OK, got a controlled group question. Two companies, two plans. Each must pass coverage in order to be tested separately. Company 1 has 3 HCE's plus the owner and Company 2 has 2 HCE's plus the same owner. The owner is an employee of both companies and lets say he makes $50K at each. Both companies make a profit sharing contribution, but the percentages of pay are different. My question is this - what is my percentage of HCE's benefitting under each plan? I have 4 HCE's getting a contribution in plan 1 and 3 HCE's getting a contribution in plan 2. Bearing in mind that one of the HCE's is the same person, is my coverage in plan 1 equal to 4/7 and 3/7 for plan 2? Or, because the same HCE benefits in both, are the coverages 4/6 and 3/6, respectively?

Any references would be greatly appreciated.

Thank you.

If two DB plans are merged are there any participant notification requirements and if so under what circmustances?

Due to some Third Party Administration testing tracking problems...

A very small 401(k) Plan didn't perform ADP/ACP test for PYE 12/31/1999 -limitation year 1999. Test was performed for 1998 and 2000.

ADP/ACP Test fails for 1999.

If the corrective distribution for 1999 limitation year failure is made after 2000 plan year end, is IRS Rev. Proc. 98-22 the best option to correct?

If so, does anyone have experience using this method "permitted plan sponsor self-correction of certain qualification failures" ???

Any help is much appreciated!

Matt

Employer A hires from the Leasing Company all the leased employees who have been working for Employer A's subsidiary. Effective 1/1/2001 these former Leased Employees are part of Employer A's payroll.

I am required to include the service with the Leasing Company for eligibility and vesting purposes in Employer A's Plan. For ADP/ACP purposes, am I obligated to use the 2000 salaries with the Leasing Company as the benchmark in determining any HCEs for 2001 from this group of Leased Employees?

Thanks in advance for any insight. Andmik

Just a little note to RLL (whoever you are) for all of your ESOP advice. I have learned a tremendous amount from reading your replies. You are to be commended for your public service to the benefits community. Thank you.

What's the difference between a Multiple Employer or a controlled Group of Employers? Do different Employer Idenitication Numbers for the respective Employers have anything to do with making a distinction

Can a Section 521 entity (farmer's cooperative) sponsor a 401(k) plan for its members? If so, where can I find the IRC authority to do so? Thanks.

Suppose a DB plan is amended to eliminate future benefit accruals (benefit "freeze"). At the time the amendment is adopted (or effective date, if later) A participant in this plan has a benefit governed by the 415 $ limit. For example, suppose his accrued benefit under the benefit formula at the time of the freeze is $8,000/mo, but the 415 $ limit is $6,000/mo. Since his accrued benefit under the formula is $8,000/mo, is he entitled to future benefit increases as the 415 $ limit is indexed, regardless of the benefit freeze? Or, since the 415 $ limits are presumably part of the plan document's provisions, can the benefit "freeze" eliminate entitlement to the 415 $ limit indexed increases?

A doctor is leaving his LLP group. He will receive a buyout over time for his equity interest in the partnership. In addition, he will be receiving his net realizable value of the receivables over the next 24 months. This is for work that he did while with the group and it will be taxed as ordinary income.

CPA thought that he could set up a SEP for this income. I do not think this would constitute earned income for self employment purposes as there is no trade or business being carried on by him. He has already performed the service while a partner with his former LLP. I don't see how he could set up a separate plan for this. I also don't see how he could continue to participate in his LLPs plan as his service has ended.

Comments?

Elderly IRA owner lost $$$ in IRA based on bad advice from an investment advisor. The worthless stock is still in the IRA. Lost $$$ is recovered.

Question: is the recovered money immediately taxable to the IRA owner, is it now considered part of the IRA portfolio, or can it be pocketed without tax consequences?

I have a client which was an employee of a very large company last year. In November my client bought a part of the company he worked for and it was moved to a new company. All of the employees which worked for the part that was purchased were terminated on December 15 and rehired the next day by the new company. Some of the employees still received paychecks until December 31 and deferrals were withheld.

We established a new plan on March 1 and then discovered that deferrals had been withheld for December but never submitted and still remain in the general operating account of the old company. Any suggestions about how this can be corrected without causing a huge problem?

I was recently laid off (This was perfect timing - my daughter was just born and I was planning on quitting and staying home being "Mr. Dad"! YIPEE!) and will eventually have to get my 401K into and IRA, then into a Roth IRA. Here are my specs:

-Wife and I are 33, with newborn (1 month).

-Married, file jointly.

-Her AGI was 25K last year, will probably be near 30K this year. My AGI will likely be close to 20K this year (only worked part of year). Our total AGI last year was 102K.

-I have 35K in my 401(k) plan ready to convert to IRA.

Question 1: After I convert my 401(k) to an IRA, should I immediatly convert it into a Roth, or should I wait until next tax year and convert it then?

Question 2: Assuming we are at the 28% tax rate this year, and the 15% rate next year (the cutoff being AGI +43K), would the tax for converting to Roth would be $9800 this year, $5250 next year?

Question 3: Do I have to snort all that tax money out my nose at once?

Just wondering if there are any terminated Nationwide PPA's which participate here. If so, would you please Email me regarding your contract termination and what has happened. We have recently been placed in this situation and I am concerned about our future. Any feedback would be appreciated.

In yr 2000, I contributed 2K to a roth IRA without realizing that there was a maximum income limit. Due to a severance package, I made in excess of the $95K max. While filing my taxes using Turbo Tax I realized I had to pay a penalty fee of about $90, which I paid because my investment was in tech stocks and worth 1/2 of its value. I have left the investment in the fund. In 2001, I will probably not hit the $95K income limit. Will I be penalized again if I leave the money in the Roth if I don't make more than the max income? Can I contribute another 2K in 2001 if I don't reach the max or do I have to skip a year?

I have an affiliated service group question.

Facts: Government contractor (Company A) is currently working on a contract where 50 employees are on Company A's payroll and qualified plan. On August 1, employees are transfered to Company C, the ensuing contractor on the project. This Company is 40% owned by Company A and Company B. Company B is 40% owned by Company A as well. Can Company A still keep the Company C employees on it's qualified plan, or must they role them into a new plan. Because of their relationships, Company A provides accounting and billing support to Company C.

If an employer wants to make a profit sharing contribution and allocate it as of 12/31/00, by when must that contribution be made strictly for allocation purposes? I realize the year of deduction and the year the amount is treated as an annual addition have rules laid out, and may cause contributions that are allocated in one year to be treated as annual additions and/or deducted in a different year. But I do not know of any rules restricting allocation dates. Could a contribution made on 12/31/01 be allocated as of 12/31/00? How about a contribution made on 1/15/02? Any cites?

Thanks for any input.

We have just discovered through background checks that we have a number of immigrants who have been working with our company using falsified social security numbers. These employees have been terminated from our company. Our question is, do we have to offer COBRA benefits to these employees?

Hello-

Has anyone come across a creative way to avoid the imposition of the 4978 excise tax? The ESOP at issue bought $11 million dollars of employer stock 1-11-99. As sale of the company is contemplated. I am looking for any ways to avoid or minimize the excise tax? Any thoughts?

The Eye, Nose & Throat LLC disolves, and three new business: Eye LLC, Nose LLC and Throat LLC are started. All of the employees from the original company perform their same functions at their respective brand new companies. There is no sale of assets. The 401(k) Plan from the original employer is terminated.

Are the employees of the original employer subject to the same desk rule?

Are the new employers restricted from beginning their own 401(k) plans (successor plans)?

Any guidance is appreciated.

I am trying to find a survey or study that will show how doctors/hospitals rate health plans (PPO's specifically). Currently with Cigna but group considering changing. Please send me links or places to look (already have IFEBP looking for me) for this kind of survey. My dream report would show several different health plans rated on various issues, such as fee's, timliness of paying, administration, etc. Thanks much fellow benefits dudes and dudettes.