Can anyone refer me to an easy to understand example of the mechanical calculations of how cross testing works. I'm trying to explain the concept to an engineering firm. I know it will be an uphill battle, but wish me luck anyway.

The son of a 50% owner has worked part time. In 2000 and 2001 he worked 1000 hours during each of those calendar years. In 2004 he attained age 21 and his entry date is 7/1/04. However, he is in Iraq.

Do I include him in the ADP test with zero comp and zero deferral? Our document provider said "yes". I realize that there may be Userra issues once he is back home, but am concerned about his being in the test with zero, zero. Having him in the test, of course, helps the HCEs.

I trying to determine whether an owner is a Substantial Owner and would have the ability to waive a portion of his benefit under a PBGC standard termination.

The businesses covered by the plan are owned 100% by a privately held holding company. There are 3 classes of stock (A common, B common & Preferred) of the holding company, and about 19 relatives who own various shares of each class. Both the parents and children of the owner in question have stock in multiple classes. There are a total of 10 shares of A common stock, 1,000 shares of B common stock and 4,900 shares of Preferred stock.

What determines whether or not you "count" the shares as ownership for this purpose? Is it only voting rights? Control of some fashion?

I don't have a copy of the articles of incorporation, which I suspect would spell out the various rights of the classes. I can certainly request additional information, but I'm not sure what question to ask.

Thanks!

Is it possible to obtain a copy of a plan document from the IRS or some other agency? Presumably the IRS might be the only option for a modern document and only if submitted as part of an FDL application.

We have a 401k Cross tested SH plan. Employees receive 3% SH contribution starting on the first day of the month after 90 days of employment. The plan has a last day of employment provision for Profit Sharing. The company is providing an additional 3.5% for PS resulting in a total 6.5% (3% SH and 3.5% PSP).

My interpretation of the Gateway Minimum is that all NHCEs entititled to the SH would also be entitled to 2% of the additional 3.5% PSP. However, the law appears to allow us to disaggregate the plan and potentially exclude the people who have not satsified statutory service (<1 year) from receiving anything other than the 3% SH. I think.

Question, if we disaggregate the plan, must we run separate 401(a)4 test for each of the two disaggregated plans? Or can we disaggregatet he plan to demonstrate coverage and then run an (a)4 test for the entire plan? Or am I totally off base here?

I have a 401K through Merrill Lynch which was my last employers 401K provider. I currently have about $1400 in it and right now have a desire to withdraw the money and am willing to take the 20% fee hit (for withdrawing) and then the 10% tax hit which would leave me with around $1100. I will be using this money to iron out some debt and straighten a few things out.

I have a desire to continue to invest later in life, but would like to iron out debt so that I could invest more in the future. Basically, withdrawing my 401K would be allowing me to jump start on a money management program and iron a few things out.

What is your advice/insight?

Thanks

IRS Model Tax Notice

What recourse do we have when we have a plan that has been terminated and there is one person who does not return paperwork to have his funds distributed? His balance is a little over $13,000 at the present time, so he doesn't qualify for the automatic cashout? We know where he is, we have sent him certified mail which he signed for, but he won't respond to our requests to fill the paperwork out so that we can distribute his funds and finally close the plan!

I have written a memo to myself (see a later message in this thread for its text) listing the consequences of lowering the cash-out limit from $5,000 to $1,000 to avoid automatic rollovers. I would appreciate corrections and additions.

Does the IRS have to be notified whether an individual took RMDs during the year or just that RMDs were required to be made during the year?

The plan uses an "hour bank" to determine

eligibility for coverage. (160 hours of service

buys one month of coverage.)

A plan participant is returning to work after a 15

month deployment. When he left, his dollar

bank was frozen. Upon his return, coverage will

commence immediately with no waiting periods.

Here is the catch...since the member has transitional

TRICARE for the next 6 months, he does not want

the plan to recommence his coverage right away.

By using the government plan, he could build up

several months of surplus coverage hours in his

hour bank.

The regs don't seem to address this. My inclination

is to resume coverage immediately and coordinate

with TRICARE.

Any thoughts?

A Sub-S Corporation sponsors a cafeteria plan. The 100% owner and his spouse do not participate. There are two additional HCE's who have 0% ownership. When performing the first part of the ratio percentage test for eligibility, is the ratio percentage for the HCE's 100% because all of the HCE's (including the owners) are nonexcludable or is the ratio percentage 50% because the owners are precluded from participation due to Sub-S status?

Looking for info regarding RASD's. Any suggestions?

Does anyone know of a report that splits the total employer contribution into safe harbor and Profit sharing totals? We have a report that shows the amount by source by fund, but we are looking for a total safe harbor and total PS listed by employee.

Any help would be appreciated.

Carson

I'm specifically looking for Rev Proc 94-41. Thanks.

Can you convert a Roth IRA to the new Retirement Savings Account (RSA) or Lifetime Savings Account (LSA)? If so, how would it be done and would there be any drawbacks to doing so?

Suppose I have been building up a Roth IRA for several years. When I started the Roth I was single and my modified adjusted gross income (MAGI) was $50,000 a year. Thus, I was elegible to start a Roth. However, my new MAGI is now $120,000. According to Roth IRA rules I can no longer make contributions to a Roth IRA. My question is, then, what happens to the money that I built up in the Roth? Do I have to take it out or can I leave it in the Roth to continue to grow? And if my MAGI lowers back down below $110,000 can I go back to making contributions into that Roth?

I have a plan that has six partners; 5 individuals and 1 corporation. The tax return is pretty well prepared except for the profit sharing plan deduction. The individual partners all receive guaranteed payments that qualify as SE income. These payments are not in the same ratio as the partners income and loss percentages. I tried putting them in the Outside W-2 Income field in census which did cause Relius to include them in the partners eligible compensation, but it did not include them in the calculation of SE tax. Has anyone else delt with this?

Also, on the HCE/Ownership percent tab in census I can enter a partners income ration and pension cost ration. On this plan I calculated SE income prior to SE tax and retirement contribuiton and then calculated each partners relative share of that SE income. I entered that income in Relius (it did not include the portion of income allocated to the corporate partner and not subject to SE tax). This seemed to work great. Next I entered a pension cost ration that did eaqual each partners profit/loss ration per the partnership agreement. These ratios did not add up to 100% as the corporate partner will be allocated a portion of the rank & file pension costs as well. When processing the plan Relius allocated the entire rank & file penson cost to the 5 individual shareholders. Thus 100% of the rank & file cost were allocated to the 5 individuals even though their pension cost ration did not add up to 100%. Is there any way to get Relius to only allocate the percent of rank & file cost that is enterd in the pension cost ration in census?

A company has been dissolved and no one is left to sign on the final 5500 for their 401(k) which has been fully paid out to participants. It is quite possible there may be no way to come up with good census data for testing. What now?

i have a new client and an esop that is approx 8million

unleveraged, and an s corp.

approx 50pct is in stock, and other 50pct in equities

can the employer purchase a building with part of the available cash?

thanks so much for a quick response

sincerely

lw