Monica Barnard

PS Plan has allocation formula integrated at 80.1% of TWB. Plan has fiscal year of July 1 thru June 30. Do I use the TWB in effect at the beginning of the plan year, or what's in effect at the end? Thanks

Doc A set up PS plan in 1990, took $50k loan in 1999, repaid on schedule for about a year and a half. Doc A's PS Plan not funded since 1999. Doc B comes along with his own PA. All employees now employed with Third PA. Doc A only employee of original PA. Doc B only employee of Doc B PA. I have notes in file that Doc A was advised by me and CPA that all employees should be covered by original plan or similar plan. Both Docs agree no new plan, no further contributions will ever be made. Plan is audited. Loan issue is caught. Doc A repays loan with penalties and interest. Auditor now wants census on Third PA. CPA says auditor is not entitled to that information. Is CPA right? Thanks in advance for your help on this. Monica

Doc age 54 150,000 Receptionist 45 24,230 Nurse 1 44 24,960 Nurse 2 61 18,770 When I initially ran 401(a)(4) without nurse 2, test passes with doc getting 12.33% and other 2 ees getting 7%. when I add nurse 2, testing doesn't pass until nurse 2 is receiving 23.75%. Any help on this is greatly appreciated!! Monica

I meant on how to classify the newbee. Could I have a class for employees within 5 years of NRA?

Cross tested plan with doc and 2 younger ees has passed testing for last 5 years. 2007, newly eligible employee throws a monkey wrench into things. Doc is age 52. Newly eligible is 60. 2 rate groups are established in plan doc. If plan is amended to add third rate group, with separate allocation for new participant, 401(a)(4) passes. Problem is how to categorize rate groups. Doc is easy. Of the 3 ees, 1 is receptionist and other 2 are nurses. One of the nurses is the problem child. Any suggestions?

thanks!

I agree that PPA would supercede as far as that is concerned but I still find it troublesome that the withholding rules were not ameded as well. I think we need to wait and see if the service rules on this issue. Is it better to interpert that the answer is yes unless it specifically says no or vice-versa??? In view of SunGard posting a "Special Tax Notice" with wording addressing rollovers into ROTH IRAs, it appears that this is treated as a rollover so that: a) the participant is responsible for paying tax (no withholding by plan sponsor) 2) the 10% penalty for distributions prior to age 59 1/2 does not apply Do ya'll agree?

And would the owner/beneficiary of the policy still be the PS Plan?

Hey Ya'll - client has 30 year old DC plan which was originally set up with whole life insurance policies. Corporation has stopped making contributions to plan (it's been 7 or 8 years). All life policies have been surrendered but one. Participant whose life is insured is still an employee. XYZ Insurance Co. holds assets in a deposit administration contract, and life policy was written by same XYZ Insurance Co. The insurance premium has been withdrawn from the contract and forwarded directly to pay premiums during the past few years. The premium payment is deducted from the participant's very old account balance. XYZ Insurance Co. rep handling deposit admin contract is now saying that they will no longer be able to deliver premiums, that it is beyond the terms of the contract. The problem as I see it is that if the corporation pays the premiums directly, that is a contribution which should be allocated among all eligible employees, which means there isn't enough contribution to pay the premium. Can the participant pay the premium? She has been paying tax on PS-58 costs for nearly 30 years. If she can pay the premium herself, will she still have PS-58 cost? She is 3 years from retirement, and will be willing to purchase the policy at this time, but what is the best way to handle this in the meantime? BTW, the IRS has audited this plan in the past 2 years, and auditor was fine with an ongoing plan not having contributions for this long, mainly because of the age of the plan. Thanks for your help on this.

CPA client just called about Form 940 asking if they have to report contributions to their retirement plan on the 940 now. I don't prepare these, so I didn't know. I did pull the form off of the IRS.GOV Web site. It appears to me that what is being asked for is if the employer pays retirement benefits and uses their corporate ID # rather than trust ID#, those benefit payments would be reported on the 940, but not subject to FUTA. Can anyone confirm or correct this? She also asked me if they should be reporting matching contributions on the employees W-2s. That was also a new one on me. Any help on this is greatly appreciated!

As an aside to this topic, what changes will be needed to the Tax Notice to advise participants of the immediate taxation (or not) of distributions rolled into Roth IRAs?

Dear Grumpy - it is my understanding that this notice must be given to all eligible employees and beneficiaries. This notice is similar to the SH 401k notice in that it gives additional, pertinent info, such as changing deferral %, other er contributions, withdrawal rights and vesting, and may also include QDIA language. Monica

Well, I use them for everything else, but didn't know what else might be available. Thanks!

CPA needs your input on a situation with a client's SEP plan. They made the SEP contributions for the client and her spouse. There was also one employee who was eligible and CPA had calculated the amount for them on her as well. In doing the monthly financials CPA saw that client had written the checks for their contributions but not ee. When questioned why this wasn't done, the client said the employee left their employment in 2007 so they weren't going to make the contribution for her (she was employed at the end of 2006) Reaction is that they can't do that; if she was eligible she has to have a contribution made for her. The question now is what are the risks to the plan with them funding only 2 of the 3 accounts? Is the plan in jeopardy? Can a SEP be disqualified? Can client "fix" anything by making the contribution now even though it is past the 9/15 deadline for the corporate return? Thanks for your advice.

Hey Ya'll - what are ya'll using for electronic filing of Forms 1099R? In the past, I have used software which has filled in the data fields for the printed forms, but haven't filed electronically yet. Want to be up and running on this before 2008! Thanks for your help.

Plan covers union members, whose benefits are determined pursuant to collective-bargaining agreements. A Joint Venture between 2 organizations is the plan sponsor and plan administrator. The three trustees are the Manager of the Joint Venture, one employee rep, and one union rep. A short amendment is needed prior to terminating the plan. Who can sign the adoption resolution? BTW, the document is a non-standardized proto which was approved by the union's attorney prior to adoption. Thanks, Monica

Co C will close its doors on 9/30/07. We have known this for about a year. We are preparing to distribute. The plan allows loans. Can we have a black out period for loans only from, say 8/15 to 9/30? Or would it be recommended to amend the plan so that loans are no longer allowed? Thanks

I haven't filed one of these in a long time...PS Plan had limited partnership investment which was sold in 2006. Schedule K-1 shows net short-term capital gain of about $5K, net long-term capital gain of about $1K. Ordinary business loss was $125, and other income $994. Do we exclude the capital gains, and therefore have less than $1k to report? Thanks,

401(k) plan is a large plan filer. All of plan's assets are participant directed and held in separate accounts at a mutual fund company. I know I have to check line 4i "YES" - assets held for investment purposes. Is there somewhere I could see a sample of the schedule needed for mutual funds? The format is (a) {What the heck is this column for???} (b) Identity of issue, borrower, lessor, or similar party....would this be "XYZ Mutual Fund Co"? © Description of investment including maturity date, rate of interest, collateral, par or maturity value.... would this be "XYZ Balanced Fund"? (d) Cost....does this mean that I have to list purchase of each individual transaction (2 pay periods per month, with 12 funds available for 175 participants)? (e) Current Value - I understand this one. Also, does this mean I have to list individually the info on each participant loan? There should be a smilie pulling out his/her hair Thanks Monica