I have a company who would like to start a 401K Plan. In addtion to salaried employees they have two people who are 1099'ed. These individuals work on location. Do they have to be included for the company 401K.?

Thanks in advance.

This looks good --

Your Pension and Your Spouse--The Joint and Survivor Dilemma, 5th edition

http://www.ifebp.org/pbpensps.html

Anybody used it?

Final regs have adopted the IRS' 1998 proposal to eliminate the "lookback rule" (generally effective October 17, 2000) which has prevented involuntary cashouts in some circumstances (e.g., where account value once was over the $5,000 threshhold but has dropped to less than $5,000 due to investment losses)

http://www.benefitslink.com/taxregs/cashou...out-final.shtml

Are there companies out there who recently have set up the following arrangement: Set up DB plan which calculates a monthly pension benefit, which is converted to a lump sum ("LS") for each participant. The LS represents a minimum account balance. In addition to the DB plan, a profit sharing plan is implemented and participants are allowed to self-direct their profit sharing accounts. When a participant becomes entitled to a distribution, he will receive his profit sharing account balance if such balance is greater than his LS in the DB plan. If the profit sharing account balance is less than the LS in the DB plan, then the DB plan will pay for the shortfall.

Although this idea is not new, it is recently being marketed again due to various tax law changes. I am interested in knowing whether any companies have recently set up such an arrangement (within the last year or so).

I have a client who has a calander year 401(k) plan and an off calander year (4/30)ESOP. How do I calculate the maximum annual additions limit and contribution under 415©(1)if the limitation years are different?

Out of 23 total years of service, 8 of them are being disallowed because of a break in service. The break was 9 years. The plan won't bridge if the break exceeds the service. The most recent 15 years includes 1987 when 5 year vesting was mandated -- does that make a difference? Is there anything in ERISA that would apply to current employees as opposed to current tenure segments? What sections of ERISA deal with breaks in service? and 5 year vesting?

Thank you.

[Edited by Dave Baker on 07-19-2000 at 12:07 PM]

Sole Proprietor Personal tax return is due on extention at 8/15 Simple IRA has not been fully funded. Goal $6000 plus 3% of Schedule C income.

CPA, pointing primiarly to page 9 of Pub 550, agrees the 3% can be contributed up until 8/15 but questions that the $6,000 can be contributed after 01/31/00 (more than 30 days after the end of the year.)

I thought all contributions by a sole proprietor, with no employees, could be to made to a Simple IRA up to the due date of the tax return.

I think example 2 ("When to Deduct Contributions") on page 9 of pub 560 supports this.

Who is right? Thanks

We have a client who will need to have an audit done. The client (employer) would like to engage the CPA firm that handles the corporate books. Is that permissible? Also, does it matter if we prepare the 5500 and schedules or the can the auditor? I called a couple of firms in our area known for doing plan audits and one quoted a bid that included the completion of the forms and attachments and the other firm said it was our job to do the 5500 and they simply do the attachment. Does it really matter? As you can tell, we normally only handle plans with less than 50 participants so this is all new to me. Thanks for any info.

I have a plan that requires 401(a)(4) testing. The plan has a pro-rata allocation formula. The first $3,500 of each participant's profit sharing contribution is fully vested and used in the ADP test. The remainder is just a regular old run of the mill nonelective contribution.

The regular nonelective conrtibution (excluding the piece used in the ADP test) fails all six of the (a)(4) tests. I can get a little closer to passing by using taxable wages instead of gross wages for testing purposes. However, I am wondering if anyone has any hints or tips on how to break the plan into component plans for (a)(4) testing. I think component plan testing is my last chance to get the plan to pass.

Any thoughts, ideas, comments, on how to break the plan into component plans will be greatly appreciated.

Has anyone been selling call options inside the IRA and purchasing the offset outside the IRA? Investor is willing to take risk that neither option will be exercised but that this would be a great way to get funds into IRA.

For our corporate employees, our medical and dental insurance benefits are fully comped; we have a few current full-timers who say they will stay on as part-time if they can maintain their benefits, even if they have to pay for them. Can we allow this? Non-corporate employees (ie, offsite) all pay about 30% of the premium cost through pre-tax deductions. We would like to ensure 1) that our corporate/noncorporate benefits differential is even legal, 2) that offering benefits to some Part timers but not others is legal, and 3) that we do not jeopardize the section 125 status of our plan. Previously we have not really dealt with any kind of tiered benefits plans, but we are running into the same questions with GEBAs and so forth now that we are growing. Help!

A DB plan examines new plan investments for venture capital operating company (VCOC) status. The VCOC status avoids inclusion in plan assets of the investment entity's underlying assets (a problem), when that entity is neither a publicly-offered security nor a security issued by a registered investment company.

Do the newest regulations on plan assets and insurance companies general assets have any effect on the VCOC determination?

Sen. Harkin's press release of 7/11/2000:

http://www.senate.gov/~harkin/releases/00/...2000711642.html

Please take a look at Senator Harkin's press release and its description of the proposed office -- has the time come for a federally-funded pension policy agency that advocates for participants in general?

I am looking for samples of retirement plan investment policy statements. We are creating one and wanted to see what other organizations are doing.

Individual on COBRA from prior employer starts a new corporation. He is the sole employee of this C Corp. He wants to establish a medical reimbursement account to "pick up" anything that his COBRA coverage does not pay as well as, once his COBRA coverage expires, anything that his new insurance does not cover. He also wants this Plan to be "retroactive" for four months (back to when he incorporated). This will be funded entirely "employer" contributions (no 125 Plan).

1) I assume the Plan cannot be retroactive because Prop. Reg. 1.125-1 Q&A 17 is applicable to all 105 Plans even those not funded through a 125 Plan. Do you agree?

2) If there is only 1 employee do I avoid any 105 discrimination issues?

3) Any problems in "coordinating" with COBRA coverage from a prior employer?

4) Any other problems that you see here?

[Edited by KJohnson on 07-20-2000 at 09:56 AM]

Can an LLC owner participate in a SIMPLE IRA? At this point the owner is not active and is not taking any salary from the LLC, only a draw (not compensation) but he would like to become active in the business, could he participate in the company's SIMPLE and get matching funds from the company?

Thanks.

Does anyone know the corrections/penalties involved when

a custodian allowed the earnings (after 12/31/1988) to be taken out from a salary deferral source for the purpose of a Hardship Distribution?

We have a frozen 403(B) plan. The investments are self directed by the participants in mutual funds via a group annuity insurance product. Presently we gather all the quarterly statements and produce an annual statement for the participant, an SAR, and a 5500. Because these particpants receive quarterly statements from the insurance co and the plan is now frozen, I am wondering if there is any need for us to prepare an annual participant statement. It is very time consuming and from what I have been reading, it appears to me it is not even required. What are the required participant disclosure requirements? Any info would be appreciated. Thanks.

A person retires at age 65 with a cash balance account of 100,000. His equivalent annuity is 1,000 per month. If he chose a lump sum, it would appear to me that the lump sum would be the greater of 100,000 or the pv of 1,000 per month using 417(e)(at a minimum). Any comments out there?

Does anybody out there have any experience with filing late returns under the DFVC program?

We have unearthed a couple of clients who have never filed Welfare and Flex plans for a period of 3 years or so. (Both plans are subject to filing standards, i.e. Welfare plan has greater than 100 participants) I called the DFVC helpline in Washington, and they gave me a procedure to follow which is pretty straightforward. I'm just curious as to whether anyone has tried this, and what the result was.

In addition, has anyone tried to file a bunch of late returns without paying the sanctions ($5,000 for a 5500 filer if greater than one year late, $2,500 for a 5500-C filer) and just submitting a reasonable cause letter? I used to do a bunch of these back in the late 1980's and get away with it, but did DFVC close this possibility?

Any comments would be appreciated. Thanks.