E as in ERISA

Tom -- You should look in the dictionary to see how to spell "unfair"!

Is it a discretionary profit sharing contribution? Is the plan generally on the calendar year? If so, are you sure that you have a "short plan year"? Although you indicate that benefit accruals will cease 10/30, you state that the plan won't actually terminate until 12/31. Doesn't that just mean that compensation will be limited for allocation purposes? But does it necessarily mean that any of the legal limits will be reduced?

NOTE: The auditors should not be "putting together" the financial information for the audited report. They should be reviewing the financial statements put together by the client.

"Eviction" is a term generally used in relation to rental property (like an apartment).

Can't you just report the aggregate gain/loss from the accounts on one line? Or do you have unusual investments in the account? See the instructions on Schedule H for how to report participant directed investments and the related income.

I should not have included "low...interest" in my last comment.

So for HCEs and catchups if you fail the ADP test, then you do leveling first and then catchups? (Is that clarified somewhere?) So if the prior year NHCE ADP is 3% and a 50 year old with $100,000 comp defers $6,000 and a 40 year old with $200,000 comp defers $10,000 (for an HCE ADP of 5.5%), then you do leveling by dollar amount and reduce the 40 year olds deferral to $9,000 and no one has catchups? Are you sure that once you fail ADP, then you can't apply the catchup rules and designate $1,000 of the 50 year olds contributions as catchups and avoid leveling?

So are you agreeing or disagreeing with Kirk? I read that regulation to imply that plans should generally not be invested in low or non-interest bearing investments, and that there may be an exception to that general rule for overfunded DB plans.

See Section 125(g)(4) applying the controlled group, common control and affiliated service group rules to Section 125 plans.

This raises an interesting issue. Let's say a plan has two HCEs -- one making $200,000 and one making $100,000. The prior NHCE ADP is 5%. So the two HCEs are advised that they can each contribute 5% ($10,000 and $5,000, respectively). The individual making $100,000 is over age 50, and he desires to make a $1,000 catchup in addition to his 5% contribution. How can he do this? Under the leveling method, won't the excess ADP will be attributed to the guy who is contributing $10,000? Or can you take out the catchups first?

For many purposes, the combination of the employer's EIN and the plan number will be reported (e.g., determination letter, Form 5500, SPD, etc.) The trust's (not the trustee's) EIN will be reported on Schedule P. Assuming there is only one trust, only one trustee needs to sign. But there may be multiple trustees. Check to see who is named in the plan and trust documents, etc. It may be that the employer is named as the trustee and Capital Trust is a directed or custodial trustee of some sort. And it may be more appropriate for the employer to sign. The Form 1099 will have both the payor's and the payee's TIN (or EIN) and SSN, respectively. It may be the plan administrator, trustee, disbursing agent that is named as the payer on the 1099, depending on who is taking responsibility for the Forms and the withholding. It does not have to be the same party named as trustee on the Schedule P.

I think that if you are amending mid-year, the main advantage of using the same adoption date and effective date is that you don't have to correct excess distributions form earlier in the year. I think that if you amend 7/1, the amendment applies to all participants (even those who have already taken a distribution before 7/1). If the distribution they took before 7/1 was more than the required distribution under the new rules, then they have met the new requirements. And because it's not retroactive, you don't have to consider restoring any excesses back to the plan. But if the distribution they took before 7/1 was less than the distribution under the new rules, then an additional distribution has to be made after 7/1. If you adopt an amendment 7/1 that is effective 1/1, then you may have made excess distributions earlier in the year that are in violation of you plan terms as amended.

Maybe you have to be thinking like a lawyer in order to see the connection here. If you bring a potential lawsuit to an attorney, one of the first things that you will be asked is "What are your damages?" If you don't have damages, you generally don't have a cause of action. (There are exceptions for specific types of cases, but that is not relevant here). Under ERISA prohibited transaction rules, I think that you're frequently allowed to assume there are potential damages based on certain assumptions about how the plan assets woud have (or could have or should have) been invested. An employer can't defend a late contribution to a plan by saying, "Even if I had deposited the money, I would have left it in a non-interest bearing account so there is no loss to the plan." And when a trustee gets the float on distribution checks that haven't been cashed, it can't defend this by saying, "There is no loss to the plan because I would have put the money in a non-interest bearing account for liquidity purposes." So from a legal perspective, the fact that you always have potential damages in these types of prohibited transaction cases, there is some implication that the plan must always be invested?

The "amount involved" on the 2001 Form 5330 is the 2001 interest. The "amount involved" on the 2002 Form 5330 is both the 2001 interest (only because it wasn't restored in 2001 and is a continuing violation) plus the 2002 interest.

Isn't the plan termination date technically the last day of the last plan year? You should definitely have cutoff reports as of that date showing value of assets, participants, etc. You don't have any more plan years after that for purposes of participation, vesting, allocations or accruals, etc. The only purpose for which you have "plan years" after the date of termination is for 5500 filing purposes -- because you don't file until all assets have been distributed. I believe that most ignore the date of termination and continue filing using the old plan year end -- until all assets are distributed. I don't know if that is correct, but that is what I've seen done.

It is likely that they would not be treated as a controlled group. The group of five or less persons who own stock in both companies don't control 80 percent of each company. There is not a person or group of people who can control the decisions about plans for both companies. The parents as generally treated as one shareholder (assuming they are still married -- and there are other exceptions). But adult children generally don't have to be aggregated with parents (unless the child has greater than 50% ownership). It doesn't hurt to check with corporate tax counsel and confirm that they are not treated as affiliated for corporate tax purposes (i.e., that they are not filing one tax return or sharing tax attributes).

How old are the siblings?

Also look at the DOL's report on the problems with plan audits at http://www.dol.gov/pwba/programs/oca/ocaudit.htm .

In fact you might have two audits: Assuming calendar year plans, you might have a one day (January 1) audit for the plan that is going away and another full year audit for the plan that continues in existence based on the fact that each has over 100 participants at the beginning of the plan year. The transfer of the assets is not necessarily relevant (unless they failed to properly amend the plans and trust and the trustee of the plan that continued in existence did not have authority over those assets as of January 1).

I assume that the risk shifting and distribution is like that of an FSA: Premiums are $17.42 the first month. However, a participant can make a claim for the full $200 in that month. Then the participant's employment terminates and no further premiums are paid. So the insurance company has paid out more than it received.

So U,V,W,X, Y and Z each own 16-2/3 percent of A and T, U,V and W each own 25% of B. U, V and W are the only ones who own an interest in both. They own 50% of A and 75% of B; their identical interests are 50% in A and B. They fail the 80% test (so it is irrelevant that they pass the 50% test). They are not under common control. However, there is not enough information to tell whether they are in an affiiliated service group (which applies in services companies -- where "ownership" may be manipulated -- and there are other determining factors).

"You can't have your cake and eat it too!" If you don't want it treated as compensation for payroll tax purposes, it generally won't count as compensation for plan purposes!

A friend she got out of jury duty by nonverbal communication -- acting very interested while one attorney spoke, then ignoring the other one. The second attorney obviously didn't want her on the panel.

What is the company's tax year? Section 404 generally applies to the company's tax year that ends WITH OR WITHIN (on or before the end of) the taxable year of the trust. EGTRRA applies for a companys tax year BEGINNING after December 31, 2001.

I never heard of this before. I assume they provide first dollar coverage up to a small cap. They take the executives FSAs that would otherwise be subject to discrimination requirements for self-insured plans and make them insured plans that avoid the requirements. The question that I would want answered is whether anyone has confirmed that this will be treated as "insurance" for tax purposes. I don't know that this arrangement has the requisite risk shifting and distribution. Although maybe the argument is that regular flexible spending accounts supposedly exhibit risk shifting and distribution, so these arrangements must too?