eilano

Document provides for forfeitures to occur after 5 breaks in service and distributions to occur during the 6th break in service. If a participant is rehired, forfeitures are to be reinstated if participant pays back the distribution. Prebreak service was to be recognized as long as the participant did not have 5 breaks in service. A participant was rehired after 5 breaks in service but had not received a distribution of her vested interest but had forfeited the non-vested portion of her account in the previous plan year. The document isn't clear how to handle this situation but it would seem that the forfeitures would not be reinstated since she had more than 5 breaks in service and also we would not recognize her pre-break service. Is this correct?

We have a Dr with a medical practice (Dr. owns 100%) and approximately 30 employees. The Dr. also owns 3 hotels (100%) that collectively have more than 50 employees. The employees of the hotels are paid through a management company. The Dr. does not want to cover hotel employees in his medical practice plan. Is there a way to do this?

Employer has 2 locations, City 1 and City 2. Employer wants to implement a 401(k) Plan for City 2 employees only and exclude City 1 employees. Plan will pass the participation/coverage requirments. For ADP testing purposes, do the City 1 employees need to be included in the ADP tests if they have satisfied the statutory eligibility requirements? If the employer decides to implement a safe harbor 401(k) plan, would the City 1 employees be excluded from receiving the safe harbor nonelective contributions?

We have a Client (LLC) who manages several properties. The first property is family owned of which the client individually owns 8%. He receives 72% of the management income from this property. He also owns 8% of the other properties (collectively owned through LPs). He receives the rest of the income from these. In addition, he owns 48% of a Bldg supply business which is housed in some of the properties that are mentioned above. The bldg supply business has a qualified plan; the others do not. From reading Derrin Watson's book, it does appear that the management function exists. However, the LLC should still be able to set up a SEP or individual 401k plan. Are we interpreting this correctly?

Is a car allowance included for compensation purposes under code 3401(a) and 415 compensation?

We have company AB, PC and BD, PC (individuals) who each own 50% of EF, LLC. AB's husband owns 100% of GI. 2 employees split their time between AB and GI. GI has a plan and EF has a plan. Which plan do these 2 employees belong to? GI is an eye doctor and EF is plastic surgery. (AB and BD are also plastic surgery) In addition, AB has $75,000 in compensation from EF, LLC and $100,000 from AB, PC. For EF, LLC's plan, do AB, PC and BC, PC need to adopt the plan in order to use compensation related to the individual entities?

Joe Smith set up “Joe Smith Ministry” (501c3) and receives contributions from various church organizations. He does mission work abroad with the funds and pays himself and his wife $25,000 each as 1099 income which their CPA shows as self-employment income. Can they establish an individual 401k plan?

Employee became a "statutory" employee during the third quarter of 2003. It is our understanding that a "statutory" employee is somewhere between a 1099 and W2 employee. If the plan document excludes "statutory" employees, can this person be excluded from the plan for allocation purposes for the 2003 plan year? The plan has a last day and 1000 hour requirement to receive a contribution.

Couple filed as self employed and funded their individual SEPs. As of 1/1/03, they became an LLC and hired an employee. Do they need to change their SEP documents, etc.?

Does anyone recall what year the law changed regarding the deposit of after tax contributions in a retirement plan? There were no limits before if I remember correctly.

Company A has profit sharing plan A and Company B has profit sharing plan B. The companies merged together (Company C) from Feb 1, 2003 to August 2003 and then split again into Company A and Company B. Company C never maintained a retirement plan. Company B is now asking how do they fund their individual plan? The employees actually have 600 hours with Company B (rest of time and compensation is with Company C). Company B's plan has 1000 hour / last day rule. Company A has the same issue.

We have a new 401k plan that was set up by a broker and determined that the client also had a MPP that had never filed a form 5500. During several discussions, it has been determined that they may be a govt entity. Here are the facts as we know them. Client had MPP for 5 years (no filings) 401(k) set up this year with PSP and MPP terminated Client is administration staff for a govt funded DB firefighters pension plan. They are employees of the large DB plan (4 employees) and are paid from the large pension plan. The large pension plan does not require 5500s and does not report anywhere the contributions for the administration staff. From the information we gathered, the client is not required to file any 5500s and may not be allowed to have set up a 401k plan. Any guidance would be appreciated as this was all set up before the "govt entity" issue was addressed. Can anyone with govt entity experience advise what type of retirement vehicle is appropriate for this administration group? Thanks.

C corp client's fiscal year/plan year runs from 10/1/02 - 9/30/03. Employer sponsors a Simple IRA in which the employee and employer contributions were funded for the plan year for his employees. However, the owner's contributions were not withheld for the current plan year but an employer match of $7,713 was funded for himself during the plan year. Since his employee contributions were not withheld, what can be done to correct this? Also, what should be done about the employer match for the owner since it is over $6,000 (3% of $200k) and no employee contributions were made for him during the plan year?

Non profit organization client insists that his pension plan is not an ERISA plan and therefore not subject to the Form 5500 filing requirements. We reviewed the prototype plan document and it is a qualified plan. Does anyone know of an exception where a non profit organization is not required to file a Form 5500?

Client had a money purchase plan for 5 years. During the 6th year, the client amended the money purchase plan to a profit sharing plan formula (in the middle of the year). What do you put on the form 5500? And do you attach a schedule R for the half of the year that the plan was a money purchase plan?

Company A, B and C were merged into a controlled group in 2003. A, B and C all have Simples. Company D has 401k plan. Do we have any controlled group issues regarding the Simple plans? Can we leave them as is until 1/1/04 when all employees will participate in Company D 401k plan?

The problem we have is that a terminated participant received a contribution and has since received a distribution. Could we go through the correction program and leave the allocations as is for 2001? What other options are available?

Employer took a deduction for a $25,000 profit sharing contribution for the 2001 plan year. $25,000 was not deposited by the filing deadline of 10/15/02 (sole proprietor). From what I understand, the 2001 tax return needs to be amended. If the client deposits the $25,000 by 10/15/03 and takes a deduction on the 2002 tax return, can we leave the 2001 allocation report as is or should we revise the 2001 allocation report and take away the $25,000 allocation for 2001 and allocate the contribution as a 2002 allocation? What else would need to be done to correct the late deposit?

In a SIMPLE IRA, we understand that if the Employer chooses a non-elective contribution it must be made for all eligible participants. If they choose a match, please confirm that it is only made for the employees who actually have salary deferrals. A CPA is stating that all eligible employees get the match regardless of whether or not they defer.

Temp employee worked for an employer through a temp agency for a couple of months and then became an actual employee of the employer. What date should be used as her hire date, the date she actually went on the employer's payroll or the date she started as a temp employee?

We are currently using the Corbel cross-tested volume submitter plans. It is our understanding that as long as we do not significantly change the language in the plan, we do not have to submit the document to the IRS for a determination letter. Is this correct?

There was a proposal to remove social security numbers from benefit statements. Did this include removing social security numbers from the valuation reports also?

Employee with a green card was working here in the U.S. and was a participant in his employer’s retirement plan. He terminated employment and is back in the UK. His account balance is less than $5,000 and he plans on taking a lump sum distribution. He claims that the 20% mandatory withholding does not apply since he lives in the UK. Is this correct?

Anyone know how to get whole life insurance out of a retirement plan?

Has anyone heard of a regulation where IRS plan agents have to conduct plan audits at a client site rather than at a TPA's office? One of the IRS agents that recently conducted an audit at our office states that in the future, IRS plan audits will have be be conducted at the client's office.