K-t-F

Revisiting this question..... What about Plan with owner and spouse and 1 EE that does not work 1000 hrs... assets less than $100K in plan... 1. Can file EZ? 2. Since assets less than $100K is an EZ required yet ? I understand that once the EE becomes eligible to participate then the EZ is not allowed..

oh.... funny you should mention that.... one of the EEs is the wife who quit her job to come and work for her husband. She had income in 2004... albeit very little. Idea was to amend PS to include deferrals subsequently reducing ER cont exposure and allow wife to defer since she will not be eligible for ER contribution. SH was the way to go. Total existing EEs passing 410(a) elig were 3, 2 EEs hired in 2004 (which will be able to defer in 2005 because of exception), plus 1 Dr..... total EEs all together 6 (3+2+1)

3% safe harbor nec. adp should be fine. At this point there is no one not eligible to participate. It was a gesture to allow one EE to participate. Small dental practice, doc is making beaucoup $

Existing profit sharing plan amended in September to a 401k. Eligibles in 2004 were able to defer in 2004. Employer wants to impose an exception to the eligibility requirement (for deferrals) and allow EVERYONE who was employed on 1/1/2005 to be deemed as already meeting the one year service requirement and be able to defer . Nothing wrong with that when amending an existing plan to allow deferrals is there? Standard eligibility requirement will be in effect for employer contributions and new employees hired after 1/1/05 will need to meet the standard eligibility to be able to defer.

A client has a child that receives income on a 1099... she turned 16 in 2004. If she files as a sole proprietor and files a schedule C, can she have a plan?

I just spoke to this gentleman... it is a business that has since ceased to produce any income. He wishes to continue to pay the loan off... doesnt want to take it as a distribution. Because of the loan he can not roll it into an IRA.... I think he may be sunk!

No... new loan. It is only a year old. His pay structure makes it very convenient to have an annual loan. hmmmm... could we say that loan payments are taken from pay... and if he only receives a pay check annually then the loan payment will be taken then?

huh.... I stand corrected. So what you have is a list and as an employee meets a requirement you check it off as "met". So does he chock up a year of service for vesting for that year also? He is not eligible for a contribution but if the plan is TH does he get the 3% min because he has more than 500 Hrs? He has no balance.. is he considered a participant yet?

I was contacted by an individual, one man show, took a loan from the plan, only made an annual payment (principle and interest). I know the rules... at least quartely payments and if a payment is missed it is allowed to be made up as long as it is done before the next quarter. My question... are there any exceptions to the rule... can he make annual payments? Semi-annual? He is looking at a deemed dist... trying to help him out...

I disagree... I would think that the slate would be wiped clean each year. He would need to satisfy each requirement to enter the plan.

I understand that the plan can not accept deferrals if the document does not allow it... you need to run the plan based on the doc. The participant did receive the deferrals back with earnings, but 2 years later. GBurns.... are you saying the return of his deferrals can simply be rolled into an IRA, considered a rollover rather than a contribution?

What happens when a participant is terminated and receives Severance pay for over a year.... The plan administrator withheld deferrals from his Sev-pay for all that time and then all of a sudden he receives a check from the plan stating that it was all done in error, here is your $ back. It sounds like the guy slipped through the cracks, but what are his rights? He has lost out on over a year of deferrals saving for his retirement. Thanks

It was a tough week for me... who to cheer for... Born in Pittsburgh.... Iron Curtain days... immaculate reception Then moved to Philly.... and now live in Boston. All of my teams had a chance. I knew I had a team that would make it to the Sbowl GO PATS!

Well... I am not much of a football fan.. wasn't much of a baseball fan either. I am a fan that waits till the end to see if there is a local sports team that has the fortune to have made it to the final games with hopes to be the one holding the trophy when the last game is over. Living in Boston has been good for sports fans this year.... especially for footbal fans the last couple of years. I did watch the Steelers/Patriots game on Sunday. Have to admit, the Patriots are a fun team to watch. I think coach Bill has a knack for mixing it up. The players appear to be having fun as well... The Sox set a record coming back agains the Yanks... I think if the Pats win the Super Bowl then they will be one of 2 teams to ever win 3 Superbowls in 4 consecutive years. I think the only thing new englander's can ask now is for it to stop snowing!

It may be late on Friday... but wouldn't the partner who has no comp be deferring 0% of $0 or 100%? 0/0 (the new IRS math) I recall the new math made Blinky beach himself on the edge of his pond once... wish I could remember the thread...

YES... there is the last day rule... must be employed on the last day of the year to receive a contribution... so dont need to amend to 0%?

Follow-up info.... Plan is an October year end plan.... Only participant in the plan right now is the plan sponsor. 3 employees will be eligible to participate but are not eligible now. EE1 enters the plan on 5/1/05 EEs 2 & 3 enter the plan on 11/1/05 204h notice would be given to sponsor himself. A formality but not a big deal. Amending the 25% MP contribution to 0% can also be done... but he would be required to make a 25% cont on income up to the date we amend the plan? 25% cont based on his income from 11/1/04 -> 1/31/05? Sum it up... 2 amendments, one to amend cont to 0% and the other to convert to SH 401K w/3% nec. Couldn't that be one amendment with everything included? Same EIN?... and create letters of authorization to amend the registration of the assets from MP to SH 401?... Thanks for your help!

I read some old posts... am I reading this correct?... There can be an immediate entry date for participants to defer but to receive the 3% SH NEC there can be a 1 year 1000 hour requirement... and still pass ADP? Soooo... basically everyone can defer, sponsor can max out... and the 3% given to eligibles who pass the 1 year 1000 hr... and ADP is passed. did I say the same thing twice?

Any reason why I can not amend a MP into a SH 401k midyear? (The current plan year is an October year) I dont want to establish a whole new plan and have 2 plans for the current year. I have more than 60 days till the end of the year so giving notice is easy. If fine then .... will I be required to calculate a contribution for the short year based on income earned till the time the plan is amended... say November -> January 31? And, if it is less expensive for the sponsor to amend the existing MP to a 0% contribution... can I do that at this point in the year? Thanks!

If a person is part of 2 457 plans in one year can that participant max out both plans in the same year?

Curious how many participants in the plan? Your company shouldn't cast a blind eye and assume that the plan is not a big deal when it comes to compliance and non-discrimination because it is a big deal. If indeed you were thrown into this position I would cover my a** so you dont end up the fall guy if something goes wrong.... like something as basic as filing the form 5500 on time (not to mention completing it correctly!) Good luck!

Mbozek... that is interesting. But that describes a personal sale... a sale that doesnt wash through the agents real estate broker. I guess you could simply discount the sale the commision... but he may need the commision on the books. This guy is saying other agents are doing it... I told him I still think it is a PT.

Cleint wants to invest plan $$ in undeveloped land. Property can be purchase outright ($30K parcels, no mortgage). KICKER... he is the agent and will receive a commision... I am sure this is a PT... I typically advise clients to not invest in Real Estate... this one is adamant. Questions.... Transaction goes throught the usual RE course... Plan would purchase land, client himself would be agent for sale and receive a commision... PT right? If there is a way how would it work?

Nope... guess I was just putting all SEPs into one group. After talking with the one who brought this to my attention am I correct in saying the timelyness of establishing each plan is a concern? First a SEP... then later on down the line (few years maybe) add a QP... that is ok? First a QP and then a SEP later... that is not ok? And to further ask, if the SEP is established and later a QP is added... each plan can be contributed to each year? as long as you dont exceed 415 and 402g ? (and of course everything else)

Am I going crazy... I thought you could not contribute to a SEP and a QP in the same year. IRS Pub 560, page 7 says you can. Am I missing something? IRS Publication 560