We prepare a few hundred 5500 C/R & EZs for clients. What authority - power of attorney, etc. - do we need to E-File for the client?

Can anyone suggest where a good place is to purchase CBT's on 401k plans and administration? Any help or suggestions would be appreciated.

Does anyone know the difference between a 403(B) and a 501©-18. We have a CPA that advised that a client was preparing W2s as if the plan was a 501©-18?

Our company has two pension plans; one for sales associates and one for balance of employees. The office staff was grandfathered with the age change in 1989 at age 60 while the sales staff was not grandfathered and age was raised to 65. Now company is converting sales staff to Independent Contractor status, an failure to apply grandfather clause consistently will cost many sales associates pension benefits since the early retirement reduction of 4.8 % per year will reduce lump sum awards. Is it legal, ethical, or what can be done???

Not yet. IRS has said informally they are "seriously considering" an extension of the remedial amendment period because of the delay in the full opening of the GUST process.

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I have a PS plan that times distributions to terminees who are less than 100% vested to be after 5 1-year breaks in service. Anyone who terminates and is 100% vested, is eligible to receive their benefit after the valuation date following their DOT.

The client wants everyone to wait for 5 1-year BIS but I don't think I can can amend the plan to change the timing for 100% vested terminees without violating 411(d)(6).

If I understand correctly, I can amend the plan going forward and any contributions and earnings applied to a participant after the amendment date can wait the five years for distribution but not anything before.

Does this sound right?

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EAC

It depends on whether the plan is using the "deemed" hardship definition (which includes the suspension requirement) or the "facts and circumstances" definition (which does not). I'd start by reviewing the plan document, you may not have a big problem. In terms of penalties, you're looking at a qualification defect if your plan does require suspension.

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Jon C. Chambers

Principal

Schultz Collins Lawson Chambers, Inc.

(415) 291-3004

My company is going to institute a welcome "kit" I was wondering if anyone has any ideas for a fun way of approaching this, obviously being very cost efficient.

Thank you

I am down to a handful of participants that we cannot locate in a plan termination. I have already used the IRS letter forwarding program. Any suggestions about a good and inexpensive private locator service?

I have the following scenario and questions and may needs some direction in finding answer(s). TIA.

Scenario

A California Professional Corporation (PC, physicians) has its benefits managed by a C Corporation MSO. The MSO bills and collects on behalf of the physicians. The physicians have an employee contract with the PC. The physicians after paying MSO and billing/collection fees (all percent based) have an hourly rate for wages determined in a variably and non-uniformed fashion in relationship to actual collections. In some situations the hourly rate of wages is subsidized to a significant degree from retained earnings from other physicians (this is approximately 1/3 of physicians subsidizing 2/3 of physicians). In addition to retained hourly wages by some supporting the hourly wages of others there is subsidizing of the 401(K) "employer" match and any residual remaining is disbursed to those physicians having had wages retained.

Now the MSO/PC is moving towards a Money Purchase Plan (MPP). The MPP allows greater "employer" contribution, which under this construct is created by retaining wages that may or may not be heavily subsidized by other physicians, and will create more pressure to "cross-subsidize" amongst physicians.

Apologies in advance for what seems to me a very convoluted plan.

Questions

1. Is this proper?

2. Are there any ERISA issues?

3. Are there any Medicare compliance issues?

4. Are there any issues with the MSO retaining up to a year the retained earnings of physicians that are going to placed sometime in the MPP accounts? Is there a problem with MSO interest generated with this retension of earnings?

regards/tim

A company merges into another company. The new plan formula is lower than prior to the merger for future service for employees of company being merged in. Is a 204(h) Notice required by the new company, just like when a plan amendment reduces future accruals?

We have a plan with a 1/20 vesting schedule. The employer wants to change it to a 3/20 schedule. I am looking for clarification on the 3-years of service election rule (i.e., "each participant who has completed 3 years of service may elect to stay under the old vesting schedule"). It is my understanding you can never take a vested benefit away. To clarify, based upon the above facts, say we have a participant with 2 years of service and is currently 40% vested, can the employer take the participant to -0-% because they do not have the right to make an election to stay with the old vesting schedule?? I am thinking the 3-year rule must be used perhaps with plans that have a 5-year cliff.

Any guidance would be appreciate!

Also, when changing vesting, do you generally tie the amendment to new participants entering the plan after a certain date or simply go on those employees hired after a certain date.

Does anyone see a reason why a safe harbor 401(k) plan (using the 3% nonelective contribution) cannot allow participants to take loans from such safe harbor contributions?

An at all times tax-exempt employer will terminate an ERISA covered DB plan and receive a reversion. All participants' interests will be satisfied through the purchase and distribution of non-transferrable annuity contracts. Participants have no right to receive excess plan assets on plan termination. Certain assets which will remain are difficlt to liquidate.

The employer wishes to receive these assets in-kind as part of the reversion. Does anyone see any issues?

A "reverse" logic from the Keystone Industries case does not appear to apply, since the plan does not have a quantifiable liability to the employer which will be dischargedg through the distribution of in-kind assets. Therefore, I don't think there is "a sale or exchange." What do you think?

Thank you in advance for you responses.

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As I understand it, Section 4974 imposes on an IRA owner a 50% excise penalty on the difference between the amount that should have been distributed (as a required minimum distribution) by the RBD and the amount actually distributed. I have 2 questions:

1. Does the custodian have any responsibility to inform the owner of an impending penalty?

2. More generally, but in a related vein, how is the 4974 penalty assessed and collected in practice? Is the IRS somehow notified or "triggered" to assess the penalty retroactively when a distribution is finally taken by the owner after the RBD has passed? Is this disclosed by an audit?

Sorry if these questions seem somewhat pedantic - I'd just like some idea of how a tax against the IRA owner is properly assessed and collected, and what the role of the custodian (who is presumably better-informed than the owner about the excise penalty) is in that process.

Thanks.

Governmental retirement plans are currently generally exempt from nondiscrimination requirements for Code Sec 401(a), 401(k), 401(m), etc. purposes. However, if a governmental DB plan provides post-retirement medical benefits, is it subject to the nondiscrimination requirements of Reg. Sec. 1.401-14 which, if vioalated , would cause the plan to lose its qualification under Code Sec. 401(a)?

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I have a participant in a profit sharing plan who on termination of employment was paid 100% of their account balance when they were only 40% vested. Participant refuses to repay the difference. How should this be corrected?

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Is is possible for the trustee and lender to be the same bank? I have seen this arrangement before. Is this a prohibited transaction, or because the loan meets the exempt loan definition is it exempt?

I realize there are other reasons not to recommend this situation due to the potential conflict of interst issue should the loan go into default, but also wanted to know if it is otherwise prohibited for any other reason.

Question that arises has the following facts:

Person age 57 sets up a Qualified Plan Rollover IRA for $200,000 during 1999. Wants to takes substantially equal payments from the IRA, calculates the amount, using an IRS approved method, based on the 12/31/99 balance and receives an annual distribution. In February of 2000, the individual rolls an additional $180,000 into the IRA, which represented the balance of his qualified plan money.

The question is as follows:

Do the substantially equal payments have to be recalculated for 2001?

May the substantially equal payments have to be recalculated for 2001?

I believe I know the answer to each question, but would like to see if I am correct. Any help would be appreciated. Thanks.

Vermont State has passed a law authorizing same sex marriages, or unions as they are called. Excerpt: "After four months of rancorous debate that divided neighbors throughout this normally tranquil state, Vermont yesterday approved a first-in-the-nation law that grants nearly all of the benefits of marriage to same-sex partners." (Knight-Ridder / Tribune Business News)

Would this State regulation offer a same sex partner the same rights that pertain to the pre and post joint and survivor options?