Santo Gold

I believe © fair market value was paid to the plan for the insurance CV. So now, out of the entire account balance, $1,000 is "after-tax", and therefore not eligible for the rollover?

If a plan has been reporting its ps-58 costs via 1099-R each year, and lets say those accumlated reported ps-58 have totaled $1,000. Now the participant has terminated employment and is doing an IRA rollover of her $100,000 account balance. 2 questions: 1) Should the rollover 1099-R simply show a gross distribution of $100,000 with a taxable amount of $0.00? 2) How does the already declared $1,000 in ps-58's get tracked/credited once the $100,000 leaves the plan? I assume that if nothing is done, the $100,000 goes to the IRA, and is then taxed as it is withdrawn from that IRA. Where/when does the already taxed $1,000 used to reduce the taxable portion of the participant's subsequent cash distribution(s)? Thanks

If a plan currently has their involuntary distribution threshold set at $1,000 cash out (no automatic IRA for amounts from $1,000 - $5,000), can the plan be amended to have involuntary IRA rollovers if the amounts are between $1,000 - $5,000? Are there any protected benefit rules that are applicable? Thanks

I'm still getting more details on this, but a SEP plan was overfunded for 2008. Is the correction of this problem the same as with a qualified plan? Take out the excess, pay a 10% tax, file a 5330? Thanks

What if this is a volume submitter document and the plan states that amounts between $1,000 and $5,000 must be paid out via IRA rollover as desingate by the Plan Administrator (if the participant makes no other affirmative election). The VS has no alternative provisions for involuntary distributions. Since VS documents are permitted to have several minor modifications to them outside of the choices presented, would something like this qualify as a minor modification? I.E., do away with the $1,000 - $5,000 rollover, and just allow for cash outs under $1,000? I realize that there is probably no certain answer to this, but what do you think? Thanks

I already know the answer: Read the document, but I have to ask anyways: Is a plan required to execute automatic distributions? That is, if the plan contains language saying amounts under $1,000 can be distributed without consent via cash distribution, does that mean the plan sponsor has to force people out? Our, for this example, the sponsor does not want to deal with automatic rollovers for amounts between $1,000 - $5,000, but the document contains that language. Is the sponsor required to make auto rollovers? Thanks

If a non-key is still employed but receiving a RMD, can she change her mind and elect to stop the RMD's, again, while she is still employed? Thanks

For an ERISA 403b plan, participants and the employer are currently contributing money into annuities via 2 separate large annuity & insurnance companies. The plan sponsor/plan administrator would like to change that and only have the new money go into 1 annuity provider's product for, among other reasons, making it easier to track. Can they make this change prospectively for new contributions? Can they force participant's to move their existing account balances out of the one insurance company's product and into another insurnance company's product? Thanks

And that section is...? I'm not aware of a requirement that says you have to continue filing a 5500 if you ever filed one. And I'm positive that we had a client who went from 5500 to 5500-EZ filing and I don't remember a problem with it, although it was before the EFAST system. Just a thought - you might want to consider amending the 2004 return and marking it "final" to indicate that future returns aren't required. Of course that will cause some static since the assets aren't zeroed out, and then they filed again in 2006, but I'm just trying to think outside the box. Another thought - if I were the client, and now realized that not only did I pay someone to do something that wasn't required, but that doing so has me embroiled in this mess, I would be very upset. What a horrific waste. The section was just page 2 of the EZ instructions. I don't see the IRS' line of reasoning in these instructions though.

New information on the plan. Forget the SEP and ASG/CG components as they do not exist. This is simply a 2 life (both owners) PS plan that has never had assets in excess of $100,000. History: The plan has filed 5500's since inception, except for 2005. 5500's filed again in 2006 and 2007. But 5500 was filed not 5500EZ. So, the missing 2005 was caught and thats what the IRS is looking into. The IRS agent is saying that since the plan actually filed a 5500 instead of an EZ, that the fact that a filing really was not due (less than $100,000) in that year does not apply. Once you file a 5500, you cannot go back and then avoid filing a form because you want to be considered an EZ filer. I asked where it says this in the instructions and I was pointed to a section in the EZ instructions that to me are not clear on this specific point. Any comments on: 1. Once you file a 5500, you cannot claim to be exempt in future filing years even if you meet the other exemption criteria? 2. Once you file a 5500, you cannot file future 5500EZs in the future. Thanks

But does the company have to meet a certain criteria in order to even be able to terminate a 403(b)? I heard something about there having to be less than 2% of active employees eligible to participate before a termination can occur. Is this or something similar to this, correct? Thanks

I have a small LLC that wants to adopt a 401(k) Plan. The only 3 people who work at the company are the 3 owners and all 3 will contribute to the 401(k). Since LLC owners do not have a salary, but rather take "draws" during the year, they should still be able to make 401(k) contributions from these draws correct? For example, an owner takes monthly draws of $5,000 and therefore has $60,000 in compensation for the year. He also plans on having $500 deposited as a 401(k) contribution each month. Can he do this on a monthly basis or does he have to wait until after the end of the year, have his income determined, and then make a 401(k) contribution all at once at that time? Thanks

Thank you for the replies. I wasn't aware of the CG/ASG requirement. So, just to confirm, if an individual is the sole owner of 2 separate businesses, sets up a retirement plan for himself in one but not the other, a 5500 is required regardless of the assets? That seems a little strange. Why should the CG status matter if he has only 1 plan? [No need to answer just thinking aloud]

I have a new client who sponsors a PS plan for himself (no other employees). The assets have always been under $100,000 so he's never had to file a 5500, but his accountant had done so anyways. The accountant missed the 2005 filing (but did one for 2006 and 2007 as well as for years prior to 2005) and an IRS letter was now sent following up on the 2005 filing. 1. Even though the plan filed 5500's for all years before and after 2005, he was not required to file for 2005 and so, a correct reply to the IRS would be that one was not required, correct? 2. The owner then mentioned "oh by the way, I also have a SEP". Do SEP plan assets count towards the $100,000 threshold? 3. The owner then mentioned that he owns other small companies (no employees). I am waiting to hear if he has any retirement plans through these other companies. If not, then we're OK. But if he does, I believe that those plans must be aggregated to determine whether the $100,000 has been exceeded, correct? Finally, a general question. The threshold was raised to $250,000 in 2007. Does that apply to assets at the end of the year, or at anytime during the year? That is, if a plan had over $100,000 in early 2007, do they have to file a 2007 5500 even though the limit was raised to $250,000 in 2007? Thanks

I was asked about a real small 403b plan (less than 10 people) and apparantly the non-profit wants to now do away with the plan. Are 403b plans terminated in the same manner as a 401k/DC plan? Is an amendment needed to terminate? Any sort of distribution forms used? Can/should terminations be filed with the IRS? Thanks

This is bad: For the past several years, participants who took loans from the company 401(k) Plan never had any loan repayments made. Not their fault, for some reason the person in charge of having these withheld from their pay and deposited back into the plan, just dropped the ball badly and never triggered these repayments. The participants, out of either ignorance or perhaps sensing an error in their favor, never noticed or said anything about it. Looking for possible consequences: (i) For the more recent loans which still have a few years left on their repayment terms, can we go back and re-amortize the outstanding balance, coming up with a new (higher) repayment schedule for the rest of the remaining terms of the loan? (ii) For the others whose loans are either close to the end of their repayment schedule (or in some cases, that date has already passed), are they stuck with having this a deemed distribution and being taxed on this this year? Am I correct that they still have to pay the loan back, but still get taxed on it this year as well? Does it matter that this is not their fault since it was the employer who did not make the deposits? I know there is a lot wrong here and I am checking into all of the consequences, but if anyone can point out a few of the major problems, that would be a great help. Thanks

With all the recent Wall Street fireworks involving Lehman Brothers, MLynch, etc, a client called and asked if there is any kind of insurance that they can purhase to cover the plan assets in case of a failure involving the investment/brokerage house? The fidelity bond covers fraud and dishonesty, etc, so that would not apply here. I figure you can get insurance for just about anything, so why not this. But I have not heard of anything relating to this before. Plan is small, has about $250,000 and invests in about 6 mutual funds via a broker. Thanks

Can a new PS-only plan have a 5 year cliff vesting or does PPA require no worse than a 3 year cliff? Thanks

I know this is probably an easy question: Does a davis bacon plan, sponsored by a government entity, need to file 5500s each year? I think the answer has to be yes. Thanks

What actually happened was that the ER had 2 plans, PS and MP. There was a required 5% of pay contribution to the MP that was around $15,000. Then there was the optional PS contribution of around $10,000. Miscommunication resulted in both amounts being deposited correctly, plus an additional $15,000 going into the PS plan. So, the amount was discretionary, in total everything still falls under 25% of pay deductible limit. ER is OK with leaving the earnings in the plan. But would just like to take the $15,000 extra out. The fiscal and plan year run 4/1 - 3/31. The deposit was made in May, 2007, for the 06/07 plan year. The MP plan was frozen as of 3/31/07, so there is only the 1 plan now. They company wants to make around a $5,000 PS contribution for the 07/08 plan year, which they can "deduct" from the extra $15,000 deposited in May, 2007. But the remaining $10,000 they would like to get back. Still not sure if this falls into the mistake-of-fact reversal, but on the other hand, it seems a bit onorous that a company makes a deposit mistake into the plan and has no way to fix that problem.

An employer deposited $15,000 more in ER PS contribution into a plan in 2007 than they should have. It was never allocated but is currently in a pooled account. Can they remove this, paid back to the ER, as a mistake of fact contribution and....thats it? Any penalities, fees, disclosures, etc.? Thanks

Thanks Tom. As my clients tell me....."the checks in the mail"!!!

Thanks to all. I tried jevd's calc and got .0000000043452% chance of hitting 6 out of 6. I like masteffs odds better at .0000013%. Tom - where can I click on your keno excel spreadsheet? Is it on your website? Thanks again.

I am occasionally dragged to a casino by other family members (and I do mean dragged; I don't like gambling much) and end up with an objective of looking for ways to lose my money slowly rather than quickly. I don't play cards and can't stand slot machines, but I have stumbled across video Keno machines, which I spend most of my time on. What I like about keno more than slots is that with slots, you are at the mercy of the games random number generator (RNG) to pick the winning/jackpot number/sequence. That is, you can play and play and play and depending on how the machine is programmed to pay out, your odds of hitting the jackpot are entirely dependent on the RNG arriving at the jackpot number. With keno however, there are probably thousands, maybe hundreds of thousands, of "jackpot" numbers/sequences picked on each spin. You just have to have 1 of those sequences in order to win the jackpot. Of course, the more you bet, the bigger the jackpot. And the more numbers that you pick each game (usually you pick anywhere from 3 to 10 numbers), the greater the jackpot. If you're unfamiliar with keno, the game is played as follows: Typically, there are 80 numbers to pick from (1 - 80). Per game, you can pick anywhere from 3 to 10 numbers. Lets say you decide to play 6 numbers. After picking your numbers, the machine will always draw 20 numbers. If 3 of your numbers "hit", you hit for maybe 3-1 odds. 4 numbers maybe 5-1, 5 numbers around 200-1, and all 6 numbers around 1600-1. As I said, it just "feels" that your odds are better at Keno than slots because there are jackpot numbers drawn each spin, you just have to have the right ones. With that said however, I'm at a loss as to how to calculate what those odds are. Given my keno playing experience and the fact that I have only hit once in my life (since I was only playing quarters, my "jackpot" was only $400), I suspect that the odds of hitting are pretty long. But, could one of the math experts out there determine what those odds actually are? The factors are: 80 numbers are available, I pick 6 numbers, the machine picks 20. What are the odds of my 6 numbers being among the 20 picked?

We are taking over a plan that had as a distribution "non-cash" distributions. Our VS document does not allow for this option. Is non-cash distribution a protected benefit and therefore cannot be eliminated from the plan when we update for EGTRRA document? If true, then either we alter our plan document to allow for this option, turning it into an individually designed plan document. Or, go to a service provider who utilizes this option and keep it as a prototype/VS. Any thoughts? Thanks