Can an employer amend a profit sharing plan mid-way through a given plan year to add a last day of the year requirement as a condition for receiving a profit sharing contribution? In other words, can this be retroactively effective within a given year?

Ordinarily, I would assume the answer would be no, but what if the "employees" in a given setting are actually affiliated employers responsible for making their own profit sharing contributions, the employee is terminating service prior to the end of the year and does not want to make a contribution.

Any advice or cites on this?

What are the requirements for a TSA if there are employer and employee contributions.

i.e, Testing, 5500 filing, etc.

Thanks

Do irrevocable waivers of participation by the Amish rise to the level of a religious order, which then keeps them out of testing completely? Note that the Amish also do not participate in the Social Security program.

For 404 purposes when performing a valuation how would the following 2 scenarios be treated differently:

1. The client makes a contribution that he does not deduct on his tax return

2. The client makes a contribution that he deducts, but he was not allowed the deduction.

In other words, would you consider both nondeductible contributions or just the first one.

timeline:

12/31/99 - PYE min contribution for 412 is $78,000

04/15/00 - files for extension of time to file 1999 return

05/21/00 - Employer files his 1999 return with a $0 deduction

08/11/00 - Employer funds his $78,000 (timely for 412 min funding)

08/15/00 - 1999 Extension expires

12/31/00 - PYE min contribution for 412 is $27,000

04/15/01 - files 2000 return with $105,000 deduction

02/03/03 - IRS initiates an audit of 2000

05/21/03 - 1999 year closes (3 yrs from actual filing)

08/15/03 - IRS gives notice saying $78,000 is disallowed as a 2000 deduction

I point out 404(a)(1)(A)(i):"amount necessary to satisfy the minimum funding standard provided by section 412(a) for plan years ending within or with such taxable year (or for any prior year)" as basis for deducting the amount in 2000.

IRS says 404(a)(6): "a taxpayer shall be deemed to have made a payment on the last day of the preceding taxable year if the payment is on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof)."

So they say that since it was deposited before 8/15/00, the extended deadline, it was ONLY deductible in the prior year (1999).

Does this sound right? Thanks for wading through this and making any comments.

Have you seen situations where a CoC accelerated distribution provision in the NQ plan has paid the benefit and triggered or added to the 4999 excise tax under 280G? Have you seen other nasty CoC provision consequences?

I hear some companies haved paid the benefit, grossed up the executive for excise tax, take the limited deduction, and just move on...wow!

Prospective client who is age 72 and trains horses. His schedule c net income is $60,000. Accountant and myself are trying to determine best retirement vehicle for him. I understand he is limited to the TEFRA factor or 20%. Would that be his only available deduction($12,000)? Could he possibly put in more with a 401(k) which in this case i believe is called a Uni-K for 1 part. sole proprietor? What's to keep him from deferring $12,000 plus the $2000 catch up and then doing some sort of match/profit sharing? Could he do it and just not get a deduction? Also, he would be subject to the RMD's as well, correct? Did I provide enough information? Thanks

I have paired electing church pension and profit sharing plans for an association of churches who may choose to adopt (or not) the association plan. Must this plan be submitted for a determination letter for reliance or although it is electing, is submission not necessary.

Also, are there any good reference resources for this (or any other) type of church plan? I expect the group of adopting churches to grow significantly within the next year or so.

Thanks

Sponsor of a small defined benefit plan wants to amend the plan to allow retirees in pay status to elect another optional method of distribution, provided that all necessary spousal consents are obtained. Does anyone perceive any problems with this proposed change?

IRS and DOL announced today that people affected by Hurricane Isabel have been given an extension of time to file Form 5500. Does anyone know if the GUST restatement deadline was extended for similarly affected people?

Thanks.

Age-Weighted PS Plan uses an allocation formula which would satisfy the "gradual age or service schedule" requirement for cross-testing except for one twist -

the three participating employers each determine the amount of their PS contribution independently. The PS contribution for each employer is then allocated solely to the employees of that employer. So you end up having employees who work for different companies, but have the same age and service, who are getting a different allocation %. The participating employers are a controlled group, so they are all tested together as a single employer.

Does this design satisfy the gradual age or service requirement, or do they need to make a gateway minimum contribution?

Is it acceptable practice to deliver SAR's with paychecks, or do they have to be sent via US Mail?

Please advise asap. Thank you so much!!

For the life of me, I cannot find official language outlining the RAP for a 403(b) plan. Checked all over this site, too, after coming up empty searching the Rev. Procedures. Can anyone provide some assistance? We rarely have a 403(b) issue to address.

Thanks a million!

I am reviewing a Form 5500 for a multiemployer holiday fund that terminated. At the termination, excess assets were reverted back to the participating employers. On the Schedule H, where should the reversion amount go?

I work for a TPA and would like to be able to sign the form 5558's for my clients. We always seem to have a few problems with employers who fail to file the signature ready 5558's we mail them.

On the signature instructions for the 5558 it indicates that "a person enrolled to practice before the IRS" may sign the form.

What does "a person enrolled to practice before the IRS" mean? Do you have to be a CPA or attorney? - I am neither. How do you go about becoming a person enrolled to practice before the IRS?

Back in 92 I was assigned a permanent representitive number by the IRS which I was to use whenever I filed a Power of Attorney form - does this qualify me as an "enrolled person?" Does it only count when I use the power of attorney?

I am getting myself confused here. Company A sells part of its stock to Company B. Prior to the sale the companies are not related. As a result of the sale they are not part of a controlled group.

A and B each have their own 401k/PS plans. Co. A wants to merge its plan into Company B's plan.

Co. A needs to prepare an amendment to merge but do they actually have to do a separate termination amendment? Is Co. A's plan actually "terminated" as a result of the merger?

If the merger occurs in the middle of a Plan Year, I'm thinking that Co. A will prepare a plan valuation based on compensation etc. as if the Plan Year were 1/1- date of merger. Is this correct? Does this mean that the 5500 would have to be filed as if this were a short year?

Thank you.

I am reviewing a Form 5500 for a multiemployer holiday fund that terminated. At the termination, excess assets were reverted back to the participating employers. On the Schedule H, where should the reversion amount go?

We have a profit sharing plan that terminated 12/31/01. Same employer adopted a new DB plan effective 1/1/01. Can the PS money be transferred to DB plan as a plan to plan transfer without distribution election forms?? Thanks.

A client employs several Amish carpenters. These carpenters irrevocably waive out of the plan due to their cultural/religous beliefs. For thos not familiar with the Amish, they also do not participate in the Social Security program.

When it comes to testing compliance in the plan can these people be totally ignored under the religious organization rules or must they be included as zeros in the calculations?

I've just run across a plan which has filed schedule i for the past 3 years, with beginning of year participant counts of 106, 109 and 114 respectively. There has not been an audit performed using the 120 participant count and schedule i "exemption". Any thoughts on audit implications?