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exclusive plan rule


Tom Poje
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the rules say you are allowed to have a SIMPLE IRA and still allocate forfeitures to another plan. not sure of the reason for this, maybe because you are not deducting anything in regards to the forfeitures.

anyway, came across an indivual who had a DB. the DB was terminated and the excess assets were rolled into a new DC plan. so of course the question becomes: can you 'allocate' the excess assets and still have the SIMPLE IRA?

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How are the excess asset allocations treated from the DC plan standpoint...as "contributions" as opposed to "forfeitures" or something else?

I would think that would help answer the question....

'Course I haven't dealt with DB Plans in FOREVER and few if any SIMPLES.

Sorry I wasn't more help, Tom!

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Hi Tom - you're looking far more handsome than usual today. That new barber must be working wonders!

I would say no. The specific instructions say that you may not maintain "during any part of the calendar year another qualified plan with respect to which contributions are made, or benefits accrued, for service in the calendar year."

Since the DC suspense account money cannot be allocated except based upon compensation for the year or future years, (for example, if no compensation in 2008, then no money an be allocated from the suspense account to the individual's account) then I'd say this precludes using the SIMPLE. I don't see anything in Notice 97-6 to help. Seems like it would be a pretty aggressive interpretation to establish and deduct contributions to a SIMPLE under these circumstances. I can see the argument, I just wouldn't use it myself.

That's my story, and I'm sticking to it. HO HO HO. It's nice to have private message boards where free speech isn't censored so badly. Our daughter teaches high school, and had a couple of paper snowflakes on her window, along with the words, "let it snow." School administration told her she had to take them down because, "They could be associated with the Christmas Holiday." Which of course is unmentionable. Sheesh...

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my leanings are you can't 'allocate' the $ either, but the IRS has said you can do forfeitures - and those would be based on comp, so its a strange situation that is not written up anywhere I know of.

I know transfers and rollovers dont violate things either, but I am not really sure if that would refer to this situation either.

the 'release' of these dollars is not deductible, so they act like forfeitures, and maybe in one sense of the word they are 'SIMPLE' then.

as for Christmas, I heard one school banned Rudolph the Red Nosed Reindeer, because it mentions

"Then one foggy Christmas Eve", and that is pushing religion on someone.

I say BAH!, but then I am a Grinch, so what do I know? (I was well pleased with hair this year, lovely shade of green, don't you think.

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Yeah, I don't really feel comfortable with the forfeiture angle. A forfeiture is based upon a non-vested benefit. In this case, it is just overfunding being transferred to a DC plan, so there was no forfeiture of a benefit. I'd instead argue that the allocation to the participants' accounts is in fact tantamount to accruing a benefit. And I follow the same "logic" with a transfer or rollover - these are referring to specific participants' benefits, and I don't think this qualifies either.

'Twould be interesting to see how the IRS would rule if a PLR request was made.

Be careful carving that roast beast!

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I was hoping Garl Lesser would answer since he knows everything about SIMPLEs. technically you really aren't funding the plan - the $ are already there, so it is a bizarre situation.

as for carving the roast beef...well, not from this grinch.

by the way, that really is me. I have to do 'extra' stuff for the company Christmas party.

while I don't do the roast beef, I have made a bunch of different cookies, plus they get 3 types of homemade bread (the best is a walnut-paste filled bread) oh, plus the chocolate covered pretzals and whatever else I decide to put together in a colorful Christmas bag.

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A man after my own heart. Send me the leftovers...

Many years ago, I informed our kids that Santa would really prefer Champagne and shrimp-with-cream cheese sandwiches(with shallots and a little mayo and tobasco stirred into the cream cheese) to milk and peanut butter sandwiches. This worked very nicely, although at a very early age, our daughter asked Santa to leave her "a few drops of Champagne."

One of the very few good ideas I've ever had.

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sorry, with 15 people in the office, there are no leftovers. I barely get to sample anything I make.

(I do buy some sugarplums to give away, because it wouldn't be Christmas without those 'dancing around'

many years ago I was visiting my sister over Christmas, and I was given the task of hiding one gift behind the door (or where-ever) for my niece.

well 'Santa' left her a note to look behind the door. but that only led to another note somewhere else, to another note, etc.

my niece couldn't believe Santa would do something like that - Santa was really cool for doing that.

oh plus she had left some tiny tots candy for Santa, he ate all but the green ones because he didn't like that flavor.

the niece was really surprised, because those were some of her favorites.

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