Hi,

My wife is a S-corp and our Financial advisors setup a Solo 401K and deposited $15500 in the account in Dec 08 and I am in the process of adding $6k to max it out. They offered to setup a TPA but asked them whether it was necessary as I did not think having a yearly $400 charge was a good idea and said I could fill up the info myself. I have a couple of questions.

1) Do I need to file a 5500EZ? I looked at the instructions for filing it and the section on "who might not have to file" it is not needed if total assets (I am assuming this is the value of the 401K) is less than $250K.

2) For sole proprietors the deadline for funding the 401k is up until the April 15 deadline or Oct 15 if an extension was filed, but the instructions said it is just at a later date for S-corps. What is the deadline for funding it?

3) Do I need a TPA?

Thanks

Large company (20+ ees) is buying 100% ownership of two smaller companies. Each of the smaller companies will continue their in-force health insurance plans, their own 401k, their own employees, etc. The only thing changing is the actual ownership of the companies. It is a controlled group I believe.

Do the smaller companies now need to offer COBRA under their small group plans because the owner of the companies is subject to COBRA?

There is no outstanding COBRA liabilities, no employee is being termed. Just wondering going forward how 20+ employees are counted in this situation and can't find it exactly.

I have several clients using a Default investment for participants who are not enrolled in the Plan yet but were due a Profit Sharing contribution. However, the default investment is not Qualified. What are the consequences, do they meet 404c?

I also have a client that has a ACA and has a default investment that is also not a Qualified Default Investment, therefore they don't give QDIA notices. What could be the consequences on this?

I am preparing a 1/1/2009 valuation. I first calculate an FTAP (after subtraction of the COB/PBF) balances of 65%. I can get an AFTAP of 100% if I there is a deemed election of all the COB and part of the PFB. Must the deemed election go only to 80% or all the way to 100%?

Or if I am at 93.5% must a deemed election be done to get to 100%?

Rev Ruling 2009-30 adds the following to our jumbled knowledge of Automatic Enrollments.

There are 2 'situations' provided

Situation 2

The annual increase does not have to be the first day of the plan year. This example uses April 1 rather than the plan year begin date of January 1, because salary increases are enacted on April 1.

Situation 1

I am not sure who dreamed this one up. the increase is the greater of 1% or a number of percentage points calculated as 30% of the percentage increase in the base pay. (rounded to the nearest whole percentage)

In this example the plan is not intended to be a QACA or an EACA, so the increase does not have to meet the uniformity requirement (e.g. some people will increase 1% each year, but someone with a big salary increase would increase 2 or more- definitely non-uniform for 2 people who otherwise have the same number of year, etc )- so the odd annual increase is ok.

C'mon - which one of you characters out there are setting up plans like this?

"Never argue with a fool, onlookers may not be able to tell the difference." - Attributed to Mark Twain

First off, this is generally a polite and courteous forum. Even "heated" debates manage to stay w/in the bounds of general decorum.

However, all forums are subject to the occassional person who posts for the simple sake of argument or, worse, for the simple sake of getting a rise out of another poster. A person making posts like that is sometimes referred to as a "troll".

The best way to respond to a troll is to not reply at all. Rather, if a post is sufficiently inappropriate, then use the "Report" button on the lower left side of the post.

I understand that Key/HCEs can be discriminated against, and don't have to receive any Safe Harbor match if the document so states. Based on the formula, one of the partners should receive approximately $8k in safe harbor match, but only wants to put in $5k for himself. Can he do this?

Last year we bought two small TPAs, under $250,000, that had old software and limited to no website service. Upgrading them to our software and the expanded services we offered worked out great. Both were close to us and we sorta stumbled into them. We would like to find more but haven't been able to find any merger firms that do deals that small. The firms we have come across have fees that start at $80,000K plus. Anyone know of any firms that facilitate small deals in the under $250,000 range?

Have an existing calendar year profit sharing plan where a 401(k) provision was added effective 9/1/08.

I am pretty clear that for ADP testing purposes, I have the option of using either full year comp, or comp after 9/1, for purposes of the ADP calculation.

My question is really a 410(b) one. If I have individuals who terminated before 9/1, can I still count them as benefiting under the 401(k) provision? I would think not. Even though the 401(k) is open to all nonexcludable employees, I would think I may still have a coverage issue here.

Any thoughts? I have to think this has been asked before, but as usual, my search comes up dry. I am hoping there are others out there with no life who are working this weekend.

Dog

A large fully insured group health plan providing mental health and addiction benefits renews its contract on October 1st each year. Its benefit year which tracks deductions and out of pocket maxima and the calendar plan year coincide.

Is the compliance date January 1, 2010 or October 1, 2010 or ????????????????????

P.S. Most employee benefits attorneys and consultants as well as EBSA associates have no clue that this issue even exists!!!!!!!!!!!!!!!!!

P.P.S. Please provide citations acknowledging the regulations due out by October 3, 2009 don't exist even in proposed form

I work on the 5500 for an ESOP that hasn't made a contribution in years. Every one is 100% vested. There are around 50 participants with balances but that number would be over 100 eligibles which would share in a contribution if one were made. So we've filed a Schedule H with an audit.

Now they have decided to freeze the plan. Since the extra eligibles will never receive a contribution or have a balance in the plan can we go to a small plan 5500? Technically are those who were once eligible but will now never receive a contribution still counted as "participants" for 5500 count purposes?

Thanks

I am adding 401(k) features to a client's profit sharing plan with a safe harbor nonelective 3% contribution. The plan only has 2 participants (company only has 2 employees). Both are HCE's. I understand that the plan is deemed to meet minimum coverage requirements. Is a safe harbor notice still required?

The CPA asks me" If Ms X has 2 full time employers who offer 401(k) plans, can she contribute the max to both plans since the employers are unrelated. Stupid me thought I knew the answer to be YES since practically every other kind of contribution(PS,MP, DB) would be a YES. Of course I was dead wrong. This went on in both 2007 and 2008. ANY IDEAS WOULD BE APPRECIATED!

Sincerley,

Imbarrased

Here are the facts:

Company A: Father owns 100%, son 1 (VP of comp. A), son 2, son 3 all receive W2 compensation from Company A

Company B: Son 1 owns 100% and receives W2 compensation from Company B (W2'd from both companies) -- no other family members work for Company B.

Based on this simplified scenario, could you tell me if there is a control group here? Would Son 1 be considered a 100% owner for control group determination because of attribution? OR Would the Father's will actually come into play to determine whether or not Son 1 is creating a control group (i.e. Father leaves 80% of comp. A to Son 1)?

Thanks in advance.

I have a cash balance defined benefit plan which was adopted on Dec 1, 06. We bought the company (on Dec 1, 2008) that had created the plan and don't think a determination letter application was ever filed. We'll check with the IRS to be sure but wanted to know when do we file for the new plan. I realize a determination letter isn't required but assuming we want to file for one (that's another discussion) do we use the Cycle in which our EIN number fits (I assume that rather than the old company's EIN number). Is there some rule that we have until the end of the remedial amendment cycle in which the plan was adopted (I found various articles which seem to suggest that)? ANy ideas? Silly me I called the IRS - they'll get back to me in 15 days if at all.

Thanks

One of my plans failed the ADP test in 2006. Corrective distributions were made. We later discovered that incorrect compensation was used. The test was rerun and now we see that too much money was "distributed" to HCEs earlier.

Does the method to correct ADP/ ACP failures also apply to this situation? If not, how would we correct this?

Thanks.

Are HCE elective deferrals made to a multiemployer plan included in the ADR for purposes of testing the employers non-union plan ?

Example: HCE participates in non-union 401(k) and makes elective deferrals of $2,000. Same HCE becomes covered by a multiemployer plan (a bargained plan in which the employer participates but does not sponsor) during the year and remains employed by same employer. HCE makes elective deferrals of $10,000 to the multiemployer plan. participants.

When testing employer 401(k) Plan, is the HCE's ADR determined based on the $2,000 contributed to the employer sponsored plan or $12,000 contributed to both plans?

A strictly read of the (k) regulations indicate only the contributions made to the employer (as defined in 414(b), ©, (m) or (o)) plan should be included in ADR. I have heard the IRS has said contributions to both plans should be included.

Any real life experience ?

Would suspension of benefits rules that are more generous than what the law requires be considered an "adjustable benefit" that could be reduced for a critical plan?

If not an adjustable benefit, what kind of benefit would the gap between the more generous rule and what is required under the law be called?

Cheers

Can someone give me an idea what a reasonable fee for a DB Plan audit is? $15,000??

a