Lame Duck

What about the poor Cubs fans? When they say wait until next year, they are talking about 2016, already.

I agree with Belgarath. This is the position we have taken.

That is what I told the client, but I was hoping to save it a little money.

I have a client who sponsors three idetical plans. All of the plans have not been amended for EGTRRA and the interim amendments. The plan is to restate all three plans and then merge them into a single plan. My question is whether I can merge them prior to the VCP filing and do a single filing or if i will need to submit on behalf of each plan. There is something in the instructions that says if you have multiple plans, such as a profit sharing plan and money purchase pension plan, you will need to submit separately for each plan, but it doesn't address plans that have been merged. Thanks for any help.

Thanks. I spoke with the DOL EBSA and they said there was no prohibition against his serving as trustee but that there were concerns over his ability to manage the tust and to be available to participants or regulatory agencies. If that oculd be worked out, he could serve as trustee.

I have a new client that is the subsidiary on an Israeli company. All of the employees of the subsidiary are sales people. There are no officers. The company wishes to establish a plan for the U.S. employees. Can the Israeli president of the parent act as the trustee of the U.S. plan? I know the law requires the indicia of ownership of the trust assets to be held in the U.S. but I haven't been able to find any requirement that the trustee be here. Any help or guidance is greatly appreciated.

This site has taught me so much. It is usually the first place I go for answers. Thanks Dave for helping all of us keep up with the ever changing world of retirement.

Sungard, who is our document provider has indicated that we should expect our letters by the end of the month.

Thanks for the response. I'm not really sure what the client is trying to accomplish with the amendment since they haven't explained their reasoning behind it. The administrator for our firm who handles the plan doesn't think the client intends to make any contribution under the profit sharing plan but only wants to amend it so that the DB and PS plans have the same allocation formulas. We are trying to get more information from the client but haven't gotten it yet.

I have a client with a calendar year 401(k) plan. The plan currently has a non-integtrated, pro-rata allocation for employer contributions. Unbekownst to us, the client added a cash balance plan just prior to year end. The cash balance plan uses a non safe harbor allocation method. The cleint has come to us to amend the 401(k) plan to provide for the non safe harbor alocation. We told them we could do it for 2014 but not 2013 saince they requested the change after the plan year end. The client's financial advisor has come bact to us and requested that we amend the plan retroactively under 1.401(a)(4)-11(g). I am not sure this is really a corrective amendment for the 401(k) plan but I did see one example in the regs that indicates that if the client has 2 plans, the correction can be made in either plan. The plan is not a safe harbor plan. Thanks for any help.

Since you submitted to Corbel, I thought you might find the followin from Sungard Corbell's Adoption Agrement Guide interesting. "This option permits partial withdrawals only for required minimum distributions under Code Section 409(a)(9). This option should be selected if the only other form of distribution permitted under the plan is a lump sum and the employer wants to permit participants who arer subject to required minimum distributions to be able to take out more than just the minimum distribution but not the entire amount."

This is probably a simple question with a simple answer, but I wasn't able to find it anywhere else. I am submitting several cash balance plans for favorable determination letters using Form 5300. Our document system still uses the April 2011 revision although the 5300 was revised again in December of 2013. The instructions to the new 5300 don't give a date on which I need to begin using it. I did find a guide on the IORS webiste, Tips to Expedite the Determination Letter Process, that says to use the current form. Since it is easier for us to use the form generated by our document system, am I still able to use the 2011 form or must I use the 2013 form for these dubmissions? Thanks for your help and advise.

I have a situation that I've been struggling with and I think some of you may be able to help, since I am not an expert in safe harbor plans. I have a client who is a member of a controlled group with about 20 members. The members all maintain separate safe harbor plans and define compensation as total compensation. My client wishes to amend the definition of compensation to exclude bonuses, even though none of the other members will be doing so. First, can a member of the controlled group have a safe harbor plan with different provisions than the others. Second, if it can what are the potential risks? Thanks for any help and guidance you can give me.

I have a situation that I've been struggling with and I think some of you may be able to help, since I am not an expert in sahe harbor plans. I have a client who is a member of a controlled group with about 20 members. The members all maintain separate safe harbor plan and define compensation as total compensation. My client wishes to amend the definition of compensation to exclude bonuses, even though none of the other members will be doing so. First, can my client do this? Second, if it can what are the potential risks? Thanks for any help and guidance you can give me.

I think you need to break it down and examine each relationship separately, rather than trying to test them all together. Is ASI and affiliated service group with NR? Is ASI an affiliated service group with DM? And, is NR an affliated service group with DM? Once you make these individual determinations it will be easier to test them together.

I'm not a guru, but I believe they can. That is the position I am taking with one of my clients.

Is there anything new on this as I have a tribal government that wishes to establish a 457 plan?

Our VS MEP basic plan document allows the terminating employer to elect a distribution to the terminating participants. It does contain provisions that the terminating employer must certify that it has not established and will not establish an alternative defined contribution plan.

My client has a question about the automatic escalator provision. We know that we can make automatic deferrals and the escalation provisions applicable to all participants. The cleint uses a 1% base and 1% escalator. The client wants to know if and when the escalator would apply to a participant who is currently deferring an amount greater than the base automatic deferral. Assume that the participant is deferring 4% of compensation. Would the escalator increase that to 5% on the next escalation date or would it not come into play until the 5th escalation date applicable to the particiant. Thanks for your help.

The 401(k) basic plan document definition of compensation includes deferrals under 457. The question we are wrestling with is what constitutes a "deferral" within the meaning of 457(b)..

i have a client with both a 401(k) plan and a 457 plan. The contributions to the 457 plan are only employer contributions that are reported on the participant's W-2. The 401(k) plan defines compensation as wages, tips and other income reported on the W-2 (W-2 compensation). It is my contention that the employer contributions to the 457 plan should be included as compensation when determining contributions under the 401(k) plan. The client does not think it is should be included. Who is right?

I think they are usually issued around the middle of October.

I must admit I've never seen this issue before and haven't been able to come up with a definitive answer. I have a potential client who is the 100% owner of an S-Corporation that is a member of an affliated service group. The ASG sponsors a safe harbor 401(k) plan for all members of the ASG. My client is also the 100% owner of a separate sole proprietorship which receives 1099 income from consulting. It is my understanding that none of the income from the consulting work is derived from the ASG. My question is whether being a member of a controlled group with a member of the ASG taints the sole prorietorship so that it cannot sponsor it's own plan? I haven't been able to find anything one way or the other, and it doesn't make sense that a completely separate business can be dragged into the ASG, but I thought I'd put the question to you.

You might also take a look at 404(a)(8).

You haven't stated your age and whether this outside income will be recurring, but you might want to consider a Roth IRA. Since you will only be able to contribute 20% of your net profit (after reduction for 1/2 self-employment tax) you are probably only going to have a tax deduction of $600 to $800. You would not receive any tax deduction for a Roth contribution, but, assuming you meet certain requirements, the earnings will be distributed tax free. Assuming you have $4,000 you can contribute to a Roth and are taxed at a 40% rate, it would only take you about 6 years to reach a break even point, with a 6% rate of return IMHO, I think this may be a better strategy than deducting $800 off your income now and paying tax on it at a later date.