austin3515

Still not following your OP. How could you get 8,000 for a $300 policy?

BG I cannot understand that last sentence which you have said the same twice. Not sure if you want to explain? You've got curiosity piqued.

In what way is your question different than the interaction between 402g and catch-ups? It's precisely the same application, just a different limit. I think it is border line impossible that your document would not permit this. Our Corbel doc defines catch-up as (notice that there is no distinction between 401a30 (which is 402g of course) and 415©: 1.11 "Catch-Up Contribution" means, effective for taxable years beginning after December 31, 2001, an Elective Deferral made to the Plan by a Catch-Up Eligible Participant that, during any taxable year of such Participant, exceeds one of the following: (a) a statutory dollar limit on Elective Deferrals or "annual additions" as provided in Code Sections 401(a)(30), 402(h), 403(b), 408, 415©, or 457(b)(2) (without regard to Code Section 457(b)(3)), as applicable; It then goes on to say: (d) Certain amounts are not "annual additions." For purposes of applying the limitations of Code Section 415, the transfer of funds from one qualified plan to another is not an "annual addition." In addition, the following are not Employee contributions for the purposes of Section 4.4(e)(1)(b): (1) rollover contributions (as defined in Code Sections 402©, 403(a)(4), 403(b)(8), 408(d)(3) and 457(e)(16)); (2) repayments of loans made to a Participant from the Plan; (3) repayments of distributions received by an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs); (4) repayments of distributions received by an Employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions); (5) Catch-Up Contributions; and (6) Employee contributions to a simplified employee pension excludable from gross income under Code Section 408(k)(6). So you never have a 415 excess. The very first penny over the statutory limit is NOT AN ANNUAL ADDITION. 1.11 makes it a catch-up contribution, and the next paragraph tells us that catch-ups do not count towards the limit. The argument of "well how do you know it was the 401k and not the profit sharing that went over the 415c limit" to me is a non-starter because only Elective Deferrals can be catch-ups (I've pondered this question myself). So, did you make a contribution over 415©? Yes? OK, then the profit sharing gets pushed up the 415 tube and the deferrals spill out of the top and into the catch-up tube. If the profit sharing was dropped in at the top of the tube and were left there above the 415 limit, then the reference to 415c has no effect. And it is well accepted that to interpret a law in a way that renders it useless would not be a reasonable interpretation. Your document probably uses similar structure. Check it out.

How is that not an insurance commission? Anyway, no skin off my back, I'm sure you did your homework. Also, I'm sure the insurance company would never pay a fee if it wasn't allowed to. I just hope you had a typo - $8,000 fee for the bond? Maybe I will start selling these bonds

I assume you have an insurance license though, correct? We don't. Seems to me the HArtford should just have a web-site to do this...

Is there a web-site from The Hartford or Travlers, etc. that I can provide clients where they can fill out a short form on line and get a fidelity bond? It seems to me if it was that easy it would be easier on me instead of telling them to call their agent, getting them involved etc. I'm sure the agents would love me for it.

I notice that the last update to this page was in May 2013, so it seems this has been around for a while. We haven't heard anything yet but maybe they were just getting geared up.

By the way, you cannot ignore it of course. But then it is so ridiculously obvious that it does not merit any discussion, in my opinion. I mean, DUH.

I read it on the Kiplinger letter myself...

A client (and RIA) just told me Kiplinger sent out a mailing saying that the IRS will be matching the deduction for ER Contributions on the 1120's with the Er contributions on the 5500. Apparently differences of > $1,000 will receive a letter. Let's ignore for a moment the number of false positives cash basis/accrual will generate. Does anyone have any literature on this? An IRS announcement, or perhaps a link to the Kiplinger letter?

I assume rolling the $500K to an IRA would not help, but I think I would ask that question of someone in the know. There are a lot of alternative investment IRA providers, just not sure if the same PT rules apply.

I agree about firing it up right away. I've never told a client they have to adhere to the 30 day rule in year 1 because if you go before 30 days its facts and circumstances, and the plan having not been existence until now is certainly a relevant fact

It might be moot though if there is a single legal entity employing everyone. Unless the seller's plan was amended coincident with the transaction to exclude the buyer's employees then those employees would be eligible if they had met the eligibility requirements. This has nothing to do with 410b6c. Some plans will exclude employees acquired through a 410b6c transaction, but the employees being excluded would not be covered by this exclusion (i.e, because they are not the "acquired employees."). I am also troubled by the fact that the plan was adopted after the acquisition. Upon the acquisition, the sellers employees all have a distributable event because they had a severance from employment. We therefore always word these things that the transfer of sponsorship is coincident with the acquisition (assuming of course we knew before hand ). I have no idea what this means from a compliance perspective but it sounds problematic.

Assuming there is not currently a 401k? It was not mentioned, but I thought it an important clarification.

How much is Grandpa looking to loan? If $50,000 or less Grandpa should take a regular participant loan from his account (assuming it allows for participant loans and he is still working). What he does with the money is a moot point. He can then turn around and loan the money to his Grandson's company.

Well that's the best darn observation on this topic I've heard yet.

Because what you are saying is that all previous amendments would be reviewed in the process?

Tom, what part of the notice suggests no other changes are permissible? My opinion is that the IRS agrees with Kevin C and I (and others) wholeheartedly. And that fact alone has prevented them from issuing published guidance banning the amendments. Instead, they took the backdoor, merely inferring that anything other than the above stated changes would not be acceptable.

Can an employer restrict the availability of a payroll deduction IRA to a select group of employees? For example, office employees vs. manufacturing employees? My concern is that they will blow their ERISA exemption through use of discretion regarding eligibility.

Bless you, just what I was looking for. I agree, no average benefits test allowed.

Kevin C, I'm glad to know I am not alone. I have said on numerous other posts that the IRS has not in any written document banned all amendments. They have only deemed certain amendments to be ok, but not to the exclusion of any other. I do believe Sungard however when they say the IRS's position behind closed doors is that they don't want to see any amendments. But they also said "it remains to be seen whether or not they will enforce this interpretation. Kevin C and I both took the same position here: http://benefitslink.com/boards/index.php?/topic/55034-amendment-to-safe-harbor-401k-plan/?hl=%2Bamendment+%2Bsafe+%2Bharbor#entry239595 Here is another one: http://benefitslink.com/boards/index.php?/topic/54837-401k-safe-harbor-and-mid-year-changes/?hl=safe+harbor+amend+%22participant+directed%22 In the latter I gave the following list of amendments which I think should cause no trouble at all:

Business is making an unusual allocation. The allocation looks to an outsider to be more or less arbitrary. We have cautioned them extensively on deemed CODA's so let us leave that aside for purposes of this question. Each employee receiving a unique contribution has a very unique job description. For example, one might be VP Finance and the other is VP Marketing. Another is the receptionist, another a machine operator, and you get the idea. When all is said and done, my coverage ratio is just 62%. I say "we're using reasonable business classifications and therefore I am permitted to run the average benefits test." I know I can for nondiscrimination/rate groups. My question is regarding coverage. Appreciate your thoughts!

If I do the amendment, and the IRS fines them $10,000 because they added auto rollovers mid-year (like my example?), they're going to sue me. I suppose to your point I should tell them in my letter, "the IRS has taken a bizarre position, and solely because you would like to add automatic rollovers (scoundrel!) your plan could be disqualified if you execute this amendment. We suspect the IRS is continuing its crusade against republicans in all walks of life, knowing that small business owners (who this rule overwhelming discriminates against) are most commonly affiliated with the republican party."

Although I tend to think there really is not as much change as Sungard suggests (not including their informal conversations with the IRS). “Except as provided …, a plan will fail to satisfy the requirements of section 401(k)(12) … and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in [the exiting rules], a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of §1.401(k)-1(b) if it is amended to change such provisions for that plan year.

That is a fact and not an opinion. http://www.relius.net/News/TechnicalUpdates.aspx?ID=1020