austin3515

Let's consider the likely possibility that there are (in my opinion) two correct yet mutually exclusive answers. I for one cannot find a flaw in any of the arguments listed above. Don't you just love this stuff??

I think I sort of implied that if you're going to limit the HCE's than it would be worth it - at least you're getting the intended result. But that's the only scenario in which I would use it. In my experience, that just doesn't happen that often though.

My opinion is that prior year testing sucks. It is incredibly cumbersome on most software programs*, and in my experience, no one is using it the way it is intended anyway. What you should do if you use prior year testing is communicate to HCE's how much they are allowed to contribute to basically ensure that the test is not failed. If you're not doing that, why bother with the added aggrevation. PLUS, any improvements in participation through education efforts, enhanced match, etc., have a one year delay in terms of benefitting the HCE's. PLUS you can't use QNEC's even if you wanted to. *In Relius, if you decide in the following year you want to run testing based on net comp, you have to "reverse eligibility" which is something a lot of TPA's are petrified of doing for fear that when reposted the outcome will change. Contrary to your last post fender, the first year is the only year prior year testing often makes sense, because you can use the "3% deemed ADP" for the NHCE group.

We were actually just tossing around the idea of including to the hardship form as part of the notice that deferrals will be suspended for 6 months. Thanks!

If I wrote plan documents, that's what I would say!! But the document just says "deferrals must be suspended for 6 months."

Is an employer required to notify a participant when/if the 6 month suspension period is up? I'm curious to hear how others are treating this.

You ended up at 764.25 because this is half of your gross. If you wanted to reduce your net pay by 1/2, you should divide your net check (Before Roth) by your gross pay, and that percentage is the amount you should elect to contribute. That should be pretty close.

See the row for 1440 - 1460 on page 44 of the link I gave you. Based on that, and based on 0 exemptions, you should have 204 withheld. You're withholding is actually pretty close to the withholding for 2 exemptions - maybe that's the cause of the difference?

But if you're comfortable paying the interest and penalties that MIGHT be assessed on a $4 excise tax, then proceed at your own "risk..."

Not nearly enough information man. What you need to ask your employer is, what are my federal wages for this pay-period? it should equal your gross pay (unless you have section 125 premiums). Then, based on the number of exemptions you've claimed on your W-4 you should be able to reference a withholding table to determine how much the federal withholding should be. The table to figure this out is in publication 15 - see that table on page 37. http://www.irs.gov/pub/irs-pdf/p15.pdf

Call an ERISA attorney at a good sized law firm, like Reish Luftman (sp?). I think they're supposed to be the best in employee benefits, but there are certainly others. This is WAY specialized in nature.

There is not one. But, I've heard through the grapevine (which is not reliable) that it costs the IRS $100 to process a 5330 - therefore, many have suggested that the IRS would not go crazy trying to find these types of returns. I think this lost interest on participant contributions revolution (in the past 5 or 10 years, I mean) has definitely created the need for a de minimis tax threshhold, but no such luck yet.

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...