Lame Duck

You might want to check the actual plpan language regarding loans to find out if the entire $4,000 can be borrowed. Many plan documents contian the language of IRC 72(p)(2)(A)(ii), which permits a loan to be made so long as it does not exceed the greater of one-half the vested account balance or $10,000. If the language exists, it may be possible for the participant to borrow the entire amount, rather than only part of it. Of course, the determination of the loan policy is at the discretion of the Plan Administrator. If he loans more than the 50% basis in this case, he will need to apply this policy in a non-discriminatory manner in the future.

What does the document say?

I am not a CPA, so don't quote me on this, but I believe the corporation would be limited to a deductible contribution that does not exceed the owner's basis in the corporation, plus the $1,000 in profit.

I doubt that you even have a loss in this situation. From what I have seen of most S-corps is that the owner pays a very small W-2 compensation and passes through the remainder of the income on the K-1. For example, assume that the W-2 is $20,000 and the additional income of the corporation is $100,000. In that case, the participant would be able to defer $14,000 (for 2005) plus an additional $4,000 (if age 50), for a total deferral of $18,000 and net taxable W-2 income of $2,000. In addition, the coporation would make a contribution of $5,000 out of the $100,000 in net profits. The remaining $95,000 would be distributed on the K-1.

There are income limitations on who may contribute to a Roth. If you are single and your income is over $110,000 or married filing jointly and your income is over $160,000, you cannot contribute to a Roth. If you are single and your income is between $95,000 and $110,000 or married filing jointly and your income is between $150,000 and $160,000, you can make a reduced Roth IRA contribution. If your income is below $95,000 (single) or $150,000 (maried, filing jointly), you can make a full Roth contribution. See IRS Publication 590 for a more detailed explanation on the rules for contributing to a Roth.

Do Roman numerals count?

IMHO, Relius is correct. If you consider a month to be the period from 1/1 to 1/31, a month would also be 1/2 to 2/1. Since 2/1 is the first day of the month, that would be the entry date since it is coincident with the completion of a month of service.

You mean I'm not?

The thread that Harwood referred to was a thread regarding the Pension Answer Book vs. the ERISA Outline Book. References to the Red Sox were not germane to the topic at hand. I think Harwood is asking that only comments relevant to the specific thread be made, rather than extraneous remarks.

I think the determination of the contribution amount can be discretionary, but the allocation of the contribution must be made pursuant to a definite, predetermined formula.

Belgarath, you beat me to it.

I made no statement regarding the validity of such an arrangement. I was merely making an attempt to clarify what Carol said. I don't work with 412(i) plans enough to make a statement of that nature.

I think Carol was saying that some 412(i) plans are funded exclusively with life insurance contracts, and these life insurance contracts will be used to provide the full retirement benefit. In this case, there may be a need to provide a side fund to cover the top heavy benefit since the cash value of the life insurance may not be sufficient to provide it. However, in cases where the retirement benefit is funded with annuity contracts and the plan provides only incidental life insurance coverage, the annuity contracts will usually be sufficient to cover the top heavy minimum.

PATA, IMHO: 1. Yes - the instructions to the 5500-EZ describe it as a one participant plan if the plan covers only the owner and spouse. As long as the other employee is not eligible, you can still file the 5500-EZ. 2 If assets are less than $100,000 you do not need to file a 5500-EZ. See the instructions under Who May Not Have To File. However, it is probably a good idea to file the form regardless of the assets in the plan.

See Internal Revenue Code Section 402(g), particularly 402(g)(3).

A few days ago, we were wondering what was the most read post. It would be nice to see this one up there among the leaders.

1,016 and growing. These posts make my day, which shoud tell you what my life is like.

You should look at IRS Publication 590, which is available on the IRS website - www.irs.gov.

A proud alumnus of the national champion Southern California Trojans?

That was my thought originally, but I'm not sure the client trusts the employee to take the additional pay to fund the plan.

I have a client who would like to establish a defined benefit plan to provide their maid (63 years old, retiring in five years) with an annual benefit between $15,000 and $20,000. I seem to remember seeing something that allows a householder to sponsor a plan for domestic help, but I haven't been able to find anything on point. Does anyone have any advice?

Self Employment Tax Calculation = ((Net Business Income * .9235)*.153)/2 49,250 *.9235 = 45,482.38 * .153 = 6958.80/2 = 3479.40

both degrees are useful and neither has a direct impact on your advancement in your chosen career(?). However, I agree with R. Butler that the accounting degree with the CPA designation will be more beneficial if you do change career paths in the future or in opening doors in this field. Jehmig, I feel for you for I am in essentially the same boat. I have a degree in government (essentially the same thing as poly sci) and am Series 7 licensed. However, I have gone one step further into the abyss. I am also an attorney.

32 - I'll Have a Blue Christmas Without You The old Elvis favorite

This was frequently done in 457 plans under the old rules. The plan was treated as a non-qualified plan and the benefits became taxable at the time the participant first had an immediate right to receive the benefits. In order to avoid immediate taxation, a participant would irrevocably elect to receive the benefits at a later date. Since the benefits were not immediately available, the participant would not be taxed until the benefits were actually distributed. This was pre-EGTRRA when distributions from 457 plans were not eligible for rollover to an IRA. Since EGTRRA, most plans permit an immediate distribution and rollover into an IRA.