Lori H

employer of 10 whose HCE will make around $250K wants to max out. would a TSA allowing him to defer $14k coupled with a discretionary SEP allowing him to receive the additional $28K be a viable option? thanks

a 403(b) which currently runs 7-1 through 6-30 will be amending the plan to a calendar year effective 1-1-06. for the short plan year(7-1 through 12-31) will participant deferrals be limited to 402(g) based on deferrals from 1-1-05 through 12-31-05? or can they put in full 2005 py limit($14,000) since 2005 py will be a short plan year?

A 7(5 NHCEs/2HCEs) participant 401(k) with no service requirement and age 21 eligibility, quarterly entry dates, failed adp miserably in 2004 HCE ADP 6.84% NHCE ADP 2.80%. however, 2 eligible participants did not meet the statutory minimum service elibility conditions under Section 410(a). excluding them from the test, the plan still fails, but rather than an NHCE ADP of 2.80%, it is now 4.67%, which would afford the HCE's to avoid a deferral/yield refund of appx. $6400 plus excise taxes and would pass the test with a QNEC of appx a few hundred dollars. Question is: would the QNEC go to all 5 NHCE's or just those 3 NHCEs who met the statutory conditions?

thank you kindly. have a super weekend.

tom i am trying to find that labor reg 2530-203.2© on cch pension plan guide, but can not locate it. many thanks

a calendar year psp(appx 18 particpants) wants to change the plan year to 4-1-04 - 3-31-05 in order to avoid making contributions to a couple of terminated employees. i advised that this can not be done retroactively. however, if they wanted to set it up for 4-1-05 thru 3-31-06, and the amendments were signed prior to april 1, 05. what liability would the plan have for the short plan year(1-1-05 thru 3-31-05) outside filing 5500 by 10/31/05?

plan is audited and match is calculated on a payroll by payroll basis. sometimes miscalculations can be due to rounding, payroll glitch, etc. seems i saw something in IRC awhile back that if participants match was over/underfunded by specific amount($15?) you were required to make adjustment.

wmyer thanks for your response. my first advice to him would be to increase his deferral level, but i believe he is deferring up to the amount where he receives the maximum employer match. since she is self employed she could shelter up to 20% in a SEP, perhaps??

often we see plans whose match is not exactly to the penny. this may affect a few participants who may receive $40 too much or short by $20. i believe there is a threshhold where the plan administrator has to make adjustments on the amounts. i want to say $20, but am not sure. for instance if the employer overcontributed by $15 on the match, it would not result in $15 being moved from that participants account to the forfeiture account. if an employer inadvertantly underfunded a participants match by $25, they would just make it up either by issuing a check or transfering from forfeiture account. or am i completely wrong.

married couple ages 30 and 28. he makes about 80k annually contributes appx 7000 to his 401(k) which includes match. he puts in 4% and they match up to 4%. she made 13,400 as a self employed medical transcriptionist in 2004. usually she makes 19 to 20K. they have about 154k in cds and 36k in savings and feel they pay too much in income taxes. would directing her income into a SEP be a good idea? roth IRA?

One of our board members with an interest in this area did want us to have more certainty regarding when exactly SEP benefits should begin for a new employee: (a) on the specific date an employee reaches the plan's 0, 1, 2, or 3 year service requirement or (b) on January 1 of the calendar year that includes the specific date the employee reaches the plan's 0, 1, 2, or 3 year service requirement. Assuming: - 1 year plan service requirement - the company's SEP benefits are 10.0 % of an eligible employee's gross pay - an employee who begins working for the company on May 1, 2004 Would the company begin applying the 10.0% SEP benefit on the employee's January 1, 2005 payroll or begin applying the 10.0% on the employee's May 1, 2005 payroll? Is there a direct answer to the above or anything you can tell us that would help us lean one way or the other?

mr. lesser, even if they earned under $450?

we use IRS Form 5305-SEP - Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement - as our Foundation's formal SEP plan document. In that document, we currently specify that discretionary contributions will be made to employees' IRAs for all employees who are at least 21 years old and have worked for the Foundation at least 0.5 years (or 6 months) of the immediately preceding 5 years. Our SEP plan document specifies that our SEP plan excludes: (a) employees covered under a collective bargaining agreement, (b) certain nonresident aliens, and © employees whose total compensation during the year is less than $450 (subject to annual cost-of-living adjustments). The Foundation currently contributes 12.5% of each employee's gross salary or wages earned during the calendar year to the SEP-IRA account specified by the employee. The first question is whether or not SEP Plan benefits provided under the Form 5305-SEP plan document would apply to all employees on the Foundation's payroll, full-time or part-time regardless of how few average hours are worked during a work-week (as long as all criteria in the first paragraph above are met for a particular employee). Would there be any way to exclude certain part-time employees (e.g., working less than 20 hours/week) and exclude all full-time or part-time college interns from receiving the SEP benefits under the Form 5305-SEP? Or would we have to discontinue the existing Form 5305-SEP document and then create a new SEP plan document? If so, what kind of hassles or employer risks, if any, would using an alternative SEP plan document entail? Also, when should SEP benefits begin for a new employee (i.e., the begin date defined as the first payroll run to which SEP benefits would be applied): on the specific date an employee reaches his/her 6-month anniversary (within the 5-year span) or on January 1 of the calendar year that includes the employee's 6-month anniversary (within the 5-year span)?

thanks

an HCE received a corrective distribution prior to 3/15/05 and wants to put this in an IRA. i beleive this is a no no. she is single and her income from this employer was 100,000 for 2004. first she would have to pay taxes on the distro via 1099r. couldnt she possibly make a nondeductible contribution to it, better yet establish a ROTH IRA and deposit into it? thanks.

match is made each payroll period, not at the end of plan year. employer thinks since participant elected not too sign up thru one employer, that comp should not be calculated in year end reconciliation of match.

well, the document defines comp as section 3401(a) comp with no exclusions. i would assume if two employers were covered by one plan you would use total comp earned under both employers for the defiinition of comp, even if a participant elects to defer under one employer and not the other.

Employee receives a salary from Company A and a substantially higher salary from Company B. Company B has adopted A's plan. The employee only defers through B. No deferrals on wages earned from A. At the end of py it was determined based on combining wages from both companies, her match was underfunded. Question: Are you required to combine the compensation for both companies? I believe so, i just need some reassurance. Companies are a controlled group and utilize one plan doc.

No Name can you elaborate on "distributive share" thanks.

there would be no significant changes to their current plan outside changing the type of entity on the adoption agreement would there? changes meaning there are no real differences between a standard S Corp and regular corporation in a plain psp.

what if the owner(100% in this case), received no comp, but "performed services" for the employer?

COMP. "A" BECAME A MEMBER OF A CONTROLLED GROUP IN 2004. IN 2003 COMP. "A" WAS OWNED BY A CANADIAN COMPANY WITH NO 401(K). IN 2004 COMP. "A" ESTABLISHED A CALENDAR YEAR 401(K) TO PROVIDE BENEFITS TO ITS EMPLOYEES SOME OF WHICH WERE EMPLOYEED WHEN OWNED BY THE CANADIAN COMPANY. IN ORDER TO DETERMINE WHO HCE'S FOR 2004 ARE, WOULD YOU STILL LOOK AT COMP/OWNERSHIP IN 2003? ALSO, IF AN EMPLOYEE EARNED IN EXCESS OF $90,000 IN 2003 AND/OR WAS A 5% OWNER, YET WERE NOT EMPLOYEED IN 2004, WOULD THEY FACTOR INTO THE ADP/ACP TEST? WHAT IF THEY WERE REHIRED IN 2005? THANK YOU KINDLY.

maybe i should add a few additional comments. any sort of match is out of the question. the hce in this case is strictly an employee. education on participating is difficult logistically as the company manages several hotels scattered throughout the country and they are constantly adding/dumping hotels. we ran an analysis increasing the eligibility requirements from 90 days to 120 and a year and it did not provide much relief. there's not much outside the plan he can do i fear? what about an health savings account? thanks for your responses.

an hce, is the sole hce participating in a deferral only 401(K). of the 1200 eligible nhces only 98 are participating for a whopping 8% participation rate. overall nhce adp is a miserable 0.38%. which is par for the course for this plan. aforementioned hce is age 64 and does the catch up but obviously not much more than that. outside a roth, any suggestions on what he could do? i really feel bad for this guy.

the doctors were receiving a "paid draw", no earned income. its a start up pllc and just did not have the revenue in its first year to report earned income. this was not realised until they had deferred funds into the trust. plan doc is a prototype. language re 415 violation is similar to that blinky reported. thanks.