SheilaD

This is a completely new animal to me so I'm not sure where to post my inquiries. (Puns were mainly intentional!) There is an association of jockeys that works (mainly) for a specific casino/race track. The race track pays a set amount to the association for the purpose of providing benefits for the jockeys of that track. The amount is set "per the agreement that governs all race track / casinos". The association (which is non-profit) would set up a plan that credited each eligible jockey (see below) with $ 15,000 annually that they could spend on any or all of the following: medical insurance, disability insurance, life insurance, dental insurance or pension. Eligible jockeys would ride in at least 200 races (annually) and more then 50% of their total races would have to be at this specific facility / track for the year. This is all I know and the first proposal of it's kind that I have run across. Can anyone give me any pointers on whether this works, is legal and what sort of testing it may be subject to? Is the pension plan a regular qualified plan and, if so, what do I use as compensation? I'm thinking it must be non-qualified as each jockey is self-employed. Any information would be appreciated. Sheila

Schedule Q and Demo 6 were used with the plan document submission if you wanted a determination letter with regards to the general test. The General Test results are not reported with 5500 filings. S

In this situation in the past we have 1099'd the deceased participant for the loan balance in the year of death and it was included on his final tax return.

Absolutly DFVC -- that's what it's there for :-)

Thank you ... part of my confusion was because I did not know that union plans sometimes allow management to participate in plans whether or not in the union. Your comments clarified matters. If, for both the owner and the brother, pension benefits are not a matter of CBA but of election then it would seem that they are both included in coverage testing. Therefore, in my particular case, the brother would need to be covered. I appreciate your time.

Janet, It seems that the union plan states that he can elect whether to be eligible or not -- and maybe even having that option makes him a union employee with regards to his own company. I also have an inquiry out to the union. Thank you

I agree that these circumstances are strange. I've never heard of such a thing before. Does it clarify anything that the owner of the business is a member of a union. He employs other members of that union. As an employer - he sets his own compensation and benefits. Because he does not "work with tools" his companies agreement with the the union allows him (and anyone else in that category) an option as to whether or not to participate in union pension benefits. I'm afraid I don't know enough about unions in general to know whether this helps clarifly the question. I think I am having trouble with the difference between being a union member, being employed on a union job, and/or being employed on a union job and being able to opt in to their pension plans.

This may be a familiar tune -- but I have not heard it before. Employer is an electric shop and has mainly union employees. The owner and his brother have the option of electing to receive union pension benefits but their pay and other issues are otherwise not subject to CBA. (I am told they have this election because they don't work with tools). All other employees are definitely union and have no options. The owner would like to elect out of union benefits and adopt a 401(k). The brother, who is not highly compensated (no ownership and lower pay) may or may not want to be part of the plan. My problem hinges on not being sure whether the brother is considered a union employee subject to CBA and so can be excluded. If merely opting into the union benefits makes him union then would opting out of them make him not union? Or is he never considered to be union and is merely a person who is allowed to "buy" (or have his employer buy) benefits under the union plan.? Worse possibility -- are both the owner and his brother considered union because they have the option to elect the union negotiated plan? If so, can I cover some, but not all of the union employees of an employer under a non-union plan? Would I then have to test coverage including all union employees? I would appreciate any information from people who may have encountered this situation. As a side question -- is this a common scenario? thanks to any and all. Sheila

Is it possible that the first contributions were made 10/1/98 but the plan effective date (as written in the plan document) was 1/1/1998? When we put in a new plan we generally make it effective as of the first day of the year even if contributions start sometime during the year.

Our clients are mainly small -- On the DC side around 80% would have 10 or less participants. A couple of plans are over 100. We do full valuations, forms, testing for our balance forward clients (about 65%). We do testing and forms on our individual account clients most of whom are John Hancock & ING so we get their asset information on line. There is a DB/CB side to the business as well but we aren't looking to bring someone in on that side yet. I would surely welcome your two cents as I am centless.

Wouldn't this be a qualfiying event which would allow a mid-year change in elections. I went to http://www.changeofstatus.com/resources/2001final.asp. (2001 changes to final 125 reg's). This seemed to indicate that if there is a significant change in the cost to the employee they could make mid-year election changes.

First be sure that the loan actually defaulted in 2007 - was the grace period expired. In whatever year the actual default occurs the participant receives a 1099 coded as a distribution (not a defaulted loan as he is terminated) and for accounting (5500) purposes it counts as a distribution. When he receives the remainder of his account it will be 1099'd and counted as a distribution for 5500 purposes.

My reading of the first post was that keeping the top heavy exemption is important so as to exclude pre-participation compensation. If you provide the 3% safe harbor to NHCE's only - then you have the top heavy exemption, do not have to give the 3% to non-key HCE's, and can exclude the pre-participation. It seems that the goal of the first post is to give the non-key HCE's the 3% as well. If that is the goal, then limiting the safe harbor to NHCE's and non-key HCE's should do it.

Here's my two cents. I was with a non-producing TPA for a long time. Over the last couple of years we were asked in maybe 10% of the asset transfer cases to prepare the black-out notice. Usually the broker taking over the assets would ask us especially if she/he was our source for the business. Our company has changed owners and we are now a "producing" TPA (I guess -- the owner sells product). I've just been setting up the proceedure so that all of our plan administrators know how to process the transfer of assets, including black-out notices, notice of termiation to prior asset holder etc. This will be part of our service going forward.

Has anyone ever seen any credible data on pension administrator pay levels vs experience or case load. Any data on what the standard case load for an administrtor in a small TPA firm? I was looking for something other then the ASPPA survey which gives such W I D E ranges for everything. Thanks

I've wondered if you can exclude key HCE's only from the safe harbor. This would allow you to get the top heavy to the non-owner HCE's without breaking out of safe harbor. I haven't found an definintive answer on whether this is possible.

We are happy using Fort William which is a very reasonably priced on-line service. You can either pay by the document or by the year for unlimited usage. We pay by the year. It takes me between 15 - 30 minutes to enter the plan information and specifications and all of the documents are generated instantly in Word. If you would like to discuss pricing, feel free to send me an email at sdott@northeastprofessional.com.

I hadn't run into this situation before and would appreciate any input. There is a client of an accountant friend of mine. He is a tennis pro who works in Canada for 5 months out of the year and otherwise resides in the US as a resident alien. The income from Canada is taxed on a Schedule C in the US (with a slight deduction for Canadian taxes). He wants to set up a US qualified plan on this income. So far I was OK with this scenario. Does it make any difference that he contributes to the Canadian (federal type) plan based on this income? He does not deduct that contribution (can not do so) on the US return. My instinct is that he should be able to treat it like any other schedule C income and ignore the Canadian plan. Any thoughts? I wonder if I can get tennis lessons out of this. ;-)

Janet, As it happens my husband (a resident alien here with UK citizinship) has a pension from prior service in the UK. Am I correct that he still cannot rollover that pension to a US plan or US IRA? Thank you.

Thank you -- it was useful indeed.

I am not a big fan of life insurance in qualified plans. However, an insurance agent asked me to post this question. Can a participant purchase life insurance with Roth 401(k) deferrals as long as they don’t exceed the incidental limits? What would be the tax ramifications? Thanks for any thoughts.

In your plan - are we assuming that the HCE's are also key? If so, I have no problem with this scenario.

At the moment that B transferred the assets to A, I believe that B realized all of it's gains. B transfered an asset with a fair market value of X to plan A. Since the transfer had a value of X then B must realize the difference between its cost and the value at transfer.

We are on version 13.01. I don't know when they introduced it but we can now produce all reports with either masked or eliminated social security numbers. We still need them on the system but don't have to show them on the reports. Our clients have appreciated this.

I hate to be the bearer of bad news but when we upgraded to 12.0 we had similar problems and in every case had to fix each employee by hand. As I have several large plans with a lot of rehires this was extremely annoying. Sorry.