Rev. Proc. 2000-16 states that the normal deduction rules of 404(a)apply. Can a deduction be taken for corrective contributions relating to a prior year if it's still within the 15% or 25% deduction limits for the current tax year?

My son has dyslexia and it was brought to our attention that tuition for remedial reading courses were considered allowable medical expensed for a "Health Care Reimbursement Account". I searched the net and found a company whose HCRA was administered by a company called TRI-AD. In their literature they indicated that they indeed allowed reimbursments for this under their HCRA. Upon contacting my plan's administator (Accordia) they indicated this was not allowed. How can this be if all HCRA are governed by IRC 213??

What is the current environment for terminating a 401(k) plan sponsored by an employer that is being acquired in a stock sale? Since "the employer" is determined as of the day of the termination, if the termination is done before the stock sale, do the 401(k) "successor plan" regulations even come into play?

Are there service providers who do operational audits to ascertain if plans are being operated in a way that provides for continued qualification under IRS rules?

If so, what kind of report would be furnished to the client?

Thanks for any responses.

Am interested in techniques used by venture capital funds to shield tax-exempt entities from realizing ubti as a result of the investment. I have heard about "blocker C corps" and options but would like more information. Has anyone had experience with this in terms of plan investments?

Seeing information on organizations' experience with implementing web-based employee self service benefits administration. I would also like to know what vendors are being used and the satisfaction level with these vendors.

Our client(Buyer) is acquiring all assets of another company (Seller). Seller has a 401(k) plan with loans. Buyer has a 401(k) plan but will not accept rollovers of loans, only cash.

Seller terminates its 401(k) plan the day before closing by Board resolution. Seller intends to file a 5310 with the IRS and distribute after receiving approval.

Buyer does not want to monitor or in any way be involved with loans in Seller's plan. Buyer wants to offset the outstanding loan balances as of the termination date, even though distributions will not be made until IRS approval of the 5310 six to eight months later.

Is this permitted? What are some concerns?

In lieu of the above, could Seller (at the instruction of Buyer) amend its plan to say that all loans will become due and payable as of the termination date of the plan. If the loan is not repaid, a deemed distribution occurs.

Others must have experienced this. Any thoughts out there on how to handle situations like this?

Thanks.

An employer purchases a professional practice in an asset sale and inherits two employees from the old practice, with the promise that they would continue to benefit under the SARSEP established by the old practice (prior to 1997). After the asset sale is complete the employer forwards salary deferrals to the "inherited" employees' IRAs, AND continues to match the deferrals under the old practice's generous matching formula. However the employer never formally adopts or executes anything in relation to the SARSEP, nor do the asset sale documents address the SARSEP. Is it necessary to "unwind" all of the new employer's contributions (and the post-asset sale deferrals)?

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I am looking for sample 401k negative election language. Several other posts have made this request (but I don't see responses). So I'll try again - does anyone have sample notice language they'd be willing to share? An e mail of the WORD document to rvatalaro@earthlink.net would be greatly appreciated. Thanks!

If a plan has a pre-1987 carryforward for deductibility purposes, and that plan has been terminated, may the employer use that pre-1987 carryforward in a subsequent plan (for example, money purchase plan terminates, plain vanilla profit sharing plan starts - can the profit sharing use the pre-1987 carryforward from the money purchase)?

Loan was given to owner of an S corp, which of course would be a prohibited transaction.

but also, Plan does not allow loans.

so, which comes first? Is it an operational defect that can be corrected (perhaps under APRSC)

or a prohibited transaction, which is not correctable under any of the programs.

owner has been paying back loan with interest.

as a side note, plan does not allow in-service withdrawals, so it can't be treated as a distribution.

We have been researching the elements of the "GUST" legislation that may be applicable to "qualified" government pension plans and it appears that only "USERRA" apllies. Has anybody else researched this subject?

Can an employer who increases the maximum deferral under a health FSA during a plan year allow participants to increase their elections during that year?

How flexible is the IRS under VCR? A 401(k) plan with a matching contribution failed to credit controlled group employees transferring to the plan sponsor with their prior group service and required them to complete an additional year of service before being eligible to make elective deferrals. When actually eligible, less than 10% of the affected employees elected to defer.

The VCR correction per Appendix B is for the employer to make a QNC equal to the ADP (for elective deferrals) and ACP (for the match) for all of them, even the 90% who never deferred into the plan. Anyone have any experience with IRS flexibility on this. We would like to make corrective contributions only for those who later deferred, the presumption being those who never did, would not have had the plan been adiminstered correctly. Cost is a 10X increase the IRS way. Seems to convert a correction to a penalty to me. Anyone?

Is there any requirement that vesting be shown on a participant's annual benefit statement, or is it enough to show the total accrued benefit before vesting?

After Company B has merged into Company A (i.e., Company B no longer exists) and has "frozen" contributions to its 401(k) plan as of the corporate merger date, does former Company B's "frozen" 401(k) plan subsequently report under Company A's employer name, EIN, and next available Plan Number between the corporate merger and the ultimate plan merger (since Company B no longer exists)? Plan contributions continued seamlessly for the employees of Company B into the Company A 401(k) Plan.

The specific situation is that Company B's 401(k) Plan has some operational defects which must be corrected under EPCRS prior to a merger into Company A's 401(k) Plan, and so there will be a period of time when the 2 plan co-exist. Company A would like to shift the assets of Company B's "frozen" 401(k) Plan onto the same investment platform as its 401(k) Plan is on to allow the employees to have the same investment options. Unfortunately, this requires an amended Adoption Agreement (the Co. B Plan is currently on an insurance company Adoption Agreement, which must be changed if investments are shifted our of the ins. co.'s investments). On the amended Adoption Agreement, the "Employer," "EIN," and "Plan Number" must be identified. Do we use Company A's information, including assigning the next available Comapny A "Plan Number" to the "frozen" Company B 401(k) Plan?

Any suggestions or thoughts are appreciated.

Must employees on FMLA or Non-FMLA be given the same opportunity as active employees to make election changes during the normal annual enrollment period while on LOA? Normally, it is my understanding that employees on LOA must wait to make changes upon their return to work.

I recognize that the DOL has increased its audit activity and one of the issues it has been focusing on is whether employers are remitting contributions to the plan on a timely basis. If the DOL conducts an audit and uncovers such an issue, will this automatically trigger (or increase the chances of) an IRS audit. In particular, I am interested in whether such a DOL finding would trigger (or increase the chances of) an IRS audit of a not-for-profit located in the NYC area.

Assume a non-contributory DB plan. Plan provides for a pre-retirement lump-sum death benefit equal to 3 times annual salary. Is this benefit life insurance proceeds and, therefore, not eligible for rollover treatment or is it a taxable distribution and, therefore, eligible for rollover treatment?