a client has been making contributions to his Money Purchase plan but does not have compensation to justify the contributions. He has K1 income and thus is not entitled to make contributions to the MP Plan. What should he do to remedy the situation? Is this handled like a typical "non-deductible contribution." Are these contributions subject to the plan asset rule?

I have a perplexing question- one that people either can't or won't answer (leaving me confused). I am trying to figure out how a business owner -who intends on selling the business in a couple of years- can buy a ten-pay LTC policy via the company and have the company write it off as a valid insurance benefit expense. My one thought is to have the company buy an immediate annuity, with an amount being enough to provide a payout matching the monthly premiums of a LTC policy. Would the annuity have to be qualified or non-qualified? Would there be any discrimination rules if this were only done for one of the owners? If it's non-qualified to avoid any discrimination, would it be deductible thru the company as "insurance"- seeing as an annuity is an insurance product? (I feel like Ferris Beuller's teacher, "..Anybody? Anybody?...") Thanks,

The FTC issued privacy regulations under the banking reform law (Gramm-Leach-Bliley). The regs exempt employee benefit plans from the privacy requirements of the new law, but the regs also suggest that retirement plans which permit participant loans may be subject to the privacy requirements at the time of making such a loan.

I've heard informally that the FTC and banking regulators feel strongly that a plan which makes loans is subject to the privacy requirements and that a plan administrator must develop a privacy policy for annual disclosure to the plan's "customers" who borrow.

Does anyone have better info on this topic? And is anyone preparing privacy policies for their plans?

Section 404(a)(8) seems to say that a self-employed person can't make a deductible contribution to his/her qualified DB plan for a given year if their net Sch C is $0. Am I missing something? Is there a way around this?

A question for the "product people" (especially those of you who deal with insurance companies)-

A client was informed that they could not purchase an equity indexed annuity contract as an investment of their Profit Sharing Plan due to the "Harris Trust Ruling". Can anyone enlighten me as to what the "Harris Trust Ruling" is and says?

Thanks!

While doing some reading about the safe harbor non-elective contribution and the safe harbor match, it seems that all participants eligible to make 401(k) contributions would get the 3% s/h non-elective, while the match s/h contribution would only go to those participants who are actually deferring. Is this correct?

If so, couldn't that lead to an employer actually being better off with low NHCE 401(k) participation. For example, if there are 100 NHCE's in the Plan, and only 10 make 401(k) contributions, the employer would only put in match s/h contributions for those 10 people. Also, if 5 of those 10 NHCE's are deferring less than 5%, then the employer does not have to put in the full 4% contribution.

Surely I've misread something about safe harbors, because the above doesn't seem "right".

Same topic, different question: Do the safe harbor contributions apply only to NHCE's, or can they also be given to HCE's?

what is the rationale as to why owner-employees are not permitted to take loans under IRC 4975

Does a safe harbor 401(k) plan make sense if it covers only part of a controlled group?

If one company in a controlled group can pass 410(B) coverage, can it operate a 401(k) safe harbor plan as if it were not part of a controlled group?

If a company in a controlled group could not pass 410(B) coverage without bringing in employees from other members of the controlled group, how would a safe harbor 401(k) plan work?

When leaving employment on disability,does Cobra extend to 36 months instead of 18?

IS 1042 ESOP Rollover treatment availale t a C Corpration that owns real estate?

When I terminated my employment on 12/31/00, my insurance provider was company A. I continued to use the same physician and prescription benefit until I received my Cobra paperwork. I received it, filled it out, and paid the premium. Now three months later, I received Cobra information saying that my Cobra coverage has been changed to Company B and I owe more money on the premium. My question: Who pays for the claims I incurred during the period when I thought I was covered by Company A. I have received NO information on company B, but I did call and find out that my same physician is not on their PCP list. Can anyone address this?

my husband is switching jobs and his last day was today, his insurance runs out tommorrow and we elected not to carry his cobra insurance ,but found a short term insurance policy that we can carry for 6 months (until his new insurance will kick in, after about 4months of working.) the policy has a big deductable and it doesn't cover pre -excisting illnesses. is that going to be a problem when we start our new insurance since it will be over 60 days from carring our cobra plan. I heard today that if this short term does not cover pre-excisting-then our new job insurance does not have to either. does that make sence thanks your help would be wonderful since we are running out of time. thanks pam

I was wondering if I could get some feedback on the following situation: A bank acts as trustee for a 401(k) plan. The plan holds employer stock as an investment option. The bank also owns employer stock and gives recommendations (investment options, administrative, etc.) regarding the 401(k) plan. The bank is clearly a party-in-interest. What liability issues arise from this situation? I am somewhat bothered by the fact that the bank owns employer stock and acts as trustee to a plan where employer stock is an investment option. I'm not sure why though.

I understand that certain states have "right to work" laws

under which employees who are not union members, nor pay union dues, may be covered nonetheless by collective bargaining agreements, and thus are entitled to the all the rights and benefits afforded the union membership notwithstanding their non-member status.

Assuming this is true, may such employees be disaggregated for purposes of nondiscrimination testing? If so, may the employer choose to test this group with the union membership, or by themselves?

Railroad Employees are subject to Tier taxes instead of SS/Med so I am not sure if Section 125 covers them or not.

I have contacted the RRRB. They didn't think they would be eligible, but they were not sure because they were not familiar with Cafeteria Plans. Does anyone else work with Railroad employees who have a Cafeteria Plan to give us an answer to our predicament? Are Railroad Employees eligible for a Cafeteria Plan?

I have a 401(k) plan with a discretionary match and the forfeitures are used to redube employer contribution. The company does not want to make a matching contribution, yet there are forfeitures. Is it ok to hold the forfeitures until some future year when a matching contribution is made?

If a company is laying off more than 20% of its workforce, is there any requirement to immediately vest everyone under the 401(k) Plan? We have a discretionary match and a graded vesting schedule.

How is a 5500 prepared to properly reflect an SCP (fka APRSC) deposit? Contribution is ER contribution and the gain is gain?! Or does it get lumped together?

I've read the previous posts on this issue, but I still need some clarification and/or guidance. How are you handling the partner's 401(k) election that must be made by 12/31 when K-1 data is not available until several weeks later? Any suggestions?

We are considering making a guess and correct after the K1 is computed. The problem w/ this is how to treat the correction.

Can a matching formula be independent of the amount deferred? For example: 3% of compensation contributed to match source if there is any deferral at all, no contribution to match source if no deferral.

Why or why not?