david rigby

Many cafeteria plans that offer dependent care accounts set that limit about $5000. What do you mean by "employer's liability"?

The original post stated: "Distribution Info – Pay as soon as administratively feasible using prior valuation" Therefore, it seems unlikely that the plan administrator can unilaterally add a BIS requirement to existing account balances. My read of IRS Reg. 1.411(d)-4 Q&A1 is that the timing of distribution is protected. http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html

Aren't we just talking about the tax withholding on $400?

I suggest the answer is Yes.

http://thomas.loc.gov/cgi-bin/query/z?c107:H.R.5095:

Not quite. ERISA section 104. SPD's must be distributed at least every 5 years if there are significant plan changes; at least every 10 years even if no amendments.

Don't expect it back. Plan for what phase 2 will be. Probably jpod's suggestion.

The 5500 instructions include the following (page 3): "The following are among the pension benefit plans for which a return/report must be filed: ... 4. Individual retirement accounts (IRAs) established by an employer under Code section 408©. ... Do Not File A Form 5500 For A Pension Benefit Plan That Is Any Of The Following: ... 3. A Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) that involves SIMPLE IRAs under Code section 408(p). 4. A simplified employee pension (SEP) or a salary reduction SEP described in Code section 408(k) that conforms to the alternative method of compliance in 29 CFR 2520.104-48 or 2520.104-49. ... 9. An individual retirement account or annuity not considered a pension plan under 29 CFR 510.3-2(d). ...

... you might also mention to the Doc that the penalty for failure to follow the terms of a plan is disqualification. Mention the tax consequences (and PR) of that.

What does the owner/doctor say about why he/she is not administering the plan according to its written terms? Who does he/she think is going to pay the amounts that should have been forfeited? (Certainly not the other participants.) Is there any possibility of misunderstanding? For example, when owner/doctor "instructed" the broker, is it possible he/she meant to rollover "100% of the vested amount"?

Another rule of thumb: if you can hold your board of directors meeting in your bathtub, you don't have a problem.

IRC section 125 has references to "highly compensated employees" and to "key employees". There are non-discrimination issues of concern in the administration of a 125 plan. For this and other reasons, there are TPA firms that assist employers with such administration. Only the plan sponsor can decide whether that expertise is worth the price.

Why bother? Date it now. Any form of backdating can create an appearance of trying to hide something.

Automatic elections can be an additional expense to the plan. If the workforce is very transitory, then the high turnover will mean that the plan is faced with making many distributions of small amounts. Consider the implications of locating these individuals, doing withholding or rollovers, producing a 1099R at the end of the year, possibly with another address change. If the above issues are not a problem, it seems that the automatic election should be targeted to the level that is likely to help you pass the ADP test. More than that seems pretty aggressive, some might even use the term "controlling."

Sounds like you can amend the plan to change the percentage to zero, effective after the appropriate 204(h) notice.

Correct, the SSA is not open to public inspection, but the individual could request that the company look at previous SSA's. BTW, if he terminated in 1983, then he did not have to be on an SSA until 1984, that is the 5500 filed for the 1984 plan year. Another source of information might be the actuary or consulting firm providing services, even if no the current one. Again, the plan sponsor will have to make that request.

What is the plan year?

401(a)(26) ?

Life expectancies are normally calculated from a mortality table. As you can see from this Society of Actuaries list of tables, there are a large number of mortality tables. Some are very far out of date; some are from other countries; some are based on very specific types of data. You are probably seeking something for a "disabled" individual. It is not easy to answer your question; it would help much to know the purpose for which the answer is needed. Not also that a "disabled smoker" might be different than a "disabled non-smoker". Ditto for male vs. female.

Don't forget to use the plan provisions to determine who to pay, and when.

Not sure of the exact answer, but if you distribute the acount balance (to beneficiary, estate, etc.) by the time of filing the 5500, then you can omit from the Schedule SSA. Also, note that you do not have to include on the SSA until the filing of the 5500 for the plan year following the year of separation of employment.

Try IRC 411(a)(11).

If you mean, for example, that the employer wants to specify in the plan that all accounts less than $2000 will be distributed upon severance, and those over $2000 will be distributed at employee discretion, then that is permissible. The law permits this limit to be set in the plan, but no more than $5000. However, if the plan currently has a provision with a higher limit, then watch out for "cutback" issues.

I suggest caution on assuming that "withholding is not mandatory for most states." More states are changing these rules.

What is the usual method of providing the Schedule of Reportable Tranactions under Line 4(j) of Schedule H? Specifically, a bank or other trustee usually includes this in the year-end trust statement. But a broker does not. For TPAs who prepare 5500s, how do you deal with this ?