K-t-F

Information still coming in..... After a phone call and some faxes it appears the $50K is TH requirement.

A plan sponsor was referred to me today asking if there is an easy way to fix a failed ADP which his payroll service and plan administrator just notified him of recently. Here is the situation: - straight traditional 401K... no match... no ER contribution - 14 EEs including himself - participation: One NHCE, and himself (No payroll info yet to determine who was eligible to participate) I think the best case scenariois that he has failed the test just barely each of the preceding years. The payroll company told him it will cost him $50K to make the plan right. My question is... can he go back and withdraw from the plan the over deferral for the years he failed instead of contributing new $ to a plan he really doesnt want. Amend the form 5500s and move forward from there? Is there a specific correction under VFCP? I know this is vague... simply trying to find out what some options are to suggest when I go to collect information and really see what the issues are. Thanks

Anybody?...

Is it allowed for a participant to take an inservice distribution from plan A (as long as plan As document allows) and roll it into another qualified plan (plan B) of which the participant of Plan A is also a participant? The reason is that the investment choices of plan B are better than plan A's choices. This "rollover" can only be employer contributed $, not deferral correct? age issues? and finally, if the account is not 100% vested, how is that issue addressed? Thanks!

There is something about the Red Sox and the Red Sox Nation. I think it is the whole idea of a team that has been around so long playing in a park that has so much history, has had so many famous players and baseball games played there.

Thank you Lori (and WDIK)!! Now if we could get Manny to show up to spring training as fast as I got answers the Sox would be in good shape!

I read the 2005 instructions and as always saw the reference to partners. I was simply unsure if I missed any proposed new rules for the 2006 year. I didnt want to move on into 2006 with a wrong understanding of the form if indeed the rule pertaining to who can file an EZ was going to change. WDIK.. would you expand for me on you last post? I dont have any partnerships currently but am talking to a new potential client (3 women who own a company) and will be filing a form 5500 (the assets of the plan are greater than 100k so a form will be filed). My understanding from their financial advisor is that they are a partnership . I have not received any information regarding their other professional advisors yet (lawyer or CPA) to ask questions. Thanks to everyone for their input.

http://401kbrokers.com/FAQ.htm I think it is the 19th question down.

I was reading a webpage where the author of the page stated that businesses with partners can no longer use a form 5500EZ... Actually didnt state it that direct, but in essence that was the point conveyed. Is there a change for 2006 with regards to the form 5500EZ? The 2005 directions state that an EZ can be used with partners. Thanks!

YES, DOB 1/20/34

WDIK... would you confirm the following: Client needed a RMD dist for 2004... 10/31 PY First RMD would be for 2004 and would be based on 10/31/03 balance due on 4/1/05 2nd RMD would be for 2005 based on 10/31/04 balance due on 12/31/05 Correct?

Excellent, Thank you. I was reading 401(a )(9) and must have skimmed past that.

Client is an October 31 fiscal year end plan... When calculating the RMD, I can use the plan year end balance, correct? Do not have to determine what is in the plan on December 31.

No one? A Canadian citizen owns a sole proprietorship here in the US... no reason why he cant have a plan.. right? if he pays taxes... I know, its a basic question... but a supposed 'tax expert' has told someone it can't be done... that a Solo plan can not do this. He threw out "non-resident alien" as a reason... I told him that that is simply an eligibility issue and if a plan wanted to exclude non-resident aliens it can... but it doesnt have to. Anything?

I have a financial advisor who has a Canadian client... one man show. He wants to establish a Solo 401K plan. He (the client) earns $ here in the states from US companies. I told him that the Canadian client can establish a Solo ... he pays US taxes... why not? Please, any thoughts would be great.. and any rulings or other info would be greatly appreciated!

Straight forward question... Husband and wife business... want to open an individual 401K plan. Were thinking of also employing a child. Q/ If they employ the child they will have to file a 5500, not EZ, correct? (EZ instructions state "owner, spouse, partner, spouse of partner". Adding a child constitutes an "Employee other than the owner") Q/ The child will be considered an HCE due to attribution... so testing should pass no problems, correct? Thanks!

Thanks.....

I have never needed to complete a 990T... I may be needing one. Is there a site.. or some literature that explains these forms (besides the instructions) and how to complete them for pensions.. an "Idiots" guide? Thanks!

Senior Settlements is what this post is all about... I should have mentioned it from the start. That is the term I was given. The LLC will invest in these senior settlements. The plan participant would invest in the LLC. What if the LLC grouped say 2 or more of these settlements, called them "SS Group 2" and the client invested into the SS Group 2 as a limited partner. The investment wouldnt be in the LLC but rather the investment... SS Group 2. Would that make it a cleaner investment? Now I am not saying it is a good investment or a bad one.. but, if someone wanted to take the chance and invest in this type of investment, who is to stop them? This person has asked me if the investment is allowed in a pension. I have seen precious metal investments that fell flat... even stocks. Investing is a gamble. If there is a black and white answer pointing to no, then I will convey that to this financial person. My experience, exposure, knowledge is simply not there regarding this subject. Thanks for everyones help.

Viatical Settlements... sounds like what this investment is. Not an illegal investment... but very speculative. I am not a financial advisor. I have purposly kept away from the investments. I will pass on this information to the ones who have asked me if these investments are suitable. Thank you for the lead to the viatical information. Exactly why I come to Benefitslink... to bounce quesitons off of everyone. Some very knowledgable people here!

No debt financing... situation is this... An LLC willbe established and it will have 2 general partners *Pensions and other investors will become limited partners *the LLC will use the $ invested to purchase senior life settlements *when the settlements mature profits and return of income will be paid to the limited partners * The pension investors will be sole participant plans or participants with segregated accounts My client will be the plan. The plan will not be apart of managing the LLC, simply a monitary investment. I am certainly no expert ... hence I am asking what people know and think

Can you explain...

CPA called me.. has a client that wants to invest in the following type of investment: Plan invests $200K into a LLC and becomes a limited partner. LLC purchases senior life settlements. Plan will receive a K-1... only participant in the plan is the sponsor... no other participants. There is no reason this investment will not fly.. correct? Am I missing anything. It is simply a limited partnership investment. NO risk to other participant $$ since there are no other participants. Thanks for everyone's thoughts!

ok... the plan is a PS... my mistake. I guess all my badgering convinced him to change it. Soooo.... If he transferrs stock into the plan will that work out fine? and , how do we value it? end of the day NAV?

Just found out... What the situation is is... if he liquidates the stock it is considered a "trade"... if he transferrs the stock it is not. If he makes a "trade" then i guess it will limited the number of future "trades" he can do. I have to ask him one question... I will ask him if the stock that he is "transferring" stock in a company which he is a member of the board, a director.... if so... is that a PT? One fact to keep in mind... he is the only member of the plan, no EEs, no other participants. Thanks!