Someone is telling me that a small business can have 105 and 125 plans in place that the same time. Can anyone say for sure (citing the source) if this is true or not? The company has employees other than the owner and spouse.

If an individual contributes to a 457 plan with the understanding the individual will be retiring in April 2005 and has a DOB of 1/31/1939 can the individual use a catch-up provision in 2001? Why or why not? Likewise, what catch-up options would he have starting 2002 with the new regs and the potential to also participate in a 403(B) with the same employer?

I am starting a small business and haven't decided between LLC, S-Corp, etc. I may have a couple employees besides myself, or may use independent contractors. Does my choice of entity effect what type of retirement plans I can choose from - 401k, Simple etc?

I am starting a small business and haven't decided between LLC, S-Corp, etc. I may have a couple employees besides myself, or may use independent contractors. Does my choice of entity effect what type of retirement plans I can choose from - 401k, Simple etc?

Does anyone know of a study of survey done that can give some general information concerning SDA's? Looking for basic info.

1) how many plans offer as an option?

2) what are the major issues, liabilities, etc.?

3) industry specific info.

I've searched the board and have come up with very little. Any help appreciated.

Jim J.

Can a third party administrator also serve as the plan administrator (ie. approve loans, hardship withdrawls, sign form 5500)? If so do many TPAs take on the the plan administrators role? Does fiduciary liability increase greatly for serving as the plan administrator with sign off authority?

I heard Suze today talk about a 22 year old that saves $100 a month in a Roth Ira would have a little over a million by the time they were 65 and that the same person who waits uintil they are 32 at that amount would only have $700,000. Does anybody know how I at 32 could have a million by 65 or where I can go to help me figure out what I need to do?

A DB plan requires participants to contribute 2% of pay, in order to receive a benefit of 1.2% of Final Avg Pay x Service. If the participant does not contribute, he only recieves a benefit based on the formula $10 x Service (max 10 years considered). The plan covers all employees of the employer; however, only 56% of the participants have elected to make contributions. All the HCEs have elected to contribute.

I am not sure at this time if the plan would pass 401(a)(4) testing if all employer-provided benefits were tested together. It had been my belief that a plan having multiple formulas such as this would need to be restructured and tested as separate plans. However, the contributing formula can not pass 410(B) on its own (fails ratio test, since <70%; and fails Avg Benfs Test, since their is no classification that can be used to satisfy the reasonable test of the Nondiscriminatory Classification Test).

I have heard several people say that since the more generous benefit formula is available to all employees at their election to make the contributions, there are no coverage issues. I am having a hard time accepting this, and I would appreciate hearing how others would tackle the 401(B) and 401(a)(4) testing issues for this type of plan.

Anyone have any advice on taking on a Puerto Rican Retirement plan, a section 165. Ive just started looking in to whats involved but I don't want to have to commit significant time of training for someone, for a single 50 life plan, but if it can be run smoothly with reasonable training time We'd look into it. Any advice would be welcome.

Thanks

Greetings,

For people 50 and older who can make an additional $1,000 contribution to their 401k or 403b next year: can they contribute the extra $1,000 regardless of their income (even if they are only eligible to contribute say $2,000 to their account)?

Regards,

Jeff Salisbury

How are benefits computed for non 5% owners once a participant retires well after attaining age 70.5? (The plan has been amended to defer payments for non 5% owners to retirement which could occur after attaining age 70.5)

I have notice 97-75 which defines the actuarial increase start date (namely the 4/1 following the calendar year after attainment of age 70.5, or 1/1/97 if later.) I need assistance in interpreting Q&A 2 and 3 of this notice. My initial reading tells me that once the person is beyond age 70.5 (ex. retires at 75), that the benefit he will receive beginning at 75 will be no less than the actuarial equivalent of the benefit he would have received on the 4/1 following the calendar he attaind age 70.5, plus any actuarial adjustments thereafter until the age he retires (age 75 in my example). In other words, it doesn't matter if the person received a suspension of benefit notice at age 65 (NRA), the fact of the matter is that at age 75, his benefit needs to be computed as if no suspension notice had been provided. Has anyone had to deal with this yet?

Thanks!

doesn't a third party administrator have liability when they have not received premiums from an employer for several months, yet they are still verifying insurance coverage to providers as covered?

Employer wants to make sliding scale contributions to employees' FSAs, based on longevity of employment; e.g., $500 for employees w/0-2 years of employment, $1,000 for employees with 2 - 5 years, and up.

Only one HCE is employed, that person is not necessarily in the highest longevity bracket.

Presuming the plan passes the key employee concentration test, would this arrangement be permissible?

Can an employeer who has had a policy for many years to provide BCBS Major medical coverage for their employees and retirees at no cost begin to provide the same coverage only it the retiree elects to pay for this coverage? In addition raise the prescription co-pay from $5 to $10 then change it again to $10 for generic and $20 for name brands

It appears that it is permissible to have a SEP that is integrated with SS and that has a flexible yearly contribution. However, for a sole proprietor it seems that calculating the allowable contributions set ups a circular reference (in addition to the normal one that limits the deduction to 13.04%). With a set, required %, the calc seems pretty straight forward, but with a non-required, flexible contribution, I seem to run into a deadend. It seems to require that the gross contribution amount be selected first and then the employee allocations calculated in a multi-step process that does not allow for the self-employed limitation. Or am I just confusing myself on something simple?

[Calculation shown below based on facts in later posts - GSL]

Notice 2001-56 was released this afternoon.

The effective date for the new definitions of key employees for top heaviness is determination years in 2001 (to determine top heaviness in 2002).

The effective date for mandatory nonparticipation following a hardship distribution includes distributions in 2001. Therefore, the period may end at the later of 6 months or 1/1/2002.

Also, Notice 2001-57 contains the model good-faith amendments (and adoption agreement language) for all of EGTRRA.

Notice 2001-56 was released this afternoon.

The $200,000 compensation limit may be applied retroactively when computing average compensation for an accrued benefit calculation in 2002.

I know that a matching contribution need not necessarily be a component of the same plan of the elective deferral (or, rarely after-tax) contribution. For example, I have commonly seen plan designs where an elective deferral has been deposited into a 403(B) plan, while the matching contribution was made to a 401(a)plan.

Following this logic, can "matches" into a 403(B) plan be made contingent on contributions to non-retirement plans? For example, Employer X wants to provide participants with a choice of making an elective deferral into a 403(B) plan that will be matched in the 403(B), or making contributions to a 529 educational savings account that would also be "matched" in the 403(B). Is this permissible? I suspect not, but I can't find a cite that would prohibit such a "match"?

If such an arrangement is permissible, would the 403(B) "match" be considered a matching contribution for testing purposes? I suspect not, since Reg. 1.401(m)(B)(4)(ii)(A) defines matching contributions that are made "on behalf of an employee on account of the employee's elective contributions or employee contributions for the plan year."

Any insight that anyone can provide will be greatly appreciated, as always!

Question on an independent contractor with possibly leased employees -

Situation - I have a group of four doctors and each is an independent contractor for a clinic. The clinic has a staff of approximately 10 employees. There is no plan for the clinic staff and only one of the doctors has a plan (MP). Some of the clinic staff members perform services exclusively for the doc with the MP. They take direction and instruction from her. However, she does not hire or fire (but has the discretion to advise of termination or hire.) Any revenue generated by the doc goes 55% to her and 45% to the clinic. She receives W-2 income from her own company as do each of the other doctors. Client was advised several years back that the employees of the clinic are not considered leased employees, however, the CPA and office manager are concerned that there may be a potential problem. There is no leasing agreement between the doctors and the clinic.

Should the employees that work directly 'for' this doc be considered leased employees?::confused:

I'm going to tell this client to consult an attorney, but I'm curious for my own information. Client has both a money purchase and a profit sharing plan. 3 HC's, currently no NHC's. In 1994, they had a NHC who was a participant. Their certified census data for 1994 said the NHC terminated employment.

Lo and behold, it now turns out that this wasn't true. Don't have the details yet, but it appears that at that time, they shifted employee over to some sort of leasing organization, but continued to employ him full time. NO contributions were made for him in 94-97, when he did actually terminate employment.

My best guess is that this would have to be handled under VCP. (took me 20 minutes to figure out which letters went with which correction program - changed a lot since I last looked!) Possibly under VCO, but I'd be concerned that this would be considered an "egregious" failure. Any opinions on this? Also, since contributions under the money purchase plan were missed, will the client have minimum funding penalties as well?

Thanks in advance for any opinions you might have.