rcline46

Tom, using a QNEC is an often inexpensive way to avoid Top Heavy. Just an off the wall QNEC which just happens to bring the % to under 60. NIIIIICCCCEEEE

You may want to check the actual 'status' of the employees. According to my clients with Title V employees, the employees are placed with the company by the government and are actually working for the feds, not the company. Their atty said they are NOT employees even tho they are receiving W-2 from the employer.

mbozek - fear of litigation and being put out of business for malpractice. To me that is a good reason. What to we do? Have the client sign a special letter of indemnification that we had advised against it. In extreme situations we resign from the case. I can think of maybe a dozen cases in the 30 years I have been in this business where this has saved our bacon, not to say our jobs.

Been there, done that. He is not terminated if he is still working for the company. Has to do loan and hardship to get any money. Problem for you is ethics and your boss. How long will you be employed after you prove him wrong?

I agree with Archimage - in fact we use this technique for first plan years. But all notifications and document must disclose all plan features.

Also need to know WHO are the shareholders of the S Corp., and if the band members, how much do they own. Offhand, I would definitely say ASG if the band owns the S Corp. I also have a significant problem with IC status unless the members of the band regularly perform gigs with other groups. Remember Limberg - pigs get fat, hogs get slaughtered.

All I can say is- WHAT A BUNCH OF MALARKY. In the small plan market place annuities are extremely rare, so the PV of lump sums due in future years is the actuaries best estimate. And mortality discounts are also rare, so single value decrements are common. FASB just cannot take the actuary's best estimate out of the picture to conform to some fantasy they have. FAS 87 is already unreal enough to the actual health of a plan. I will not make it worse. PV of lump sums is what will be provided in my reports.

The 'normal' result of a stock sale is that the Buyer assumes the assets AND liabilities of corporation. The agreement of sale stipulates was is not assumed. In general, it is the corporation which has the responsibility for making the corrections required and that would pass to the new owners unless the agreement of sale stipulates otherwise. Unfortunately if the IRS is not willing to let the plan terminate and the new owners do not want the plan either the sale must be put on hold or the old owners will have to form a new organization which will assume sponsorship of the plan until the IRS is through and then terminate the plan.

I would make sure I advised my client to make full disclosure of the situation and let the sale agreement dictate who responsible parties are after the sale. I would also notify the IRS of the pending sale.

FLUNK. Need 11(g) to get back in with lowest contribution (cross tested). Not good.

If it is a PBGC plan, then yes. PBGC has even given special directions on what to do for a first year plan.

Sheila gave you excellent starting advice. File a claim under the claims procedure. The procedure has built in deadlines so you cannot be stonewalled. I would specifically refer to the SPD where you think no end of year applies. As to the 1000 hr/ plan year / end of year relationships I would have to read the actual document (and any amendments) to see what they are for your plan.

Oh man, what a can of worms!! Can you use the SLOB rules to keep them out of testing? If not then they will still be in all testing creating problems for the rest of the group! Why do they want to deny participants the ability to defer? It it because the match is too costly? Maybe they can reduce their match - need a (billable) study to check that out. Make sure document will permit differing match levels. Probably more problems too.

Several issues: State law governing employment ('at will' state or not); Yes, it now is the EBSA; You do need a copy of at least SPD or document; How much will you get considering vesting vs. cost of attorney; Remember ERISA is a FEDERAL case (could get atty cost back if you prevail). Unreasonable termination will be VERY difficult to prove - was position actually eliminated? Did employer have cause - ie you were causing problems for the employer with other employees due to resignation, bad mouthing the working conditions, etc? All of these issues point to why you need to engage an attorney whose main practice is ERISA.

Were you scheduled to work Dec 31 3pm to midnight? New Year's eve? If not then you did work the last scheduled day and in my opinion are entitled to the contribution. Second, you may have a breach of contract suit since you were asked to work into january and the contract changed. Third, it IS a breach of ERISA 510 to cause an action expressly to deny benefits. You need to contact an ERISA attorney or take this up with your local PBWA (DOL) office. Legal counsel is your only recourse.

We look at it as a funding assumption - basically actual salary scale for the year. Of course if a salary scale is used, the software may be calculating a current liability number based on the assumed sal scale which is on top of the 'actual' sal scale and that would be wrong.

No. Never. Cannot happen. Read regs on definition of compensation.

I agree with Tom. Any rounding, applied consistently to a plan, is permitted. Of course you can always change you method and be consisten after the change....

I don't think Tom's example works. There is a distribution of 20,000 plus 4,000 or 24,000. Taxes must be withheld at 20% or 4,800 - does not work. Must 'gross up' to get enough cash to cover cash AND loan for taxes. Therefore you need to divide loan by .8 to get total cash for taxes and you get 25,000 with 75,000 for rollover. However, the correct method is no withholding UNLESS the participant elects otherwise.

I would be concerned about discriminating against employee A. Waiting until they are paid to get access to their forfeiture. Why not let them become 100% vested and avoid the problem? I would not want to defend this situation in an audit.

This issue is addressed in the plan document. In a 401(k) plan it had better be immediate re-entry. In other plans you may require a wait, but with retroactive entry and then you may have contribution problems in DC plans.

A 'Solo 401(k)' is a fancy name for a run of the mill, regular 401(k)/Profit Sharing Qualified plan requiring all testing and all qualification rules, including the minimum distribution rules. No exceptions. Don't get lost thinking a fancy name is something new!

The third method sounds like a 'pay as you go' funding method, which was outlawed with ERISA. I prefer no. 2 as there may be a benefit increase from formula which is larger than the AE increase.

I believe what you are looking for is 401(a)(11) or something like that. Force outs at any level in a plan termination. Should make that participant sit up and take notice.

In fact, I would be concerned even if the 'side fund' was called a 'premium reserve fund'. For those who don't know insurance, that is really just pre-paid premiums.