betheeg

my client is 1 owner(100%) and 3 employees. one of the employees is her daughter. how can i name the allocation groups to exclude the daughter from being in the same group as her mother? how will she affect my testing? thanks for any help.

my client had a participant that termd in nov 2003. he had an outstanding loan balance. the plan doc states that the loan is due and payable upon termination. if the employee does not pay the loan back, should the 1099r be issued for 2003 or 2004(if there is a 90 grace period to pay it)? i just don't know when the loan technically is in default. thanks for any help.

company currently has 401k with only employee contributions. because audit costs are out of control (around $10,000) does it make sense to go to a 403(b)? can you restate as 403(b) or will 401k have to terminate giving ee's option to roll to 403(b)? any reasons to not do this? thanks for any help....

Are shareholders (who own more than 2%) in an s corporation prohibited from participating in a flexible spending plan? Does this prohibition also apply to a dependent care spending account? thanks for any help...

if i want to use top 20% paid group, how do i handle owners by attribution? i think when using this election you have to automatically include 5% owners regardless of comp. but does that include 2 sons that are only owners by attribution? thanks for any help....

i have always used 1000 hours for eligibility, vesting (year of service). i have a new client that has many part time ee's she wants to cover. is there anything wrong with using less than 1000 hours? i would think it is ok but wanted to double check first in case there is anything i am missing. thanks.

Total distributions should have been $344,000.00 (prior to 13,500 dep for error). Thanks for all the help....I appreciate it!

ok. good conversation. here's the facts of what happened in the original post. the amount the employer had to contribute was $13,500. this was allocated between 125 participants and yes, they did receive more than they were entitled to, the most extreme was a few hundred dollars. the error was discovered after some checks had been cashed, and trying to recover the checks and reissue would have been almost impossible. i was thinking it could be considered a contribution, but like already stated, it was allocated not according to plan doc. any other suggestions on how to report this on 5500?

it does sound strange, but yes, it happened. they were paid out with checks, all of them were sent at once, and then their error was discovered. the employer had to make an additional deposit to the account to cover the mistake. so, any ideas?

when assets were distributed from a terminated ps plan, the loss was understated and participants were paid out more than they were supposed to be. what should be reported on the final 5500?

i have a client that is a sole proprietor. he has set up a 401(k)/ps plan for 2002-he is the only participant. he os over 50. can he contribute $12,000 in deferrals as well as make a 25% profit sharing contribution using his sch c info? if so, do you take deferrals out of sch c figure when calculating the 25% ps contrib? sch c info is approx $91,000 (line 31). we have mixed opinions in my office and cannot find any answers in our resources.... thanks for any help.

when converting a mp plan to a profit sharing plan, are you required to give a new plan number to the plan? example: if the xyz mp pension plan was plan 002, if that plan is now the xyz ps plan, is it plan 003? also, am i required to file a final 5500 for the mp plan? i am inclined to say no since there was no termination and the assets were not necessarily merged....but i'm not sure. can anyone help? anything else i could be missing? thanks....

i can see where my question was confusing. sorry about that. thanks for the help.

I went to a corbel cross testing seminar back in November and have materials that say you can use the 3% nonelective safe harbor contribution to help satisfy the minimum gateway requirements and the top heavy requirements. I'm not trying to sound like a jerk, just telling you what it says in the materials I received.

I realize that discretionary match cannot be used for minimum gateway. However, in a safe harbor 401(k) using a nonelective 3% contribution, you can use that 3% contribution to help satisfy the minimum gateway and top heavy. The match contribution that is being used that I referenced in my original post is an accepted safe harbor match, so can that also be used to help satisfy the min gateway and top heavy, and, if so, how do I handle my original question?

I have a safe harbor 401(k) with the basic match (100% match up to 3%, 50% up to 5%) to only those who defer. For my new comparability profit sharing allocation, say I want to make a contribution to all eligible NHCE's of 5%. Does that mean I give 5% to all NHCE's and end up with the ee's that get a safe harbor match getting a higher % of compensation, or do I just need to allocate the amount needed to get those ee's that get a safe harbor match up to 5% of compensation so that everyone ends up with the same % of compensation? this might sound like a dumb question but it's my first plan not using the nonelective match for safe harbor. thanks for any help.

thanks for the help Tom!

can you expand on possible exception #1?

does a participant that is only entitled to a top heavy contribution need to be bumped up to 5% for gateway requirements?

if a plan excludes compensation prior to participation for safe harbor 401(k) contributions as well as discretionary profit sharing contributions, do i have to use full year comp for non-dicrimination testing?

what is required for documenting a change in plan trustee? just a corp reso or do i also need a plan amendment?

rollover from qualified plan has been completed during 2002. While doing 1099 for distribution it has been discovered that it was rolled into a Roth IRA which you cannot do. Any advice on what to do from here? Is distribution now considered a lump-sum subject to tax and penalties? thanks...

For 2002: 1. what are the maximum deferral limits in a SARSEP? 2. what is the maximum % of compensation you can use? 3. do you include deferrals in compensation when calculating the max % or do you have to deduct them like you used to? 4. do SARSEP's have to do ADP testing? 5. what is the allowable catch up contribution? Also, I have read that the maximum deferral amt may have been changed to 25% of taxable comp....20% of gross comp. Can someone explain this to me? is this the same as the 13.04% when it was 15%? (not that i really understood that either.) I don't deal with SARSEP's at all, and don't know if they were included with the EGTRRA changes. I think I read something some time ago with some technical corrections made to EGTRRA included with the JCWAA which affected SEP's, but would like the opinion of someone with more experience with SARSEP's then I have before I jump to any conclusions. thanks for any help....

thanks for the info Tom, your thorough responses are always very helpful and appreciated!

i thought i heard somewhere that using the 5.7% - full TWB formula was deemed to pass general non-discrim testing.... can anyone confirm this? thanks