WDIK

buie, I think your statement is too general. There are many factors that could tip the balance either way. GBurns listed one. Others may be the individuals health status, goals, family situation, etc.

In summary: 1) indicated that dom was "a bit combative." 2) classified dom as not being a bad apple. 3) inferred that dom was a black kettle. Perhaps Blinky could be accused of being too metaphorical, but probably not "embarassing".

What is/are the underlying reason(s) that the employer wants to terminate rather than amend and restate? If it is to allow participants to get their money, why not allow inservice distributions of profit sharing money under the terms of the amended and restated plan? Has the plan been administered so poorly that there are issues the employer is trying to deep six? If so, the issues are deeper than termination vs restatment. Has misinformation or lack of information led to the employer's choice? If so, an appropriate amount of communcation could help remedy the situation. Does the owner suffer from acid reflux? There are a variety of prescription and over-the-counter medications that could help. I would ask WHY?

A plan offering the safe harbor matching or safe habor profit sharing contribution is deemed to pass by statute. There is no testing involved. The scenario you describe involving no NHCE's that defer is precisely why some companies choose the safe harbor matching option. The HCE's can defer the maximum, receive the match and satisfy the regulations without putting in a penny for the NHCE's. See Section 401(k)(12) of the Internal Revenue Code.

National Production Workers Union, Local #707

Now I'm embarrassed. I'd try to explain that I was only trying to be humorous rather than fishing for compliments, but Blinky already found me out earlier.

Where's the love? Although I happen to agree with ERISAatty, b2kates and rocnrols2, I though it would be fair to provide links where other views were also expressed.

Is anyone out there familiar with a scenario purported by United Financial Group wherein the rank and file employees of a small business become members of a Chicago union, thereby being classified as collectively bargained employees excludable under the terms of a retirement plan? Some information is available here. Of course the basis for this approach is to provide small benefits to the rank and file through the union and large benefits to the owner through the corporation. Of course UFG avers that this approach is legitimate, conservative and has passed IRS scrutiny under audit. I would appreaciate the insightful opinions of the members of these boards.

Stirring the pot. A little more stirring. One more stir just for good measure.

If the plan language requires "that the contribution to class 1 is maximized based on class 2", and that amount is $82,000 (and the cross-testing works), it appears that $82,000 must be contributed to class 1 to comply with the plan document. I think the real issue may have been clouded by the fact that "[t]hey have worked something out where the partner who is getting $20,000 will receive the difference as a bonus." If you are interpreting the terms of the plan document correctly, contributing the $61,000 is not even an option. In my opinion, it is a poor design that would lock class 1 into the maximum and not allow some flexibility. Is it possible that the plan uses language such as "up to the maximum" or something similar? If so, then we are back to the question of proper allocation, in other words $30,500 each if the partners' salaries are equal (again assuming a pro rata allocation). If not, it seems that $82,000 is the magic number. In either case, it does not seem like the partners can justify their arrangement.

Your point is also well taken.

There should be language in the document that explains the method for allocating a contribution among members of a class, for example, pro rata to compensation. The total contribution to class one is most likely "maximized" in terms of contributing the highest dollar amount that still enables the plan to pass cross testing, although I guess it could refer to deduction or other limits. In any regard, it is the total contribution to a class that is maximized/determined by the employer, not the apportionment among the members of the class.

Another possibility is that fewer submissions with similar comments may lead to the conclusion that an issue is not as important to or as supported by the taxpayer community as is actually the case.

Didn't the shark leave Captain Quint a little less than half of a man?

Forms R Us: Currently you have made four posts to this forum. It appears to me that none of them have contained any benefits information. Two have accused others of being rude, mean-spirited, etc. The other two, at least in my opinion, also seem to be accusatory in nature. Just an observation.

See here.

Check in Volume IV of Confusing Concepts Made Easy somewhere between "continuum mechanics" and 'double-slit defraction."

I am not familiar with the context of Jim Holland's comments and how they might apply to this scenario. Setting that aside for the moment, I think that a facts and circumstances test would be appropriate. Did the spouse actually perform services for the company? Did the spouse work enough hours/time to receive credit under the terms of the plan document? What is the basis for deciding that the spouse would not be paid a salary? Other relevant information would also be a part of the determination.

There is an extensive list of information that must be provided to participants if a plan wishes to be 404© compliant. That list can be found in 29 CFR 2550.404c-1, here. The SPD is a logical and convenient place to disclose part of this information. If the plan in question is providing what is necessary separately, I think it is fine.

First, I agree with pmacduff. Second, I would anticipate computer generated letters from the IRS at some point, because I don't think that their system has a way of matching up two filings, one with an incorrect EIN and another with an amended/corrected EIN. Perhaps it would be prudent to take preemptive action by sending a letter of explanation along with the amended return and hope that someone can key the change into the system.

flosfur, I don't think your inference is supported by the facts of this thread. The spouse (or in your scenario Vinni and Harry) is performing legitimate services for the company. The question is whether or not the spouse must take salary for the rendered services to justify benefit credit under the plan.

I think it is an extension from this topic.

Blinky, I'm afraid you are confusing me with my evil twin WDYK.

Obviously your memory is better than mine. I wasn't trying to get credit for someone else's suggestion.

Not being aware of all of the specifics for this individual, such as marital status, anticipated retirement date, and other available retirement benefits, it is difficult to make suggestions that may be applicable. Therefore, the following idea may be way off base, but I'm trying to think outside the box. If the individual is single and is considering a Roth IRA, his AGI is close to the threshold for the highly compensated designation. Why not suggest he reduce his income below the threshhold? Than he can defer as much as he wants up to the dollar limit.