rfahey

WHat is the definition of compensation for calculating SIMPLE dererrals in a SIMPLE IRA PLan ? Does it exclude Section 125 cafeteria contributions ? ADP payroll service is advising clients that compensation should not include Section 125 plan contributions. THanks.

The plan document says that you get a profit sharing allocation only if you were employed on the last day of the year and worked a year of service ( but it them goes on to say that this can me modified if certain coverage things are not met ) It is a profit sharing plan - not a 401K. There are only 3 participants. THe doctor and two other common law. ONe of the common laws terminated in 2011 with about 600 hours. So I am not sure if she gets an allocation ( regular or top heavy ). THank you.

I have a small profit sharing plan using a non standard document. The owner is in the plan and 2 common law employees. One of the employees terminated in 2011. Is she entitled to an allocation if : She worked under 500 hours ? She worked 800 hours ? She worked 1200 hours ? Thanks, Bob

I am sure this has been posted before but please bear with me: Individual is covered by his employer's 401K plan where he defers the $22,000 maximum in 2011 ( over age 50 ) and also gets a sizeable profit sharing contribution ( $30,000 ). THis is a company that he does not own. These are within his 415 limits and this plan is monitored by a TPA carefully. He also has a side business unrelated to the above where he has a solo 401K plan for himself only and earns about $100,000. I don't believe he can contribute to the elective deferral portion of his solo K plan. But I do believe he can contribute the full 25% profir sharing to his solo K plan. Is this correct ? THanks

Would it matter if husband and wife have anew baby now ?

Company A owned 50% each by husband and wife has had a SIMPLE IRA plan for several years. THey set up another company in 2010 owned 25% each by husband and wife and another 25% each by 2 other non related businessmen. Do they need to cover the new company in the plan ?

Clients who are self employed ( Schedule C or K-1 ) can now deduct health insurance premiums for computation of their self employment taxes. How does this impact the calculation of "pension income" for their 401K plan ? In the pasy you subtracted one half of their SE tax as well as the employer plan contribution to arrive at "net pension income" to do your plan contribution calculation. THanks !

I have a client who has had a Solo K plan for him and his wife for many years. THey are 50 years old. WE are using a "canned plan" with Invesco / Aim Funds. THey would like to roll these assets out of this plan and into a managed IRA program. However they also want to continue a solo K plan with another open architecture vendor I am suggesting. Can we terminate the old plan and start a new one? Final 5500 EZ reguired ? Any other suggestions ? Thank you.

Client had had a SIMPLE with on mutual fund company for several years using the fund company's SIMPLE plan document. THey now want to enable participants to put their funds into other financial institutions of their choosing. Is this allowed ? What plan document swill they need ? THank you.

Client has an old SARSEP plan. Some employees put money into a HSA account. These contributions are deducted from all of the boxes on the W-2 ( including social security wages ). For the 3% employer contribution calculation do I add back the HSA contributions to the social security wage figure ?

I am trying to confirm the computation of "net pension income " for partners ( K-1). Before any pension cost deductions you begin with their K-1. Then you subtract the partner's share of any employee contributions ( 3% safe harbor and any profit sharing allocation ) The you subtract the partners own 3% safe harbor contribution plus his share of the profit sharing allocation. Finally you subtract his self employment tax deduction. THis gives you his "net pension income " to calculate the 3% safe harbor as well as his share of the profit sharing allocation. You do not subtract his 401K plan salary deferrals in this calculation. Is this correct ? THank you.

Company has just done its SEP calculation for 12/31/09 plan year. A terminated employee is entitled to a contribution of $279 who was never in the plan and does not have an account. She cannot be found at this time either. What do they do ?

I have a client who puts $7,500 into a 403(b) plan at the medical school here. He also has a SIMPLE in his medical practice to which he defers $14,000 ( he is over age 50). He also receives a matching contribution of about $8,000. His CPA's tax software is not allowing the full deduction for the deferrals for the 2 plans. Are we missing something here ??? Thanks.

I have an LLC where the 2 owners take a draw. They have 2 other employees. All 4 of these people are covered by a union with collective bargained benefits. The owners are only in the union to get health insurance ( but they are still part of the small union pension plan ) Is there any way they can exclude the common law employees under the union exclusion rule, but include themselves only in a SEP plan for the LLC ? THank you.

I Have a prospect that works for a company that he does not own in any way and he defers $9,000 / year into the 401K plan there. He also has a business that he owns entirely ( no employees ) that has SEP plan. Can he contribute the $46,000 limit for 2008 to the SEP plan considering he puts the $9,000 into the 401K plan ? THanks

I got a call from a 501c3 orginaztion who has had a 403B with Mutual of America ( employee deferals only ) for many years. - About 30 employees out of 50 participate. They are getting mixed recommendations about whether to stay as a non erisa plan or change to an erisa plan. Can anyone give some pros and cons on each ? Thanks

These HSA contributions are being made via a cafeteria plan I believe so their contributions are deductible for both income taxes and social security taxes. So my question is in order to calculate compensation for this plan do I take social security ( or medicare if higher ) wages and add bac the HSA contributions ? If this is how it is done in 401k plans then perhaps it is the same for SAR SEP plans ???

Client has an old sarsep plan with a major mutual fund company. Employees in the plan do salary deferrals and also contribute to an Health Savings Account ( HSA). Social security wages include the sarsep deferrals but do not include HSA contributions ( no SS contributions on HSA contributions). How does the HSA play into the definition of compensation for the sarsep plan ? Do I take the social security wages and add back HSA contributions ? THank you.

I have a very small 501C3 ( not a church or religious ) that had an employee contribution only 403B plan in the past with a few different insurance and fund companies. THere are only 6 participants. They stopped all contributions in the Fall of 2008 with concern over the new rules. Now I am considering low cost options for them to start a new "plan ". Oppenheimer and Metlife both have a Non Erisa Plan Document for use. THey also suggest that the employer really does not need a TPA as their enrollment and distribution forms and procedures will comply with the new rules. Your thoughts and recommendations would be appreciated.

I have a few very small 501C3 organizations ( not schools ) that have a couple of 403B accounts in each ( salary deferrals only ) - very simple. I understand that they will need a plan document by Jan 1. Are there documents available from the fund companies or the IRS ? If not are there TPA's that could provide a basic document for a low cost ? THanks

THanks Gary, Lets make this easier. Can a company increase the eligibility requirements on SIMPLE's and SEP's from say 1 to 2 years after a few years ? Bob

THank you. THe new owner is starting up his own corp with the old employees. So he needs a new plan. Wants to put himself and other current employees in Simple plan right away but keep future employeres out for 2 years. Can he do this by amending the plan after a few months ? Bob

A new employer ( guy who bought the previous owners business where the employees were in a SIMPLE plan ) want to continue/start up a new simple for the prople that have worked there for several years - with no eligibility for all those there on the start date. For new employees down the road he wants to put in the 2 year eligibility requirement. Is this allowed ( amending plan ) ? Any other ideas if it is not allowed ? Thanks, Bob

I have a client who extended their 2006 tax return. They sent in a check to their traditional IRA on 4/20/07. No deduction was taked on the 2006 return. The 5498 showed it as a 2007 contribution. I jyst found out that this contribution should have been made to a SEP IRA plan for 2006 and the CPA took a deduction for it on their 2006 tax return. Their 2007 tax return is now on extension. Can I simply recharacterize this contribution as a SEP IRA contribution now ? Thanks.

Can a sole proprietor opt out of a simple or SEP IRA plan for the first few years ? He just wants a plan for now for his employees. Thanks