Lame Duck

Multiple personalities?

How about Close Encounters of the Third Kind? Aren't I supposed to be working today?

You might want to consider the fact that the spouses are probably a controlled group and should have one plan for the two of them, rather than separate plans. You may also want to investigate the possibility of an ASG that could maintain a single plan for all members of the group.

DOL Reg. Section 2530.200b-2 defines an hour of service as "each hour for which an employee is paid or entitled to payment for the performance of duties for the employer." These regulations are made specifically applicable to IRC Sections 410 and 411 (2530.200a-3). IMHO, since the spouse was not paid for her service, the question is whether she was entitled to payment. If her rate of pay was zero, I would find it hard to argue that she was entitled to payment for her hours of service. In that case, she would not be credited with any hours of service and would not meet the eligibility requirements. Most plan documents I've seen use the DOL definition of hour of service. What does your document say? Is there any reason (e.g. other employees) why the plan cannot be amended to change the eligiblity requirements to participation on the entry date next following date of hire?

Belgarath, I agree with your interpretation of 415(b)(5)(B). I'm not an actuary but work a lot with DB plans and I thought the answer was $128,000. I put the problem up on my old DB calculator for 2002 and came up with $128,000 as the maximum contribution. If this is wrong, I would really appreciate one of the actuaries straightening this out.

Except for the water, it looks like my driver's license photo.

I always thought drinking your Thanksgiving dinner meant Wild Turkey.

I'm going to flip the coin over and argue the other side. If this were a rank and file employee who terminated during the year after meeting the eligibilty requirements with enough hours of service to meet the sccrued benefit requirements, you would have to include them. Whether they would receive a payout would depend on the vesting. I think the same would hold true if a rank and file employee died during the plan year. In this case, we are dealing with an owner who could be excluded from the plan so you don't have a 410(b) problem. However, I think you do have a problem under 401(a)(26) which requires that the plan benefit the greater of 40% of all employees of the employer, or 2 employees. This requirement must be met on each day of the plan year. if you give your plan an Effective Date of January 1, 2005, excluding the husband would not meet the requirements on each day of the plan year. In addition, your entry dates are presumably the first day of the plan year and the first day of the seventh month of the plan year. If the husband met the eligibility requirements on the first day of the pan year, he would enter on that date. His death after that date should be irrelevant. The only question should be whether he is credited with enough hours of service during the year to accrue a benefit.

I had a problem logging in a couple of days ago because it wouldn't accept my password. I used my Log In name, though, and requested my password. When it was sent to me, I had no trouble getting back into the site. It asked me to set a new password but it has been working ever since. By the way, I checked the spelling in this post for Kirk and I do nut find any miss takes.

We have a number of DB plans that have started after the owner has attained age 65. The maximum benefit that can be payed out from the plan is the lesser of 100% of compensation, reduced pro rata for years of service less than 10, or the 415 dollar limt, reduced pro rata for years of participation less than 10. The 415 dollar limit of $170,000 is actuarially increased to the actual retirement age, if it occurs after age 65. If you are using a standardized prototype, normal retirement age cannot be greater than age 65 or five years of participation in the plan. RMDs must start after attainment of 70 1/2, even if the plan is still being contributed to at that time. In some cases, it may be possible to delay the start of RMDs through the use of a three year cliff vesting schedule with vesting beginning with the effective date of the plan.

If common law marriage is not recognized in Idaho, this would mean that your brother and his "wife" are totally separate parties and oyur brother would not be liable for her debts, unless he has accepted responsibility for them. If he has not, perhaps his wife should look into filing bankruptcy before the house passes into her name. If she has no assets, bankruptcy might totally discharge all of her debts, leaving her free and clear to inherit the house according to your brother's will without the risk of losing it. Please note that I am not schooled in bankruptcy and do not know the rules around it after the passage of the recent law. I am merely suggesting this as one avenue for your brother and his wife to explore. They should consult both a bankruptcy and an estate attorney to see what is necessary to preserve the estate for the wife. These boards are generally for employee benefits practioners and your question is outside our normal area of expertise.

We have four seasons in California, too. We just don't have to live in them all the time. If I want fall or winter, I can hop in my car and drive to Lake Tahoe in a few hours. Southern California is the only place I know where you can go to the mountains, the desert and the beach, all in one day. I actually did that one day when I was in high school just to prove it oculd be done.

The sun sets in the ocean around here and I only run on the beach in the morning.

Attorney, been in this field almost since I got out of law school, which was too long ago to remember. I have had people comment that I might be suffering from a mental deffect or deficiency since I went to law school dreaming of being a tax attorney. How sad is that? For fun, I write - novels, short stories and poetry. I've had one novel published but sales are rather underwhelming at the moment. Since I was hoping for a best seller to fund my retirement, I guess I'l keep plugging along helping other people with their retirements. By the way, Lori, I can tell you more than you ever wanted to know about crossdressing.

Minnesota This appeared on PlanSponsor.com this morning. Minnesota Governor Tim Pawlenty has signed H.F. 138, legislation that amends Minnesota law to bring it into conformance with federal law that gives federal tax breaks to health savings accounts (HSAs). As a result, contributions employees make to HSAs will be tax-deductible, while employer contributions will not be added to employees' Minnesota taxable income. Additionally, distributions made from the accounts to pay for medical-related expenses will not be taxed. The change in tax law is retroactive to January 1, 2004..

mbozek said it in the first post, but it may have been missed in the ensuing conversation so I will state it again. The benefits provided under both the SEP and the 401(k) plans need to be aggregated for purposes of the maximum contribution limits under code Section 415. You stated that he deferred 7% under the 401(k) plan and made the maximum contribution to the SEP. The total of the two contributions could not exceed $41,000 ($44,000 if age 50 or older) for 2004. Even though the 401(k) deferral is not considered for purposes of the 25% of compensation deductible limit, it must be considered for purposes of the limitations on contributions under 415.

If the 401(k) is rolled to an IRA and then converted to a Roth, it would not be subject to a penalty, even if it is distributed within 5 years of the conversion, if there is an exception to the penalty. In this case, the distribution should be exempt from a penalty since it is a distribution for education expenses.

The Plan Administrator will have to provide you with a copy of the plan document if you request it in writing. Failure to do so could result in fines and penalties. However, the Plan Administrator can charge you to reproduce the plan document. The first thing to check, as WDIK suggested, is the Summary Plan Description (SPD). This is a plan language explanation of the terms of the plan and must be provided to you automatically upon entry into the plan and upon request. There is no charge for giving you a copy of the SPD.

Filing the Schedule P is the argument we make with our owner-only 401(k).

Just a thought - Is the illness related to work? Since you are a full time staff nurse, is it related to any disease you may have contracted in the course of your employment? If so, you may be eligible for workers compensation.

All of the major mutual fund companies advise against plan loans. Why? Because the loan removes the money from their control and they no longer earn anything on it. all of their assumptions and calculations are based on the erroneous (to my way of thinking) conclusion that payments made into the plan will not be reinvested so that money will sit useless until the entire loan has been paid back. I once participated in a study that demonstrated a plan loan was definitely in the participant's best interest. He would have more money in his account at the end of the loan period, at the same rate of return, than if he would have if he had allowed the money to remain in the plan over the same period of time. If the plan is going to provide a net return of 10% and the loan is providing a return of only 6%, the participant would generally be smarter to leave the money in the plan. However, you need to consider the net effect of the money saved between paying off the credit cards over time as opposed to paying off the loan to the plan. I'm not an actuary or mathematician so I don't claim these numbers are accurate, but I think they are close. One of you who is might check them. Assume that the credit card debt is $5,000 and the interest rate is 18%. To pay that amount off over a 5 year period would require a monthly payment of $126.97. To pay off a plan loan of $5,000 at 6% interest would require a payment of $96.66. If (a big if) the additional savings of $30 per month is contributed to the plan with a net return of 6%, it would be worth $2,614. The plan loan would have paid a total of $5,980 into the plan, for a net gain of $980. Assuming a level payment of the interest to the plan, over a 5 year period, it would grow to $1,140, a gain of an additional $160. This results in a net increase in the value of the account of $3,754. The plan would have to achieve an annual net rate of return of 11.85% on the $5,000 to put the participant in the same position he would be in if he took the loan.

I can only tell you what I would do if faced with a similar position - Notify the first company that you have an offer from the second company and give them a deadline to make you an offer. If they don't, accept the offer of the second company. I have worked for companies who make hiring decisions once a year and do not have the budget for any additional hiring. If a fantastic prospect comes along, they will try to find the money somewhere, but it can take time. Sometimes they never find it. Use your best judgment but remember - A bird in the hand is worth two in the bush.

I was ahead of you this year since I missed the fall back reminder last year.

Assuming that a controlled group or affiliated service group issue does not exist, the deferrals to the k plan will be limited by the total amount of deferrals under the SIMPLE. Deferrals are an individual limit and all deferrals must be aggregated for purposes of the limit. The doctor would still be entitled to the profit sharing contribution as well as the remainder of the deferrals.

Sometimes, pursuing the issue up the chain of command can have hidden blessings. Back in the good old days when I still submitted plans for determination letters, I had a new IRS reviewer who refused to issue a DL because my plan was using a 500 HoS requirement. she insisted that the minimum permitted under the law is 1,000 hours of service, basing this argument on the fact that the heading for 410(a)(1) is minimum age and service conditions . I finally got tired of trying to teach her the law, and asked to speak to her supervisor. The supervisor was very hostile when she came on the line until I explained why the reviewer was an idiot. She issued the DL immediately. The upshot is that I had another plan assigned to this same reviewer a few months later. She was questioning some of the provisons in the plan and one of my staff said she would have to speak to me, giving my name. The reviewer's response to that was, "plan is qualified" and issued the DL. I had traumatized her so badly the first time, she would approve anything rather than have to deal with me again.