jpod

To Austin: 1. Someone earlier pointed out that if you have a large organization with a decentralized personnel function, this may not be feasible. 2. Why should the employer bend over backwards to give money back to the employee? The employee can participate again, so I don't understand the point you're trying to make.

If it was disclosed adequately in an SPD that was distributed to the employee in a timely fashion (before his termination), that's sufficient. As an aside, I've been working in the benefits field for 20+ years and I've never, ever, heard of a rehire asking to take advantage of the restoration rule. Maybe my universe is too small.

The new 5310 has none of that pink sheet stuff.

There is no solution here that would allow the employee to reduce his income and fica/medicare tax liabilities for 2002. That doesn't mean, however, that he is has no recourse. If I were the employee, I would ask you to pay him the taxes he would have saved, plus a gross-up. I'm not sure what the employee's legal cause of action is, but I bet he has one. If I were the employer, I would respond by saying that the employee was at least partly to blame, because if at any point before the end of the year he had brought this to our attention, it could have been fixed by piling up on the pre-tax deductions before the end of the year. I think a court would probably split the baby.

I theory this would work but you'd have to set up a premiump conversion cafeteria plan under Section 125 for this one employee, and if the employee is an HCE or a key, you're out of luck.

Three comments: 1. DFVC is not available for an "owner-only" plan because it is not subject to any ERISA Title I filing requirements, and, therefore, is not subject to any Title I late-filing penalties. 2. I believe the IRS has said that if a plan is not eligible for DFVC, the IRS' automatic waiver of Internal Revenue Code penalties DOES NOT APPLY. Therefore, you are at risk for Internal Revenue Code penalties which I believe are $25 per day for each day late up to $15,000 per 5500, unless you can show "reasonable cause." 3. Nevertheless, you have a legal obligation to file, and you still file at the regular DOL address. When you do, include a statement of reasonable cause explaining that you are a "FIRST TIME FILER" and just found out about the filing requirement. And, hope for the best.

I'm sorry; the accountant is not 100% correct. It is not the "dividends" which are taxable. The plan's share of the corporation's income is taxable.

If the plan is not an ESOP, the accountant is correct. Although any 401(a) plan is a permitted shareholder, the plan's share of the corporation's income for the corporation's year ending with or within the plan year is UBTI, unless the plan is an ESOP.

MBOZEK is correct. There must be a plan and a trust agreement (or an insurance or annuity contract, if the plan is not funded by a trust) in effect before the end of the first taxable year for which deductions will be claimed. If there is no corpus by that date, the IRS doesn't care, even if it might not be a good "trust" under local law as of that date due to the lack of corpus. I don't recall, however, if there is a ruling backing this up.

What the heck are we talking about here? A 401(k) or other deferred compensation program? A contributory health insurance plan?

There was a loan. The employee did not repay it in the manner required by Section 72(p) and the regulations, including the grace period rules (I assume). Therefore, there was a default triggering a deemed distribution. Case closed. Does employee have a claim for damages? Maybe; who knows.

There isn't any special relief for these cases. Why would they refuse to participate because of the spousal consent requirement? If it is a vanilla 401(k), there would be no mandatory J&S. So, the only concern which an employee might have is that he/she could die before receiving the full account balance and the beneficiary would be the long, forgotten spouse. Do these folks understand that this would be the only consequence of the spousal consent requirement?

For purposes of the tax-qualification requirements of the Internal Revenue Code, a gov'tal employer can sponsor a profit sharing plan. Is it a problem under any other law(s)? That depends on the gov'tal employer involved and the applicable state laws regulating the affairs of that employer.

I won't claim to fully understand how the Section 125 nondiscrimination rules work, because they're not writtin in the English language as far as I'm concerned. But, I've always felt that you actually lessen the risk of discrimination by providing fully-paid coverage for HCEs and Key Employees in situations like yours (i.e., because they are not using any nontaxable benefits under the Section 125 plan, or at least the premium conversion component of the plan). Ironic? Yes, but I think this is how it works.

NO - Do not ignore the question, but it really does not matter how you answer it.

I agree with the advice that she contact EEOC and/or a lawyer knowledgeable about age discrmination laws. In addition, if they are telling her that she no longer qualifies for health insurance due to her pt status, she nonetheless would have COBRA rights, and no "application" is necessary. (Unless, of course, the employer is so small that its health program is not subject to COBRA.)

It is not necessarily a pt. Based on the stated facts, the LLC is not a "disqualified person" with respect to the IRA. Therefore, it is not a per se pt. It would be a pt only if it is considered (I'm sort of paraphrasing) an act by the IRA owner whereby he deals with the income or assets of the IRA in his own interest or for his own account. In other words, it has to be a "self-dealing" type of transaction, which is determined by the facts and circumstances. Without knowing any of the facts and circumstances, my guess is that it's probably not a good idea for the IRA owner to do this. trougd : one that is intended to benefit the IRA owner in some capacity

For an old plan, it's not an issue. "Administrative burden" is fine.

Yes; provided that the plan document allows loans and if it does it has been amended to reflect EGTRRA's repeal of the rule prohibiting loans to sole proprietors, owner-employees, etc.

Yes, unless (1) the beneficiary designation form says that the surviving spouse is automatically the beneficiary unless the spouse had consented to a different beneficiary (even though ERISA is not applicable, I would not be shocked to find this in the form); or (2) there is a state law statute that mimics ERISA as applied to IRAs.

There is no guidance from the gov't, other than perhaps a stray statement here and there that decisions concerning mapping (e.g., whether to map and how to map) must be made with reference to the ERISA rules of fiduciary responsibility.

If you were involved with putting the plan's terms together for the employer, a word of warning: make sure your boss/client understands that your plan could but does not offer hardships before you run off and tell the participant that "it's not an option." I would not like to see you get burned if the participant then runs back to his/her boss and makes a stink. The boss may say to you: "Why don't we allow hardships? If you had explained hardships to me, I would have insisted that we allow them. I expect you to take care of our plan so that I don't have to deal with complaints like this." Whether such a comeback would be fair or not, it's always better to try to head these issues off at the pass. This is just common sense, agsmith, so please forgive me.

cite = Code Section 6501(a) and (B)(2).

There is, in fact, a 3-year period of limitations on the assessment of back FICA taxes for an employer who has timely-filed Forms 941. As to what to do, the 941 instructions give you a good explanation of how to correct past under-withholding, under-reporting, and under-depositing of employment taxes.

First thing to do is to talk to the accountant who is responsible for this group's tax filings. Is there a C corporation? An S corporation? Is it a partnership? Who gets W-2s, who gets K-1s, and who gets neither (i.e., a 1099-MISC or nothing) ? These are the types of questions you should ask. Insofar as service crediting is concerned, don't you always have to ask the client what would make the most sense from it's perspective? It may be that if this group is only interested in the 401(k) feature, with perhaps a small match, or maybe even a safe harbor structure, there would be no need to keep track of service crediting for vesting purposes. Insofar as eligibility is concerned, certainly they could keep track of eligibility on an elapsed time basis. Just some random thoughts.