We have a law firm with 9 current shareholders with ownership greater than 5%. There is one former shareholder who is receiving compensation based on revenue of his clients when he sold out (paid as W-2 compensation); he doesn't actually work. And there is another shareholder who has sold a portion of his stock, is now below 5%, who is "on call" for questions about his clients and is paid a monthly amount (about $200 a month) but otherwise not active. The problem is these individuals are eligible for top heavy and are now considered NHCEs for discrimination testing. I am considering amending the plan to have these individuals excluded from the plan by definition (retiring shareholders as an example). The Plan would easily pass coverage excluding them. Any thoughts?

Review considerations for structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors.

What needs to be done to add a Participating Employer to a 401(k) Plan on a Fidelity Volume Submitter (Adoption Agreement No. 1, if it matters)? I know we will need to amend Section 1.02(b) of the Adoption Agreement to provide for a Participating Employer (they haven't had one before) and also complete the Participating Employer Addendum to list the company (which is a recently acquired member of the controlled group). The general form of the Participating Employer Addendum provided, however, does not appear to include a place for the Participating Employer to sign. We plan to have a Board Resolution by Participating Employer authorizing participation in the plan but do they need to sign the adoption agreement or addendum anywhere? Also, it appears that Participating Employers are generally treated as Employers with respect to credit for vesting purposes? Is there any need to expressly provide for prior service credit for the Participating Employer or is that assumed by virtue of their participation? (I assume the later but wanted to confirm.)

A non-profit 501(c)(3) entity (not a church) has a 403(b) plan. They tell us they've allowed only employee deferrals to the plan since 2005. In 2004 and before, the plan allowed for an employer match. The plan does not allow hardship distributions, or loans. 2004 was the last year they filed a Form 5500. In 2006 they received a letter from IRS regarding the 2005 Form 5500; apparently they told the IRS they're exempt from filing because only deferrals are now allowed. Is it possible this is a non-ERISA plan? Or should they have continued filing 5500's after 2004 because the plan had already become an ERISA plan due to the match?

I have a small S-corp consisting of 2 employees, my wife and I. My desire is to retire in 5 to 6 months at age 62. Currently I have a defined benefit plan administered by a large firm. Due to significant market gains over the last few years, the plan will be over-funded by about $800K to $1M at the time of termination. Both employees are at the 415 limit. From what I can find, a 401(h) plan seems to be my best option. I plan to roll over all excess assets into the 401(h) plan at the time of termination as per Code section 420(f)(C)(i)(2). Unfortunately I am having trouble finding someone to set up this plan and administer of it. A local pension firm suggested I use this forum to perhaps find someone with experience in this area.

I am currently advising a client with respect to some potential prohibited transactions inside a self-funded group health plan. Part of that conversation has turned to a discussion about hiring an independent fiduciary. What are some names of companies that offer independent fiduciary services to self-funded health plans?

What's the impact on nongovernmental 457(b) plans of the new 21% excise tax on $1,000,000+ of compensation paid by exempt organizations? (All 457(b) distributions are excluded for the "excess parachute payment" tax.) The new Code Section 4960 applies the $1,000,000 excise tax on "so much of the remuneration paid ... by an applicable tax-exempt organization for the taxable year with respect to employment of any covered employee in excess of $1,000,000.... For purposes of the preceding sentence, remuneration shall be treated as paid when there is no substantial risk of forfeiture (within the meaning of section 457(f)(3)(B)) of the rights to such remuneration." The term "remuneration" is defined as "wages (as defined in section 3401(a)), except that such term shall not include any designated Roth contribution (as defined in section 402A(c)) and shall include amounts required to be included in gross income under section 457(f)." I've seen some commentary that nongovernmental 457(b) plan balances will be included for purposes of the $1,000,000 excise tax when they are no longer subject to a substantial risk of forfeiture, i.e., when they become vested. But Code Section 4960 only references immediate inclusion of amounts that become vested under Section 457(f). Separately, deferrals or contributions into nongovernmental 457(b) plans are not "wages" under 3401(a). But distributions from nongovernmental 457(b) plans are "wages" under 3401(a), so it seems to me that all contributions (deferrals or employer contributions) into nongovernmental 457(b) plans would not be included, even when vested if later, but that all distributions from nongovernmental 457(b) plans would be counted in the year of distribution. Am I missing something?

I represent a spouse going through a divorce. His wife has a FERS benefit and he is getting half. He wants a survivor annuity (he insists he will live longer than his wife; that's his call, not mine). To make sure he gets the maximum, should I give him 1/2 of the gross annuity, self-only annuity, or net annuity? It seems to me the gross annuity is the self-only annuity minus the cost of the survivor annuity, so those two choices are effectively the same here. I'm not sure though if the net annuity would be larger. I don't think it is, but I'm not sure. Any thoughts? Does it depend on other factors?