goldtpa

Since some courts have ruled that SEPs are not ERISA qualified plans, I would not count the 2002 SARSEP salary deferrals in the average benefits percentage test.

An employee is not taken into account for purposes of coverage testing if the employee does not benefit under the plan for that plan year. An employee is treated as benefitting if the employee receives a contribution, an allocation of a forfeiture, or is eligible to participate in a 401(k) however elects not make elective deferrals.

Aside from the SEP-IRA issue, there is a fiduciary issue and a document issue. Does the plan document allow for the purchase of life insurance? Secondly I am not aware of any regulation that states what a fiduciary should invest in. Basically, your HCE must act solely in the interest of the plan. The question is whether investing in an individual annuity would be a breach of fiduciary responsibility under the prudent man rule. In order to satisfy the prudent man rule, one of the issues you must consider is the anticipated cash flows. In a business with high turnover, it would not be prudent to invest all of the assets in an individual annuity. In order to distribute the vested benefits to the employees, the HCE would have to withdraw money from the annuity thus incurring surrender charges. Also to satisfy the prudent man rule you must diversify your assets to minimize losses. Your HCE would have to prove that his investment strategy is reasonably designed to minimize losses and expenses, not to mention take advantage of opportunities to make money.

The instructions for the Schedule H say Assets held for investment purposes shall include: Any investment asset held by the plan on the last day of the plan year; and Any investment asset purchased during the plan year and sold before the end of the plan year except: Participations in an insurance company pooled separate account. Under the instructions I would answer the question NO

We were in a similar situatiuon with a client. Obviously if they owed you money you have to get in line with everyone else who is owed money. Any money that was owed to you prior to the bankruptcy you can forget about. However you can get paid for post bankrupcy work. The trustees of the bankruptcy do have a fiduciary responsibility to continue with the plan. In order to get paid for post bankruptcy work, the bankruptcy judge would have to approve it. the problem in bankruptcy is that the now defunct corp does not care if the 5500s are filed on time or not. The IRS and its fines are at the bottom of the creditor pile. We are still owed 10,000 from our bankruptcy experience and the 5500s are still not done. My advice is that you notify them that they are on a pay as you go service. Don't do anything until you get paid to do it.

look at the article on http://www.erisaexpertise.com/articles.asp?id=38 I would do the form as the cpa may not have all of the info needed. Secondly, I would fix the prohibited transaction problem by going to the DOL. If your client feels that he wont get caught, write a letter informing him of the prohibited transaction. And you feel he should go to the DOL's correction program. Your letter should also include a hold harmless clause if he chooses not to correct. You can lead the horse to water but you can't make it drink.

First of all the plan document would have to stiplulate that these types of investments are allowed. Or the plan document would have to be written in such a way that the language is broad enough to allow for it. In addition, there are broker dealers who have policies on what you can invest in and what you can't invest in. Many broker dealers will not let you invest in uncovered options in a retirement plan. It may violate the NASDs suitability rules and the "know your client rule" I would imagine that futures would fall under the same category.

I would look at the following link. it may answer your question. http://benefitslink.com/cgi/qa.cgi?databas...d=244&mode=read

Can waiver of premium be provided in life policy insuring a participant either in a 412i or split funded db? I've found nothing saying yes or no. Any direction would be appreciated.

The plan clearly states in the adoption agreement that the comp is defined as w-2. I would have to look at the basic plan doc. My gut feeling is that they ran the plan in 2001 with the secretary exclusion and my gut says that it didn't pass. Hopefully i am wrong. The last thing I need is a headache

I just picked up a new client. I looked at the document and the document which was signed 9/01 and defines comp as w-2. The only problem is that the owners don't get w-2s, its a partnership. All income is reported on the K-1. The other issue is that the eligibility period for the 401(k) is 21 and 1 yr. In order to get a ps contribution there is a 2 year wait and secretaries are excluded. The problem, over half the ees are secretaries. I doubt it will pass the 410(B) coverage test. The profit sharing contribution is cross tested. The plan doc, calls for a 3% contribution for all ee's in Class II. The partners in Class I get whatever % will pass the test. The plan as written doesn't pass the allocation gateway test. The plan may be a GUST I, but EGGTRA was not done. Can this be self corrected or do they have to go to the IRS? :confused:

Sorry for not posting a reply sooner. I have been stamping out termites all weekend long. This is a psp with only two participants, one HCE and one NHCE. The owner withhheld the ee's deferrals but never submitted them to the mutual fund co. He used the money to pay bills. The Top heavy contribution for 2001 and 2002 has yet to made made. In 2003 I have advised him to lay off the ee's dough and stop making contributions. I told the CPA to revise the w-2s to reflect a much lower contribution for the owner.

I have a client who has not contributed the required top heavy contribution for 2001 or 2002. in addition the w-2 reports that the nhce contributed $4,081. However only $693 made it into the plan. the hce's w-2 shows a $6,327 contribution, however only $1,818 made it into the plan. besides the qualification issue for failure to make the top heavy contribution, what other problems can we expect? thanks

I THINK THAT SOME SORT OF MEDIUM WHICH WE COULD ALL SIGN AND SEND TO CONGRESS IS A GREAT IDEA. INSTEAD OF HAVING DB GUYS FIGHTING WITH DC GUYS, WE SHOULD JOIN TOGETHER AND HELP ASPA AND OTHER INDUSTRY ORGS DEFEAT THIS THING. I SHUTTER TO THINK THAT I WILL BE FORCED TO GO FIND A JOB AT A TIME IN OUR ECONOMY WHEN UNEMPLOYEMENT IS AT SOME OF ITS HIGHEST LEVELS.

I have spent my life explaining to business owners the complicated pension laws. I agree with the pension attorney and others. Any time they tried to "simplify" the pension laws, it always created more work for us. The mere fact that in 2004 -2005 my entire career may end is scary. And what will I have to show for it? A list of clients who saved thousands of dollars in taxes thanks to me.....who then told me that my prices were to high, that I should stop nickel and dimeing them, they wanted a freebie, they cant pay now becuase business isn't what it used to be, etc. Thanks Mr. Bush!! I hope that ASPA and other orgs can defeat this or seriously modify it. I think that ASPA will need all of the help it can get. Has anyone heard from Mr Stephen Krass. His 450 page Pension Answer Book will make a very nice log for my fireplace.

Since I handle mostly DC Plans and will be out of a job in 2004, I would like to practice my new lines... ....Can I Super Size that for you??