is it similar to ending employment where a person can actually use the original elected amount which may be more they original put in at the point of termination.