WDIK

The loan repayment schedule must provide for a level amortiziation. However, I am not aware of any general prohibition against an early payoff. My own question: Would a loan policy be able to ban early payoffs?

I disagree. Line 14 on the EZ specifically asks for the total number of employees and whether or not the plan meets coverage requirements. I think as long as the other employees are not eligible, an EZ may be filed. Whether you want to or not, in anticipation of rank and file employees actually becoming eligible is a different question.

http://benefitslink.com/boards/index.php?showtopic=22641 http://benefitslink.com/boards/index.php?showtopic=15821

I do not believe that the tax code has established or refers to "Solo K" or "Individual 401(k)" plans. My understanding is that it is mostly a marketing tool. Perhaps there have been documents designed specifically for this approach. If so, I would be interested in seeing one. That all being said, I think that any entity that is otherwise allowed to establish a 401(k) plan can have a "Solo K" if the owner is the only employee that satisfies eligiblity requirements. If the owner is the only participant, an EZ can be filed, but would not necessarily be required because of the $100,000 exeception.

I think I would classify it as discriminatory.

I don't think this proposal will garner much support because actuaries do things with variable rates of interest.

mbozek: I read Just Me's post differently than you did. I understood that the plan in question currently does not have J&S provisions and that Just Me was wondering if those provisions could be added so that annuities could be purchased for the participants, thus facilitating the closure of the plan. In other words, they can't force out the participants with a balance of over $5,000. Can they force them out through the purchase of an annuity if they have appropriate J&S language?

Rather than maintaining separate documents and preparing separate filings, have you considered merging the plans?

Revenue Ruling 95-3. 9.54%

Blinky, I don't think I'm disagreeing with anything you said regarding the timing of deferral elections and compensation. As you state, the scenarios for a corporation and a sole-proprietor are not the same. My response was an attempt to answer dubya's question as quoted above. (At least what I thought was dubya's question.)

I think that dubya is referring to language found in some nonstandardized prototype documents that allows a participant (usually at the administrator's discretion) to elect to defer from a bonus payable for a plan year which is paid after the end of the plan year but not more than 2-1/2 months after the end of the plan year. (Edit to correct poor typing)

Most prototype documents address the issue of nonvested terminees. Refer to your plan language to determine when the nonvested account balances are considered forfeited. Then, calculate your count accordingly.

To each other?

This does not directly answer your questions (as if so often mentioned on these boards, you should get competent counsel to determine the options for your specific situation), but a couple of questions came to my mind that you may also want to consider or address. 1) Your question about number the plans makes me wonder why there were not previously two plan numbers. Does the Schwab prototype combination Money Purchase/Profit Sharing Keogh consist of a single adoption agreement with only one plan number? 2) With the recent law changes, what advantage is there in maintaining both a money purchase plan and a profit sharing plan for someone who is elgible to file Form 5500-EZ? I would recommend that the two plans be merged.

Some of the most common uses of code 2 include: 1) Roth IRA conversion. 2) Part of a series of substantially equal periodic payments made for the life of the taxpayer. 3) Distributions after separation of service for someone age 55. Sections 72(q), (t) and (v) provide other exceptions from the 10% tax as well.

Good points John G. It's not necessarily a bad thing to end up in a higher tax bracket.

In a prior post, lgolden noted that it was a "small repair shop."

I'll have my wife email you.

http://benefitslink.com/boards/index.php?showtopic=20700

For your reference, I was able to dredge up this old thread.

Perhaps some prior threads would be of assistance. http://benefitslink.com/boards/index.php?showtopic=20741 http://benefitslink.com/boards/index.php?showtopic=23618 http://benefitslink.com/boards/index.php?showtopic=22632

The maximum repayment period is five years. If the plan document and loan policy stipulate (in a nondiscriminatory manner), the repayment period may be shorter than five years.

Does this mean that premiums were paid and filings made prior to 1980? One possibility is that (as you mention) after 1980 only one participant (assumed the owner) remained for a number of years. As discussed (maybe debated) on this board previously, the plan would then be exempt. Then later (when additional participants became eligible) it would be covered again. This scenario may be far-fetched, but it may help to eliminate some premiums, penalties and interest if a number of years can be excluded because only the owner was eligible.

I assume from this statement, that the EGTRRA amendment (Section 631) pertaining to catch-up contributions was not adopted. If that is the case, you cannot classify the excess amounts as catch-up contributions.