A Shot in the Dark

Shares allocated to a Plan Participant within an ESOP are not counted in an ownership equation. Participants of an ESOP do not own the shares that are allocated to them within the ESOP. The trust itself own the shares. The regulatory answers are in Code Section 318 and 1563.

QDROphile and masteff, thank you for the input. I will pass this along.

On behalf of a CPA friend of mine I am posting this question. Quite frankly I am not sure there is an answer. Ten years ago an individual opens what he believes was ROTH IRA with a local institution. Each of the 10 years, the individual makes an annual contribution to the IRA. Each annual contribution is accounted for as a Roth Contribution for tax purposes, etc. The individual changes CPA's and the new CPA doing his applicable due dilligence in taking over a new client discovers that the supposed Roth IRA established ten years ago was in fact established as a traditional IRA and not a Roth IRA. The CPA tells me he can amend returns for a period of three years. Any idea how to handle the other 7 years of incorrectly reported contributions?

We use FT William's other software products, 1099, 5500 and plan document. We find all of it to work really well. We have looked at converting to their admin sofware from our current vendor. Our practice completes a great deal of share accounting (ESOP's, etc.) and FT William has not implemented a share accounting module as yet. When they do and if works as well as we hope, we will convert to their softare.

Submitted Determination Package on January 31, 2009. Received Determination Letter today. Nearly three years.

12: You have to deliver the punch-line.

Andy, Our clients that have this issue are DC clients, primarily 401(k) and ESOP. In the plan documents for our clients that have the 51-53 week plan year, we define the plan year as being: The 51-53 week period ending on each allocation date and coninciding with the Employer's taxable year. You ask a great question regarding a DB Plan in this situation; whereby a given plan year could include two separate actuarial valuation dates. I am not sure of the answer.

We have a few clients that have fiscal year ends and corresponding plan year ends that end up being a 51 to 53 week year depending upon the year. For our clients this fiscal/plan year generally end near July 31. We have given up attempting to report on the Form 5500 the correct actual plan year end. We tried for a few years, but every year we would have to respond to an IRS Notice (or several notices) detailing a short plan year error or extended plan year error. We now simply file the 5500 showing a 8/1 to 7/31 fiscal/plan year for 5500 reporting regardless of the acutal fiscal/plan year. Of course all calculations are completed using the actual dates. The client agreed with our solution as did the independent auditors. The indpendent auditors note the reporting issue in their audit. To date we have had no problems.

In my mind, question 3D and 4G on the Schedule I go hand in hand with the question you speak of, Section IV Question 12 on the Schedule R. As a whole, I believe the IRS and DOL are attempting to asertain the number of ESOP's that hold non publicly traded stock, along with determining whether or not an Independent Appraisal has been obtained. When you speak of tax consequence, I do not understand your question. It seems to me that answering a question no that clearly should be answered yes would put the signer of the IRS Form 5500 in jeopardy of filing a return that is true, correct and complete. Dale

I have not heard that. I believe John Hancock continues to support their Schedule D Conversion tool, used to convert a client's asset report as a given date to a CSV File for import into various commerical software pacakges.

I think the following factors need to be considered: Two Plan Documents to maintain - Two Plan Administration costs to be paid - Two form 5500's, and any duplicit processes that may be invloved Versus: Amending ESOP Plan document to include 401(k) Provisions - Completing the necessary 401(k) compliance within the KSOP document. And if there is a plan audit requirement subject to plan participant size you must take into consideration the audit fees. I think you would also need to consider fiduciary/trustee issues.

ESOP Guy: I believe you are correct. IRC Sectons 318 and 1563 (attribution rules) specifically exclude stock held by a trust related to a qualified retirement plan. Thus, I believe you do not count the owenership % of the stock held inside the ESOP.

I choose (b). It willl never ever be (e).

Have any of you NFL Fans reviewed the NFL Channel's 100 Greatest Players of All Time. The top five were: 1. Jerry Rice 2. Jim Brown 3. Lawrence Taylor 4. Joe Montana 5. Walter Payton Johnny Unitas was number 6. What I found to be interesting was not so much the list results, but the process they used in determining the list.

SheilaD: The letter states "Welecome to the EFTPS". It continues "We (the IRS is We) have enrolled you in EFTPS". And it proceeds to explain the program and includes the PIN number to use the EFTPS System. Included with the letter is a brochure with instructions on how to activate the program. Also included in the packet is a very "catchy looking" Department of Trasury Memo that states the following: "The government has recently issued a proposed regulation that provides the Federal Tax Deposit coupons will no longer be accepted as of January 1, 2011." "If this regulatory change takes effect as proposed, your business may be required to make deposits electornically, and may be charged a 10% penalty for each non electronic deposit." There is "Additonal Information" noted on the memo. Note the line: "If this regulatory change takes effect". It has not taken effect just yet, and I chalked this up to a good marketing piece.

I am not Tom. Sorry for the disapointment. The answer to your question is, when you use the FT William 5500 software, the client logs onto the DOL website to gain their user ID and PIN Code. They can then exit the DOL website. The client is then redirected to a link for the FT William website to complete the filing and acceptance. The process seemed to work easily for about 90% of our client base. The other 10% had problems initially following the directions. But, we were able to help them throught the process.

We may consider the FT William Recordkeeping and Administration System once it is enhanced with the share accounting module. We provide a services to many ESOP's and share accounting is vital to us. We currently use the document services, the 5500 Package and the 1099R Package. I/we are very happy with all of it.

I can not say enough nice things about the FT William 5500 Software (as well as their other software packages). We have had very few problems and I think the longest that I have had to wait regarding a response for assistance is an hour or so. The fact that FT William was recently purchased by CCH and/or its parent company has not been an issue.

Look closer at the codes. There are now two possible codes for an ESOP, 2O for non leveraged and 2P for leveraged. And ofcourse 2Q, if the employer sponsoring the ESOP is a "S" Corporation. Yes, we are using the code 2C for the ESOPs that we provided services to that have a Fixed Contribution (or Money Purchase) component.

I agree with the poetic license calling it a 401(k) Plan. Perhaps as a teacher, she belongs to a PERS (Public Employee Retirement System) Pension Plan that required mandatory Employee Contributions that are eligible for withdrawal after x amount of years of participation or service.

The National Center for Employee Ownership has a great publication titled: "ESOP Distribution Policies". www.nceo.org

It is my experience that many auditors prefer to wait until the summer time to complete Plan audits. Presumably their audit teams are tackling tax stuff in the spring. But I agree with Austin, rarely have I seen fault by the auditors in late filings. I just wish they didn't charge so much.

That decision is an administrative election set in our plan document. The employer sets the distribution order for Roth Contributions; ie: Other accounts first Pro Rata Participant Election Most of our clients have elected Other accounts first or Participant election.

I think everything that went on illustrates all of the good things about the game of baseball. This may provide for a return of fans to the game. And he still received his corvette.

Would you be willing to share what transactoin ocurred that required a pass through vote that did not happen? Many individuals, plan participants and professionals are often suprised at the level of corporate actions and transactions that do not require pass through voting in the ESOP environment. Example: Most corporate asset sale(s) requires pass through voting. Most corporate stock sale(s) do not require pass thorugh voting. Needless to say, there is a lot of quirkiness in corporate governance and ESOP environments