GMK

And here's similar information about Minnesota state taxes: http://benefitslink.com/articles/guests/washbull100823.html

Yes, that is the best source if it's up to date. The instructions usually aren't ready until later in the year. DoR web site announcements can give you the information earlier. In addition, nowadays federal and state tax laws sometimes get changed near the end of the year with a retroactive effective date, so the instructions may include a "subject to possible recent changes in the law" warning.

I, too, agree. As an aside, some states have passed laws that require that such separate dental/vision plans be available to adult children to age 26 or even 27. The good news is that the federal tax code allows the income exemption for this coverage to age 26. This means no imputed income calculations for federal income taxes, even though PPACA does not require availability of the coverage.

For one, Wisconsin does not automatically federalize its tax code, and it has not federalized with respect to coverage to age 26. Maybe they will consider it in January 2011. Adult child coverage, therefore, results in imputed income for state income tax purposes unless the adult child qualifies as a "tax dependent" (as a qualifying child or a qualifying relative). In addition, Wisconsin requires coverage eligibility to age 27, which results in imputed income for both federal and state income taxes. You may need to go to each state's Department of Revenue web site to get your answer. (And then you could post your chart here. Probably not what you had in mind. )

The name of the guy who is: hanging on the wall: Art floating in the water: Bob lying flat at your door: Mat Three guys were walking down the street. Two of them walked into a bar. The other one ducked. Happy Friday.

WDIK makes the relevant point. For a 5/7 - 5/6 plan year, I would read that "the first day of the first month of the plan year" is 5/7, unless the word "calendar" shows up by the words "day" or "month."

a drive-by comment: I think I recall that you count up to 501 hours of time paid when not working, but check your plan document.

Good questions, and I don't have the answers. I understand the employee's point of view, but I don't know if the employee can prevent the child's coverage, as long as the employee in not otherwise affected (in terms of the plan, not in terms of his/her rage, disgust, etc.). With luck, others will chime in.

Just to add that the premium amount is not an academic question. Several states require availability of coverage beyond age 26, which gets us back to calculating imputed income for the employee. For reference, here's a federal and state summary, as of August 2009: http://www.ncsl.org/default.aspx?tabid=14497

Consider if the employee who is entitled to coverage said that he/she wanted to be in the plan but didn't want to pay his/her share for her own coverage? Would the plan have to cover the employee? Could the plan require the employee to pay for the coverage? Would the plan have to accept a non-standard payment method for the employee's coverage? I think the answers are no, no, and no (but the plan is not prevented from accepting an alternate payment method). Same for the son's coverage. The plan cannot prevent the employee from adding coverage for eligible dependents, but the plan cannot require the employee to do so, and the plan does not have to cover someone who doesn't pay their share of the premium. The plan could choose to allow the son to pay his own share of the premium, which would be whatever the plan charges for older dependents in other cases. Here I'd look at it in terms of what amount would be considered imputed income to the employee if the premium for older dependent coverage were taxable (e.g., it could be the employee amount for single coverage).

True that. As a reminder, with an S corp, the pass-through earnings add to the basis of the shares in the ESOP, and the calculations look at each time the number of shares in any account changes. Almost impossible to do the calcs on a slide rule, but a spread sheet helps. And as far as I know, the rest of what tmills said is right. (Tho' I don't know if reshuffling is a stock purchase, the plan document is your key guide regarding cash contributions and stock releases and allocations.)

Yes, but the company can write the check for the valuation. Just my opinion, but it seems ill advised to spend a few thousand on an evaluation when you have other, more cost effective options. As discussed previously, the company could simply contribute cash to the ESOP, or the ESOP could distribute shares to participants and have the company buy them, for example, using the put option.

You got it, oriecat. People enroll in Part A. It doesn't cost anything and doesn't pay anything while you have employer plan coverage, but if an emergency creates the need for Part B, you don't have to wait 3 months to complete your enrollment. You're already in the system and just add the coverage(s) you need. Or so I'm told.

Seems like the whole thing is an ad, i.e., use an axe instead of a scalpel, but that's your call. Of course, any plan that has you dancing in the clear, aquamarine waters of the Tropics has to be a benefit to your health and welfare (if not your pocketbook), so without much difficulty I found the link to the advertising.

1) The basis is the cumulative total of value of the stock at the time the plan acquired the shares. In your example, the basis is $6000, and the NUA is $2000, and would be taxed as you described. 2) If you roll over the stock to a taxable investment account, you get to use NUA tax treatment (assuming a lump sum distribution following a triggering event), but you'll be paying the taxes on the distribution. For example, see this link: http://www.dinkytown.net/java/StockRollover401k.html If you do a rollover to an IRA, you lose the NUA option. You have to run the numbers, but in most typical cases, a rollover is better in the long run, because the money that you otherwise would have paid in taxes goes into your rollover account to generate additional earnings. Check with a financial advisor about whether a rollover or NUA is better for you in your situation.

I agree with PensionPro. It's an incorrect error message. My reading of the 5500 instructions is that 'participants with an account balance' includes those participants who have received or made a contribution and does not include those whose balance is and always has been zero.

As I understand it, deferral money is not available to the company to use for its own purposes. The rules, which are the conditions that must be met to qualify for the tax deferral, require that deferrals be deposited into the participant accounts timely. The owner has to recognize herself as two different persons, the plan sponsor/administrator and a participant. Although we understand her reasoning, the rules say that she does not have the option as a participant to delay the deferral deposit, even in order to benefit her company. And not following the rules can result in fines and penalties that will really mess up her cash flow and possible loss of the tax deferred status (read: unhappy employees and owner). I would recommend that she check on these rules with her plan advisor or the trust company, a pension lawyer, etc.

If your 5500 isn't in by now, file the 5558. It's free insurance against the train wreck/perfect storm coming this weekend.

Understood. I should have put one of these by my flippant remark.

We keep the medical file separate from the general employment file and pension file. Gotta be careful about access to medical information. Of course, being a small company gives us flexibility that larger companies may not have.

I don't know of anything that would prevent this, but I would plan to do it once a year, not once for the next, say, 5 years. Having a lot of extra cash in the ESOP for a long time may not be a prudent investment of the ESOP's assets, especially now with interest rates so low. For what it's worth, we generally distribute the (S corp) shares from the ESOP, and the company immediately buys them back. Most years, it's only one or two times into the mainframe. Yes, this reduces the number of shares in the ESOP, but the company usually makes its contributions in shares. Contributions do not necessarily equal the number of distributed shares, but they bring the number of shares in the ESOP back up and increase the share balances of active participants.

The plan administrator is responsible, so the plan administrator should review the beneficiary forms as they come in (there's no heavy lifting involved) and keep them in the participant's pension plan file (separate from the employment personnel file). The generally long time from when the plan receives a beneficiary form to when the PA needs it could see one or more TPA changes, so the PA really ought to keep the form on hand. At least that's what we do. If the PA wants to pay the TPA to keep backup copies or to review incoming beneficiary forms, so be it. Plans that outsource everything down to beneficiary form processing better have darn good oversight procedures and backup record keeping, because in the end, no one but the PA is responsible for the plan, its operations, its filings, and its records.

Good replies. One minor point is that an ESOP can even distribute S corp shares with ownership restrictions IF the plan provides for this form of distribution and IF the company immediately and automatically buys the shares when they are distributed. Again, this assumes the company has some cash available. An advantage of stock distribution is that if the participant takes a lump sum distribution (entire account balance paid, not rolled, following a triggering event, like separation from service, disability, or death; and all within a single tax year), then only the basis is taxed as regular income. The NUA is taxed at long term capital gains rates, even though the participant sells (the company buys) the shares immediately and no matter how long the plan held the stock. Basis is the value of the shares when the plan acquired them (which is an interesting calculation for forfeitures) plus (for an S corp) pass-through earnings. These links give some info on NUA: http://www.bogleheads.org/wiki/Net_Unreali...reciation_-_NUA http://financialducksinarow.com/2354/mistakes-with-nua/ Participants should get investment and tax expert advice before electing a lump sum distribution with NUA treatment.

My understanding of NUA (which others here can correct or confirm) is that NUA treatment is available if the distribution was a lump sum distribution (which can include multiple distributions within the same tax year) that was the first distribution following an NUA triggering event, like retirement, death, etc. If the distribution was completed in 2009, then it sounds like the NUA is OK. NUA treatment is not available for a distribution of the additional 50 shares in 2010, unless there was another triggering event after the 2009 distribution. If the first distribution was completed in 2010, then it seems likely that the 50 shares added in 2010 would have to be distributed in 2010 to make it a lump sum distribution within the tax year 2010, and the basis of the 50 shares would be taxable as regular income. (There could be a little NUA in the 50 shares, for example, if some were from forfeitures.) It might help to look at the form 4972 and its instructions: http://www.irs.gov/pub/irs-pdf/f4972.pdf And here's some reading that may or may not help: http://benefitslink.com/links/20021029-019131.html http://benefitslink.com/boards/index.php?showtopic=27490 http://benefitslink.com/boards/index.php?showtopic=17532 http://benefitslink.com/boards/index.php?showtopic=13276 In many cases, you will see the wise suggestion to contact a tax lawyer about this topic.

As far as I know, no.