We terminated a profit sharing plan in 1985 or 1986. To the best of our knowledge and recollection, all participants were paid out then. We destroyed the records relative to the terminated plan in 1996. Now a former employee has presented a formal demand for a distribution he claims never to have received. How do we prove we paid him out? How does he prove we didn't? We are within the 30-day response period and will deny that he is due any benefits under the plan. Any experience on this?

Now that the Neolatology case was decided, did the promoters of such arrangement back off? No, they put their heads together and concocted a new scheme to get around the tax laws. Why don't they read the opinion. Judge Laro, who respectfully and impartially reviewed the Prime Benefit Plan in the Booth case (although correctly finding that the Plan was experience-rated), trashed the Southern California Medical (or "SCAM") VEBA, the insurance company (Interamerican, which is now defunct), the financial planners who misrepresented the information to clients and the clients who didn't even bother to do a check with their own CPAs or attorneys before they got involved.

It is obvious that Judge Laro's primary concern (and reason for throwing out deductions without even getting to an IRC section 419 analysis) was the intent of the parties. The VEBA promoters sold the plan on the basis that they had found a tricky way to use welfare benefit plan laws to get money out of a closely-held business. There was never any welfare intent, only the greed of the owners. The Judge imputed their intent and actions to categorize the payments (in excess of the current group-term life insurance premiums) as dividends.

Did they get the message? No. The group who brought you the "speciously designed" continuous group product, now called CJA and Associates, has "found" a new "loophole." They propose to modify their "Group Plus" product to provide a paid-up term insurance policy at retirement. The new product would still be a very expensive product (which Judge Laro correctly described as a combination of two policies in one), but now there would be no conversion privilege. However, since the policy is guaranteed to stay in force for life, it could be "sold" (a viatical sale) for cash.

Now the owner of the business is being encouraged to buy very expensive "group-term life" insurance policy which can be converted to a cash lump sum at retirement. Still doesn't sound like a welfare purpose to me. Will the IRS will be able to see through this? In about 30 seconds.

I'm preparing a requalification application for a multiemployer defined benefit pension plan. My question is about Schedule Q (Nondiscrimination requirements). The plan allows contributing employers to contribute on behalf of nonbargaining unit employees pursuant to a participation agreement -- must I survey all employers with NBU employees to get the information necessary to complete Sch. Q or is there some way that other people do this?

How do you figure out the distrubtion schedule for a 403(b)invested with Fidelity in mutual funds. Fidelity doesn't seem to know

In a retirement plan, a participant must have their spouse listed as primary beneficiary unless that spouse choses to waive that right and notarizes the appropriate paperwork. That being said, lets switch to a company that allows Same Sex Domestic Partner Benefits (which I am very much for)for it's employees. The employee signs an affidavit stating that the other person is their domestic partner and so forth. I know legally that they are not considered married, however, in a sense by signing the affidavit they are saying "if we could get married, we would". The questions (which I already know the legal answer) then is could an employer force that person to name their Same Sex Domestic Partner as primary beneficiary and, on the flip side, could a surviving domestic partner use this thinking to sue for benefits that may have not been left to them. Looking more for discussion than "no, the plan can't" responses.

A DB plan's first PYE is 12/31/99. On that date, no participant has a vested benefit because vesting is based on years of participation and they're using a 2/20 vesting schedule. There are 4 participants: the owner and his wife, and his adult daughter and her husband who do not have any ownership. It seems the plan should/will be covered by the PBGC, but when should coverage begin? Should it be covered from 1999 inclusive, i.e., does the PBGC expect coverage even in the absence of vested benefits just in case the plan terminated and everyone became 100% vested in the first year?

Also, in the case of a new plan where PBGC coverage is needed from the start, do most of you file a PBGC return for two premium payment years the first time you do the tax forms?

Thanks much.

Okay, I'd like a little help with the very basics of applying the Section 415 limit to profit sharing contributions in a 401(k) plan.

A 401(k) plan provides for deferrals up to 15% and a match that can be up to 6%. One NHCE defers 15% and gets the 6% match. The plan sponsor wants to make a 10% profit sharing contribution.

1. Can the plan sponsor make the full 10% contribution and return deferrals to the NHCE (whether the NHCE wants the deferrals returned or not) to satisy 415?

2. If the plan sponsor decides early enough in the year that it will make a 10% profit sharing contribution, can it limit all NHCE deferrals during the year in anticipation of the 415 limit to something below the limit set by the plan?

3. Stupid Question: Can the plan sponsor contribute 10% to everyone but the NHCE and contribute 4% profit sharing for the NHCE?

4. In general, how is a situation like this handled (other than by telling the plan sponsor that it might be wise to redesign the plan)?

5. Is there any type of official guidance that would prevent this type of plan design?

Thanks!

A company has a joint venture subsidiary which the company owns 50.1%. Participants from the parent and sub particpant in the 401k plan. The parent controls all activity. The match is paid from earnings. The parent and joint partner do not contribute funds into the plan. The plan functions as a single employer plan. However I am not sure if it meets all the IRS regulations. According to Regs 1.414, even though the company does not own 80% (<50% o.k. for common control purposes) it appears that common control is established and it is a single employer plan. Is this correct???

If an employer match is required to be invested in a money market account rather than allocated according to the participants selected investments, is this considered non-participant directed? Participants may move the match money after fully vested. Also once employees are fully vested the match mirrors the participant's selected investments. Is the match considered participant directed or non-participant directed??? If non-particpant directed additional footnote disclosures will be required.

If you haven't registered for the meeting yet, here are even more reasons for you to plan to attend!

QUANTECH 6.0 ROUNDTABLE

Nancy Bramlett and Susan Davis of Corbel's 6.0 Update Team will join us for the Quantech 6.0 Roundtable. They'll be prepared to answer any questions you might have about the update procedure and join us in our discussion of any 6.0 issues you might have.

CORBEL TO OFFER QUANTECH CONVERSION TRAINING IN SAVANNAH ON THE DAY BEFORE OUR MEETING

Corbel will sponsor 2 separate hands-on training sessions--Converting from Quantech 4.x to 6.0 and Converting from Quantech 5.x to 6.0--in Savannah on Thursday November 9. This is not part of our user group meeting (you must register separately with Corbel), but has been scheduled for the convenience of our members. Be on the lookout for a announcement from Corbel!

ASPA C-2DC REVIEW CLASS

ASPA now offers a new designation--Qualified 401(k) Plan Administrator (QKA)--which can be earned by passing the ASPA C-1, C-2DC exams and PA1 and Daily Valuation self-study courses. Sign up now for the C-2DC review course and get started on earning your designation now. (and Please e-mail me at TPoje@LDA-FCPA.com as well)

For your convenience, a copy of the full meeting announcement and registration form is attached.

(Please note: this is not limited to Southern USer group members only)

Quantech Southern User Group

Fall Meeting

Friday November 10, 2000

Savannah, Georgia

8:30 – 9:00 am Registration

9:00 – 10:30 am Quantech 6.0 Roundtable

(moderator: Bernadette Sharma, HAW Benefit Advisors)

10:45 – 12:00 noon Using Crystal Reports with Quantech: Crystal 7, Subreports,

Parameter Fields and Other Features

(instructor: Kory Murphy, Crystal Report Designer, formerly Quantech

Report Designer with Corbel)

12:00 – 1:15 pm Lunch – sponsored by Manulife

1:15 – 4:00 pm Crystal Reports (continued)

6:00 – Dinner at Marshall House

Meeting Fee: $125 SUG members/ $155 non-members (includes meeting, lunch and dinner with group)

Location: Marshall House (912) 644-7896

123 E. Broughton Street, Savannah, Georgia 31401 www.marshallhouse.com

Please call the Marshall House directly to make your room reservations. Mention that you are attending the Quantech Southern User Group meeting. We have reserved a block of rooms at the special rates noted

below. These special rates apply to this block of rooms only, so make your reservations now.

Hotel Room Cost per night, excluding taxes: Single/Double: $109

Name(s): _____________________________________________________________________________

Company: _____________________________________________ SUG Member?: yes, dues prev. paid

yes, dues enclosed

Address: __________________________________________________________ no, send application

Phone: ___________________ Fax: ___________________ Email: ____________________________

I would like to bring ___ guest(s) to dinner [add $50 per guest to registration fee]

Please fax/email me a registration form for the one day ASPA C-2(DC) review course to be held on

Saturday, November 11 at the Marshall House Hotel. Course will be taught by Tom Poje and is

open to all ASPA students. Cost is $250 per student; last day to register is Friday October 27.

Return this form with your check payable to the “Quantech Southern User Group” to :

Maggi Heffernan phone: (770) 641-1429

Applied Financial Concepts fax: (770) 594-9631

1108 Hope Road, Atlanta, GA 30350

http://www.benefitslink.com/taxregs/1.401a...-proposed.shtml

Basically (and this is really simplified, so take a look at the actual wording):

the new regs effective 1/1/2002

minimum is lesser of 5% or 1/3 the rate of the allocation rate of the HCE (in a 401(k) plan an HCE defers 10,000 and receives 20,000 profit sharing. 20,000 / 170,000 = 11.76%, so minimum is 1/3 of that or 3.92%.

There are are other options for combo DB and DC plans, as well as what is called broadly available allocation rates.

e.g. lesser of 5% or 2 times. if one age group is 6%, then the rate for the next group is capped at the lesser of 11%(6% + 5%) or 12% (6% * 2) The age bands for the groups must be the same length.

Anyway, its only 11 pages

A lump sum total distribution from a DC Plan was made to a separated participant (with spousal consent from particpant's spouse, his second wife) in connection with the plan's termination. Nearly one year later, notice was received that the participant was, in fact, still married to his first wife at the time of the distribution, and that in cashing out his pension monies the participant may have violated a preliminary injunction issued during the pendency of his divorce action from his first wife. The participant and his first wife had been legally separated several months prior to the distribution. The plan had on file a marriage certificate for the second marriage dated prior to the distribution, and the plan has never received notice of a QDRO or DRO at any time. I am looking for guidance on the following: 1) once a participant is legally separated from a spouse, is spousal consent still required? 2) Did the plan administrator have any obligation to question the legitimacy of the 2nd marriage? 3) In the absence of a QDRO or notice of a pending QDRO did the plan administrator have any obligation to question the consent of the 2nd spouse? Any wisdom, including IRS Q&A references would be greatly appreciated. Many thanks

My question pertains to "retirement income accounts" for churches.

IRS Publication 571 says:

A TSA plan can invest funds for participating employees in:

€ Annuity contracts

€ Custodial accounts holding mutual fund shares, or

€ RETIREMENT INCOME ACCOUNTS (defined-contribution plans maintained by churches or certain church-related organizations.

What exactly is a retirement income account? What can they invest in? Is it just for churches? How is different than the 403(b)or 403(B)(7) plans?

Thank you for your time and consideration.

Hello:

I WOULD LIKE TO KNOW IF IT IS LEGALLY POSSIBLE TO PURCHASE PENSION CREDITS OUTRIGHT OR FROM ANOTHER EMPLOYEE IN A DEFINED BENEFIT RETIREMENT PLAN? I HAVE 2 YEARS AND FIVE MONTHS UNTIL I HAVE "EARNED" MY 30 YEARS OF PENSION CREDITS UNDER A 30 AND OUT PROGRAM. I WOULD LIKE TO PURCHASE TWO YEARS FROM ANOTHER EMPLOYEE WHOM HAS 33 YEARS CREDITS. CAN THIS BE DONE IF WE CAN COME TO ACCEPTABLE TERMS?

RE: Conversion/rollover from SEP to Roth:

Can a person contribute to a SEP, say $8,000, then roll this into a Roth? And then repeat this process annually? My client has low AGI and doesn't really need the tax deferral right now, but building up a tax free Roth looks almost too good to be true. Can this be done? I realize that the SEP would have to be included in income in the year of conversion, but could this be a way around the $2,000 limit on Roth contributions?

Thanks for any comments.

I recently discovered a pick-up amendment that permits employees to select among a range of 2-5% but does not state that the election is irrevocable. This amendment is several years old and I am not sure how to correct this problem.

I am interested in finding out what small companies (less than 20 employees) do about tuition reimbursement.

Does anyone know where I can get an example of how to compute the 5330 excise tax on late deposits? In particular, I am seeking answers to the following questions:

1. How to compute the 1999 excise tax for a deposit of salary deferrals relating to a 12/1/99 payroll that wasn't remitted until February 15, 2000. Assmume the amount is $1,000 and a reasonable interest rate on this transaction is 10% per annum. It seems to me that the excise tax for the 1999 year would be calculated by applying the 15% excise tax percentage times the interest on the deposits for the period 12/4/99 throught 12/31/99. (I assumed a 3 day turnaround for the date that the deposits should have been remitted in this example). I come up with an excise tax of about $7.40. Is this correct?

2. Is there a need to file another 5330 form for 2000 due to the fact that the prohibited transaction wasn't fully corrected by 1/1/00? How do I calculate the excise tax for 2000? Continuing with the example at hand, would the 2000 excise tax be another $12.60 calculated by taking 10%/365 multiplied by 46 days (1/1/00 to 2/15/00) multiplied by the $1,000 of salary deferrals?

3. Finally, when filing the 2000 5330 form (I am assuming that needs to be done), would the excise tax for 2000 be the $12.60 from 2000 plus another $7.40 from the 1999 prohibited transaction that wasn't corrected until 2000?

Thanks a ton to anyone who can steer me in the right direction!

Phil

5330 Excise tax calculation question - Assume a plan sponsor fails to remit the salary deferrals for the 12/15/99 payroll until 1/15/00. Assume

Hi Everyone,

Need some help on this actual circumstance.

A man elects prior to his first RMD to jointly recalculate both lives with his wife named as beneficiary on his IRA. Several years after payments are underway he changes his beneficiary to his son solely, even though his wife is still living. She is continued to be used in the RMD calcs as is required because she is older than the new beneficiary.

Eventually he dies with his son still sole IRA beneficiary and his wife (who was used in the RMD calculations) still alive.

For the remainder payments to the son beneficiary, are the

assumptions based on options available to his still living wife who has been used in the RMD calcs but not named as IRA beneficiary or based on options available using his son who is now actually the beneificary?

What changes occur (if any) if the wife should die during the remainder payments to the son?

Can RMD reform come soon enough?

But then it keeps me in business!

Thanks for any input.

David

A client has made a contribution in excess of the deductible limit in order to make the plan sufficient for plan termination. The plan is covered by the PBGC and has less than 100 participants. I understand that the excess is deductible over 10 years. My question is whether or not the excess is subject to the 10% penalty?