I HAVE A PLAN WHERE THE EMPLOYER MATCH IS BASES ON 50% OF SALARY DEFERRALS. THE ADP TEST DID NOT PASS, THEREFORE REFUNDS NEED TO BE MADE. DOES THE EMPLOYER MATCH THE AMOUNT DEFERRED, OR THE AMOUNT DEFERRED, LESS ANY REFUNDS?

IS A FIDUCIARY BOND REQUIRED IN THIS SITUATION: THE PARTICIPANTS IN THE PLAN CONSIST OF TWO PARTNERS AND THEIR SPOUSES. THE TRUSTEES OF THE PLAN ARE THE TWO PARTNERS. THE SPOUSES HAVE NO CONTROL OVER THE ASSETS IN THE PLAN.

WHAT IS THE BEST METHOD TO LOCATE MISSING PARTICIPANTS?

What practical experiences are people having on the various "discrimination" tests that are required for cafeteria plans under Section 125 of the Internal Revenue Code?

-- Is the testing generally done by the employer or by a service provider?

-- Is testing actually being performed at all?

-- Is there still very little (any?) IRS enforcement in this area?

-- Any experiences in the not-for-profit area (such as dealing with related entities that arguably should be viewed as one)?

In Texas the new limited liability partnership laws and the IRS check box regulations make it possible to convert a Texas corporation to a limited liability corporation and elect to have the entity to continue to be taxed as a corporation with out having a taxable event. This is being considered by several Texas corporations as a way to avoid the Texas Franchise Tax. The question is will the entity be able to continue to have Qualified Employer Securities in the Profit Sharing Plans? The reorganized LLPs will have partnership units which will function exactly as stock. There will be no individual equity accounts but rather a stock account. Any thoughts? Is the ERISA definition of Qualified Employer Security broad enough to include this strange ownership units?

An earlier query from me concerned conversion of a Sep to a Roth. I wanted to know if this year's (1998) contribution to the Sep would still be considered an adjustment to income.

Besides this forum, I posted similar inquiries at two other web sites, one of which is the IRS.

IRS flatly states that I may not "recharacterize a current year's contribution to a SEP-IRA over to Roth IRA."

Apparently I may only "convert" previous year's SEP to a Roth.

Comments?

I and my wife have IRAs through mutual funds. My question is can we set up an IRA account with a stock broker, contribute say $2000, and then direct the broker as to a stock(s) to buy? And then sell later and invest in another stock, all as part of a tax-deferred or tax-free IRA.

Controlled group? Yes, no or depends...

A parent is a 100% owner of a company. The child is the 100% owner of another company. Would these two companies be part of the same controlled group?

Thanks for any input.

Do not process loan payment transactions unless you have downloaded all the fixes from the web site. Posting loan payment transactions before downloading fixes may cause some of your loans to jump forward to the first payment in 2000. If this happens, do not reverse the transaction. Call Quantech support first.

I want to find a plan that shows how to determine profit in a manufacturing firm. This plan needs to satisfy employees and be simple to determine amounts. If you have a formula you are currently using please e-mail me at asichuck@ismi.net.

Is there a requirement for employers to continue to provide health benefits at the employer's cost where the employee is on an employee-initiated leave of absence?

Generally, contributions to a 457(B) plan are subject to FICA and FUTA taxes when the contributions are deferred (not when distributed from the plan to the participant). But, suppose an employer fails to withhold payroll taxes at the time the contributions are made. Is there a way for the employer to correct this now -- e.g., go back and calculate the amount that should have been withheld and pay this amount to the IRS now? I'm thinking of course that the employer would pay its share from its general assets, but would take the employee's share out of his or her account. Any thoughts, comments? Thanks.

I have a small client with a 401(k) plan. The 100% owner retired back in 1994. Her son is the President of the co. now with no ownership. For 1998, he is the only employee who deferred any salary into the plan. With Family Aggregation gone, is there any problem with this? He is listed as a NHCE in the ADP test results, and there are no HCE's according to the way the test printed out. Is this correct?

It's clear in the code that a more than 50% owner of a business who also works for a 403(B) plan sponsor must aggregate contribtuions to the 403(B) plan and the outside business' defined contribution plan into one combined 415 limit.

Question: does this aggregation also apply if the outside business maintains a SIMPLE IRA with a 3% match? On the SIMPLE, neither the deferral nor the match by themselves are subject to the 25%/$30k 415 limit. Do the SIMPLE contribtions still count against the combined 415 limits on the 403(B) plan?

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We are terminating a qualified plan and have approximately 20 people with whom we have lost touch. We have used the IRS and SSA locator services but as yet have not had one person respond. Looking for other low cost ideas on how to make contact with these people.

I have a potential client on 10/31 fiscal year. The company has a SIMPLE Plan . It wants to terminate it and start a P/S effective 11/01/98.

Can he? Can a SIMPLE be terminated prior to its 12/31 y/e?

For a takeover plan, where the prior administrator cannot provide cumulative deferrals contributions since 1988, how are you calculating the maximum available for hardship?

Generally, a trustee or custodian for an IRA must prepare a disclosure statment. Does this rule also apply for SIMPLE IRAs? I could find no carve out for SIMPLE IRAs under the disclosure requirements. If there is one, please provide cite. Thanks.

How are investment losses paid for if participant is due to receive a 415 refund? Does participant still get refund and if so who makes up the loss?

The $64,000 question: is it 10 years since one became a participant in the plan, or ten years of service (1,000 hours or more?) for the employer while a participant?

401(a)(28) requires that an ESOP must grant a "qualified participant" the right to diversify 25% of his or her account into something other than employer stock in the year in which the employee has "completed at least 10 years of participation under the plan and has attained age 55."

ESOP is established in 1988. Some employees leave during the 90s, before being in the plan for 10 years. But their accounts in the plan now have been in the plan for 10 years (not yet distributed). Some of them are age 55 or more and want to exercise the diversification option (or a distribution right, in lieu of diversification). What result, assuming the plan document parrots the language of the tax code in this regard?

[This message has been edited by Dave Baker (edited 01-07-99).]