austin3515

Don't forget that PPA now allows non-spouse beneficiaries to roll over their balances. This is not without complications, but we can't have a complete discussion about non-spouse MRD's without at least mentioning it!! If anyone's interested, here is an aweseome write-up by Natalie Choat who is allegedly the kingpin when it comes to MRD's... http://advisor.morningstar.com/articles/do...2772&pgNo=1

The NHCE plan enables the HCE plan to pass coverage, therefore, they both must be aggregated. There's just no way a loop hole that large was left open...

WDIK, this is classic...

The two separate plans won't work... In order to avoid top-heavy aggregation it is required that you can pass coverage without aggregating (if memory serves, which I'm quite sure it does . A plan covering only HCE's would not be able to meet that criteria.

I don't think ruling out an ASG is as simple as the prior post may have lead you to believe. A-Org's and FSO's must be service organizations (i.e., capital cannot be a material income producing factor). Therefore, the home builder must be the B-Org. (i.e. bull-dozers, nails, wiring, plumbing, lumber are all capital), because B-Org's need not be service organizations. The B-Org is the one that must be "providing services historically performed by employees." However in your example it is the real estate training company that is providing services to the home builder, so IT must be the B-Org in an ASG. Therefore, the home builder must be the A-Org/FSO, which we already know it cannot be!!! So no ASG. Clear as mud, right?

He is the only owner with SE income (he owns 99% and his wife owns 1%) It was the LLC who adopted the SEP (as an aside, wouldn't it have to be, since contributions will be made with respect to the LLC's income?). I agree that amending the return doesn't in and of itself extend the due date, but let's say we all conclude that he really does have until he files his 1040 - then we would need to amend the 1065 to reflect those contributions appropriately on the K-1.

Guy owns an LLC with NO employees. He filed his LLC 2006 1065/K-1's by their original due date of 4/15/07. There was no deduction for employer contributions reported on the K-1's. He filed an extension, however, for his 1040 (which returm he has not yet filed) The question is, is it too late to make a SEP contribution for 2006 (plan is already in place). The argument in favor, of course, is that he is only taking the deduction on his 1040 since there are no employees.

Defintiely have to give him the 3% top heavy. Now, you could arbitrarily and for no good reason reduce his pay in the following year, or simply knock a little bit off that really big bonus so the net cost to owner is zero. The reality is that this happens, particularly with these highly paid executives. I'm curious to know what others think about this. Does anything ERISA preclude a business owner from paying an employee whatever they see fit?

Well wait a minute: Perhaps if we look at the literal definition of the Union Exclusion that will help-- you mentioned that they have joined the ranks of management. One of the conditions to exclude union employees is always that retirement benefits were the subject of good faith negotiations. So if these employees were not included in the negotiations then they would not be subject to the exclusion or the mandatory disaggregation.

It seems unusual that a plan would exclude union members other than union members who are HCE's. I'm wondering if the HCE's were never eligible for the office plan to begin with. IF the office plan simply excludes union employees (without any additional special language about HCE's) I'd say you've got a problem because your union HCE's didn't belong in the Plan in the first place. What's more, something about that provision smells a little like discrimination. I think it's a coverage issue because the "office plan" needs to disaggregate the union employees for testing. Your only covering HCE union employees so it would be impossible for you to pass coverage. Is the union plan maintained by the union itself or the employer? If it's the former, I'm not sure you can even aggregate the union plan for testing? So my questions are 1) are you sure the HCE's are allowed in the office plan and 2) who sponsors the union plan?

If you could provide a site, that would be great - I'm actually dealing with this exact situation on my own. Everything I saw led me to the opposite conclusion.

1) You need to covert Canadian Dollars to USD because the applicable limit is denominated in USD. 2) I like the site that you have indicated HOWEVER, I don't think that section applies because the employee DOES have US-Source income for part of the year. So take an example: John Doe from Canada transfers to the US on 6/30/07. I don't see any way around aggregating his compensation for the first and second half of the year to see if he is an HCE for 2008. The real interesting question is do you look at the Canadian compensation for 2006 to see if he is an HCE for 2007? I still think the answer is yes except for one thing that keeps nagging at my brain: If that's the case, then what is the point of the rule you cited?

McDonald's got rid of it for a reason...

From the 5330 instructions (Rev 10/04): The second tier tax is a 100% tax that is applied "if the initial "tax" is not corrected within the taxable period." I think the use of the word "tax" is sort of a typo as the surrounding text clearly related to correcting the PT--not sure how to "correct a tax"? The trick here is the definition of taxable period, which is the earliest of: a) The date correction is completed (sort of hard to miss this one) b) The date of a mailing of a notice of deficiency c) The date on which the tax under 4975(a) is "assessed" In my opinion, this could be interpreted loosely as follows: You only need to pay the 2nd tier tax if the DOL is the one that catches you. My recollection from DOL seminars is that in reality the 100% tax is almost never imposed - rather it is a big stick that the DOL can wield as a negotiation tactic. One thing is for sure, I have NEVER heard the DOL/IRS discuss this 2nd tier tax as it relates to late deposits, and I think the above is the reason why. It is important to note that the example (which is a fairly typical situation involving prior years) does not include the 100% tax.

It can definitely wait. The point of completing the affilliated employer sections is to include the employees of that employer.

Coverage doesn't care if they get a SHNEC or a PS contriubtion. They're treated as benefitting either way. Then you turn to nondiscrimination, and you need to run rate group testing because (probably) there are different allocation conditions on profit sharing then safe harbor. But, lucky for you, all of the nonexcludable NHCE's are receving the same 3% of pay that your HCE's are getting, so rate group testing is passed by default (i.e., because everyone is benefitting in every rate group). So with this plan design, you can never have any nondiscrimination/coverage issues EXCEPT: if the plan is top-heavy, you've blown the exemption by allocating profit sharing contributions. If only part-year pay is used to calculate the SHNEC, you'll need to give them an additionl top-heavy minimum.

What JSimmins is referring to in his first paragraph is "fail-safe" language - in other words, if the Plan is failing coverage, then participants not benefitting will automatically be brought in (one by one) until the test is passed. So the Plan, as written, will never fail coverage. If your plan has it will read something like "if the plan does not pass 410(b), then..." If your plan does not have this, it could be good news - plans with fail-safe language are precluded from using the average benefits test, which you might pass!! B/c HCE's are generally older than the employees, cross-testing the average benefits generally helps.

Agreed that your correction is passed due and you have qualifcation issue, but you don't need to involve the IRS. Check out the IRS's EPCRS correction program. You can definitely self correct this using the "one-to-one" correction method (assuming the other eligibility requirements are met). Basically what this says is that if your have refunds of $5,000 in total that you would contribute a QNEC to the employees of $5,000 as a "penalty" for not correcting it in time. I'm saying you can self correct, because under EPCRS, you have until the last day of the second plan year following the date on which the corrective distributions were required (Section 9.02), which gives you until 12/31/2008 to self-correct a failed test from 2005 EVEN IF THE FAILURE IS SIGNIFICANT. Here is a link to the IRS program: http://www.irs.gov/pub/irs-drop/rp-06-27.pdf

I've done this. I can't see how limiting the HCE's to zero discriminates in their favor. LEt's say he/she was not limited to zero and the ADP test was failed--the HCE would be able to retain AT LEAST the catch-up amount in the Plan, if not more. Okay, I suppose it might help another HCE keep money in the Plan, because of the ordering of refunds, etc. but I fall back on my original comment (i.e., limiting HCE's to zero discriminates against the HCE's).

Does she realize that the funds would be paid right back to her immediately?

IRS issued a ruling on how to calculate this (2006-38). http://www.relius.net/include/IRSPDF/IRR-06-38.pdf Here's Corbel's write up of this. http://www.relius.net/news/technicalupdate...?ID=343&T=P

Okay so the next time I came in, it defaulted to this board... If I could delete this posting I would... But kudo's to benefitslink for doing things right!!

Does anyone else dislike the new page layout? I gues the theory may have been put the most popular item towards the bottom to get more traffic on the "less trafficed" areas, but what a drag! Hey benefitslink, can you have in the user profile to default you to a favorite board (i.e., 401k plans)?

29 CFR 825.215 paragraph d(4) http://www.dol.gov/dol/allcfr/Title_29/Par...9CFR825.215.htm

The doc does provide that maternity/paternity leaves cannot cause a break, but it doesn't mention FMLA leaves in particular. Are there any sites on the Internet?