K-t-F

Taking over a SH 401.... Just told by the financial advisor go-between that the client had an EE that was eligible to enter and defer on 1/1 but was not enrolled. The EE as a result ended up missing out on the ability to defer during the period from 1/1 to now.... and also missed out on the SH match. Is EE entitled to make up the missed deferrals and receive the missed SH match? (I would think so) Are there any other issues that I should be concerned with? I appreciate the help!

"dumping the dogs" could be a tough pill to swallow... especially if the outlook is that the dogs will recover. An unfortunate situation.... I am sure the plan sponsor is looking at his/her fiduciary responsibility and doesn't want to be bitten by one of the Dogs!!

It is not a daily val plan... but then what of the $ taken out of the last payperiod of the year which doesn't hit the account until after the year end? Are you saying that in that situation you would not count the money as the previous years deferral? And that is considered "Standard" practice ?

Yes... The $ that was taken from the paycheck which was part of the 3/04 year will be considered 3/04 deferrals and accounted for as "receivable". It is the way I thought... Thanks for your imput.

March year end.... March quarter investment statement received and all activity accounted for. My question is .. do you take into consideration that an employee may have deferred during the last pay period in the year and the $$ has yet to hit the account? Or do you just go with what you see as of 3/31.

My feeling towards pension contributions is that it is the gravy added on top of the beef (their compensation).... While it is their money once fully vested and they retire (or terminate), it is not their money until then. It is $$ that the EE would never have seen if there wasn't a plan at all. For an employee to ask for their contribution as compensation instead of adding it to the plan is an honest question. What the EE doest't know is that a plan has certain rules that it must follow for it to be in existance at all. To honor their request is asking alot, taking into consderation possible fallout like other EEs wanting to follow suit, in addition to the administration expenses to provide the EE that option. I know this doesnt offer a solution to your problem... It is just what I tell a client who has an EE with the same desire. I also tell the sponsor if the EE needs more compensation, give them a raise. That usually ends the conversation and the EE is told it can't be done. Just about everyone lives beyond their means.... On a side question... has anyone seen this as a common question lately? My clients are small closly held PCs with between 3-5 EEs. I have been asked this same question more frequently than in past years. The economy could be fueling this desire by EEs to have their $$ now rather than later (to make ends meet)

Can someone tell me how to find a lost terminated EE? Doesn't the IRS have a service where you provide the SS # ? Thanks!

I understand.... I think I may change my name to "Kermit " and use his avatar until I shed my green (in addition to learning to look outside the box)

Call me "green"... you can amend a plan retroactively? Wouldnt that be like establishing a plan after the year end?

The notice timeing was what I was after... 30 days. And it has to be done before the start of the new plan year? I dont know about the other's deferring.. it is a valid point but though. What if the client decides to remove the K feature all together... is there a notice requirement in that situation?

Client chose a 3% SH contribution when the SH 401K plan was established. He was sure everyone would contribute. Plan has a 3/31 year end. Turns out he would have saved $$ if it was a matching SH contribution. Can the formula be amended for the 3/05 year end ? and must it be done before the 3/31/04 year end?

When does the "Cross-testing for Idiots " come out?

So true about the seminars.... the knowledgeable take over and the basics are passed over too quickly for the ones who went to learn in the first place. I am the same kind of learner and benefit knowing how each step is done and what the next step is in the whole scheme of things. The way you describe your learning process reminds me of my kids in school right now.... repeating their problems until they understand how it works. Practice...practice...practice.. If you have the time to share your "crosstesting for idiots" course I would sit up front ...

Tom was kind enough to answer an email... I will look deeper. I appreciate your replies and look forward to any others.

I want to be able to setup and calculate a New Comp plan.. Can anyone point me to a good source where I can learn ? As much as I dont want to take business away from the one who is doing it for me... I need to know how to do this if I am going to suggest it to a client. Case I am working on (and I think a new comp would be a good plan) 2004 calendar plan year Census below shows EE status, then DOB, then comp Owner A.... 6/62.... $120,000 ....(comp can go higher.. $200K) Owner B.... 7/61.... $120,000 ....(comp can go higher.. $200K) EE 1.... 2/56.... $150,000 ....(right hand man, Key) EE 2....9/57.... $80,000 EE 3.... 11/79.... $32,000 ....(enters 1/05) EE 4.... 12/70.... $60,000 ....(enters 1/05) EE 5.... 1/70.... $40,000 ....(enters 1/05) EE 6.... 6/74.... $80,000 ....(Key) EE 7.... 6/71.... $25,000 EE 8.... 5/69.... $52,000 ....(spouse of owner) EE 9.... 9/64.... $52,000 ....(spouse of owner) EE 10.... 5/63.... $25,000 EE 11.... 11/70.... $60,000 I am not asking for someone to perform the calculation.. maybe an opinion and as stated earlier... point me to where I can read more. thanks!

ahhhh.... as I said, I was thinking too much.

I agree with all the comments about the EZ... but... You mean to tell me if a plan is ongoing and receiving contributions it is ok to make a contribution each year and when it reaches $95k take a dist and roll it into an IRA for the sole reason to reduce the balance and avoid filing a 5500... and then make more contributions after that? It would be like having an IRA with a $41k limit. And... does anyone have a doc that states it can be done? Common sense tells me it can't... or have I lost all sense thinking too much

A new soloK client asked an interesting question.... he asked "can I withdraw $ from my solo and deposit it into an IRA to keep the balance of the solo below $100k when it nears that limit for the purpose of qualifying for the 5500 filing exception" I told him it would be a premature distribution since the Solo would still be ongoing and receiving contributions. Comments?

Thank you for your help... I guess what I am looking for is a course on "how to administer a 412i plan" Where does someone find out how to administer 412i plans? I know that they are $$ makers for insurance companies.. and the ins company has staff or software... I have been confronted as a TPA to administer a 412i plan... I want to understand how it is done.... I will continue to search and ask quesitons.

Thanks Andy... but I want to be more dangerous... I am looking for actual math and formulas. For instance... A participant in a 412i plan funded with annuities only (and funding for the max) has "A" years of service and earns "B" comp with an account balance at 65 of "C". If the participant takes the distribution as an annuity my understanding is he is all set, the annuity pays him his monthly payment... but if he wants to take the $$ and run... how do you calc the lump sum? Have I supplied enough info? Am I asking to be too dangerous?

I am not a DB number cruncher.... but I want to understand how it all works... the math. Can anyone reccomend a publication.... provide an Excel SS... anything that will help me calculate and understand a retirment benefit for a participant in a DB plan? I ask because I have been asked questions and I want to be able to answer. Thanks!

The way I see it the W2 shows what you were paid and what you chose to defer during the year... Whether the deferral was not actually paid (deposited to the plan) till the biginning of 2004 is moot. The deduction was a 2003 deduction.

Generally, Required Minimum Distributions must be started by April 1st of the year following the calendar year in which the account holder attains age 70-1/2. If the account is through the account holder's current employer and the account holder does not own 5% or more of the business, the account holder can wait until April 1st of the year following the calendar year he retires, if later. This is called the account holder's Required Beginning Date (RBD). Normally, each year's RMD must be completed by December 31st. Only in the first year can an account holder wait until the following April 1st. (Consider this to be a little break, in case you forget to start taking your distributions in the first year.) Do I have it right?

I will inform the client that he is going to have to ask for the $ back. ... Do you think I could get away with calling it a "Mistake in fact" and carry the over payment as "Receivable" on the balance sheet until it is returned?? I will also read the doc. more closely. I am still waiting for a return call from the client. Maybe he gave me wrong information and of the 2 withdrawals (which I was told were both distribitions to the son) one is not a distribution at all. My fingers are crossed!

Upon termination of employment, a client paid out his son from a plan more than his vested balance ($7k more). The client wants to stick to the amount distributed and suggests that the payout amount be determined by the current end of year value which would bring the sons account up to the amount paid (and a little extra, $300+/-). I indicated he couldn't. Can the client calculate the amount of the distribution on a trust valuation which is not an end of year date? and if so would he be setting a precedence for future distributions? (small company, 2-3 EEs at best including owner)