Bird

I think they just want to reconcile the deposits and move on; you should be able to just say "oops, here is the return" and that should be the end of it.

Amen.

And that's where your government wonk might say "mmm, why not? We'll take the $21,000, and give $10,000 to the employees in some form of a government-run plan, and have $11,000 left over!" I'm not saying I'm in favor of it (it would probably cost $30,000 in waste to give the employees the $10,000) but if it really costs $21,000 in taxes to get $10,000 to the employees, as a taxpayer, I have to question whether it is worth it.

Failure to remit withheld contributions is a very serious offense, basically stealing, and your employer needs to be educated to the fact that s/he does not want the Dept of Labor to get involved in this matter. Everything Gary said is right on...good luck.

Too many to try to pick and choose which ones specifically apply to that plan; we're spitting out a 10 page PPA addendum with our EGTRRA restatements. Your document vendor should have a template for this, no? If it's a prototype it's likely the sponsor has amended the basic plan document already.

That's correct, a SIMPLE can't exist in the same year as a qualified plan.

Thanks for the feedback; we'll look at the Rev Proc more carefully.

Thanks for the response, Laura - are you saying that by virtue of the employment arrangement, they are, perhaps, not (ever) "leased employees" and should be considered employees of EFG from the get-go? That's nice and easy, but the fact that they are paid by another company must count for something, no?

There's a big difference between freezing a particular fund and ceasing to offer a particular type of investment - Kevin has nailed this pretty well, I think.

As long as the second contract is valid, and I see no reason to believe it is not, I think the request is valid.

That might be true; I know there is a catchall in the 401(a)(4) regs that says a pattern of amendments can create discrimination, but it's probably a stretch to make it apply here - or maybe not. Personally, I think it smells, and some day it might generate another 3000 pages of regs because somebody was greedy.

Probably, but the fact remains that they are shared.

Anyone have any thoughts on this? I came across the same situation, and haven't fully researched it, but am thinking it might be "yes."

It sounds to me like they are "shared employees" (and your CPA is right about needing to cover them, or at least consider them in testing, which will lead to covering them). The cites I know of are ancient revenue rulings, 73-447 and 67-101 (I don't actually know this stuff, just found the references in a book). FWIW, physician B does not have to have a plan covering them; you could have a plan and cover them for your share. But you're talking about a whole 'nother level of complexity and cost to do that.

As I see it, the cites provided are about permitting rollovers, not precluding lump sums. I don't think it can be done, and in any event, the plan sponsor is deluded if he thinks this accomplishes anything.

Some info on this...I have a friend, not a client, who got notices from the IRS that he didn't file not one, but two years of 5500s for a retirement plan. I told him that I wouldn't let my clients do anything but pay the DFVC penalty and move on, but he was adamant that he mailed them (regular mail with no receipt, of course) and that he wanted to fight it. So I gave him some tips on what to say (filed religiously for many years w/no problem, new procedures in place, blah blah) and...a month or two later, he got a letter back with these words: “based on the information you provided, we will not assess the late filing penalty on the account listed above for tax periods 2006 and 2007, form 5500, plan 001”. They even apologized for the hassle! I'll get a lunch out of it. I don't know that I'll change my approach with my own clients, but there it is.

Unless there is a spousal consent to a specific non-spouse beneficiary, or (unlikely) the plan is an annuity plan where the pre-retirement death benefit is up to 50% for a non-spouse, it goes to the wife. And it doesn't necessarily work the other way around. In Kennedy v. Dupont (I probably read about it here), a participant got divorced but never changed the bene from his ex, and she got the benefits.

It depends on what the SPD said. With any type of group allocation, ours just makes a vague reference to a "group method" so changes to the groups wouldn't call for a SMM.

We're in the micro plan market too, and it might put us out of business. Setting that aside, I find it hard to get indignant about it for the reasons mentioned. As far as creeping socialism, people can take as much taxable income as they want in this country, for the most part. But it's perfectly logical to have some non-discrimination rules where tax-qualified money is concerned. And as far as SS...it is what it is. People might wish they had more SS as a result of having less from a qualified plan, but unless that system is changed to reflect need, this won't impact SS. Ed Snyder (might regret outing myself but don't want to be argumentative behind a handle)

Y'know, cross-testing (and ASPPA too) been berry, berry good to me, but I can't argue with a straight face that the loss of cross-testing is the end of the world. As a taxpayer, I'm not so sure that letting Dr. X get a 20% contribution @ 5% for the staff is really worth it (or cherry-picking a handful of NHCEs in a 50-life plan and giving zippo to everyone else). Part of the retirement problem we have seems to stem from the mis-perception that just because you are covered by a plan, you will have adequate retirement income...5% might as well be 3% because it's still not enough. FWIW.

Yes, and that's why it's problematic. As are we...I wish they would just move on to something else already.

Company EFG leases its employees from another company, I guess because they think it is easier to process payroll, non-retirement benefits, etc. (To clarify, EFG had its own employees and then one day turned them over to the leasing company. They are clearly under the control of EFG.) I understand that these people are "leased employees" after a year, and if we want to include them in EFG's plan, we simply include "leased employees" and are done. But they want to include these employees after 2 months, and we think that we need the leasing company to sign on as an adopting employer in a joinder agreement, specifically referencing employees of EFG so as not to include all of the leasing company's employees. What do you think, are we headed in the right general direction or is there some other way to do this?

I've heard that too, but nothing formal.

I tend to agree that they are 0% owners - ownership for partners is based on sharing of profits and capital interest, and, as you note, they have neither. I think they are "employees" in the plan sense of the word; those guaranteed payments should indeed be earned income, IMO.

That's at least a little bit unusual; the only reason I can think of for making that change is to be consistent with the DB plan. Take the annuity form of benefit, or get the spouse to agree to something else. Not much of a choice. Rightly or wrongly, Congress says that the spouse must consent to any other type of distribution when a QJSA is an option. It's a grand PITA when the spouse doesn't go along, but it's hard to blame them, no matter how happily married they might be at that time.