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Pretty sure that the fact that the person was employed for only part of the year does NOT matter. As a non-owner, I think it is just the total paid that year.

well the IRS website http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Definitions has the following definition (but perhaps the financial manager knows something the IRS doesn't. if he does, he should tell them). Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2013 or 2014; $120,000 if the preceding year is 2015), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation.

"I was not talking about the coverage test, though, which is where the reasonable business classification would apply. I was going for the 401(a)(4) test, not the coverage test." I was talking about the coverage test when I talked about a 33% coverage ratio. After that I switched to the 401(a)(4) test, more commonly known as the rate group test. That is the one that comes in at 14%, which you agreed with, so ...... "(2/8)/(1/2)" is what I think the 401(a)(4) test requires. As you noted, most of the time passing it the way you described satisfies the rules, so those that do it that way end up on their feet. No whacks or laps or push ups.

All I can say is Wow, just WOW. As a long time lurker. This is my first post. I have used the great collective knowledge of the active participants here to increase my own knowledge. This has allowed me to be active on the retirement plan committees of small companies I have worked for and better understand the issues with my own SEP IRA and then owner-only 401k. I understand that this is a forum intended for professionals helping other professionals. Some other professional forums I have visited (on different topics) are very hostile to non-professionals. This is not one of those forums. Yes, the topics usually discussed are some of the finer points only administrators and TPAs are concerned with. Yet, the forum members seem very willing to help the occasional end user with their concerns. I would hope that the members do not associate kckid with the typical end user, and continue to help that occasional post. Especially, where the poster is receptive to the advice and provides the relevant information asked for. I just want to say thanks to Mike Preston and others here who have sacrificed their valuable time to help other non-professionals.

Thought so.

With the plan under examination, SCP is only available to correct insignificant failures( Rev. Proc. 2013-12, Section 4.02). The criteria used to determine if a failure is insignificant are in section 8.02 of Rev.Proc. 2013-12. The agent may be unreasonable about how that criteria applies, but I would exhaust that possibility before moving to something more expensive. We had an IRS agent insist that if more than one factor indicates the failure is not insignificant, then it is not insignificant. There was a discussion of how the criteria is supposed to be applied in an IRS phone forum on EPCRS within the last few years. The speaker was the head of the EPCRS group and his opinion was more reasonable than the agent we had the problem with. The transcript should be on the IRS website.

The DB minimum is, of course, deductible. I should have noted that. Look at Q&A 8 of Notice 2007-28: Q-8. How does the combined limit of § 404(a)(7) apply when employer contributions to defined contribution plans (other than elective deferrals) exceed 6 percent of compensation of participants in those plans? A-8. When employer contributions to defined contribution plans (other than elective deferrals) exceed 6 percent of compensation of participants in those plans, the amount of employer contributions to defined contribution plans to which the combined limit of § 404(a)(7) applies is equal to the amount of employer contributions for the plan year less 6 percent of compensation of participants in those plans. Thus, the combined limit of § 404(a)(7) (i.e., the greater of 25 percent of compensation, or the contributions to the defined benefit plan or plans to the extent such contributions do not exceed the amount necessary to satisfy the minimum funding standard for the defined benefit plans, treating a contribution that does not exceed the unfunded current liability as an amount necessary to satisfy the minimum funding standard for each defined benefit plan) applies to the total of employer contributions to defined benefit plans and employer contributions to defined contribution plans (other than elective deferrals), less 6 percent of compensation of participants in the defined contribution plans.

Dear Johnny: The Plan requires employment status on the last day of the Plan Year to receive a contribution. As you recall, you drank the fizzy lifting drink and were fired because of that. Sincerely, Employer I like my letter better.

this may sound silly, but what does the document say? for example, in the basic plan document for FT William, in the section labeled forfeitures ...(re-employment) the document I am looking at has: (2) At any relevant time the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula: X = P(AB + (R x D)) - (R x D) For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time; AB is the Account balance at the relevant time; D is the amount of the distribution; and R is the ratio of the Account balance at the relevant time to the Account balance after distribution. ............ as a side note, I believe the software I use is hard coded as the second option, you can't even select which one to use, so ultimately the software would be wrong in this situation.

or have the other plan handle the excess deferrals

I would not use the expression "can he make catch-up contributions" I thought it was simply a matter of deferring, and then, if any of the deferrals were greater than a limit - 402(g), plan imposed limit, failed ADP test, those amounts are then treated as a catchup

You have to take into consideration that a lot of jobs for children, such as babysitting, lawn mowing, etc. are under the table for tax purposes. If the child is going to base the Roth IRA on the income, the income will have to be reported, probably as self-employment income. That may not matter for income tax purposes, but it will involve SECA taxes.

Taking a 60 day loan from your IRA or Roth is generally not a good idea. First, you disrupt your investments. Most of your funds should be invested. Second, you lose two months worth of tax sheltered growth/income. Third, you may stumble in getting the funds re-deposited, you forget, funds don't come to you on schedule, another "problem" comes up, custodian does not post the deposit in time, etc. And Fourth reason - there are so many alternative ways to get access to funds for just 60 days. A signature line of credit, getting a vendor to accept delayed payment (such as a roofing contractor), using a home equity loan, margin borrowing, etc.

I forgot to add, passing is the first step toward obtaining that valuable Smart Thinking Upstanding People Intelligence Determined so maybe someday you can have some great initials after your name

I see what you did there...