Bird

I agree with Jim Chad. Further thoughts on the BRF issue - you can, in theory, offer participants either the pooled option or the self-directed option, but the practical matter of getting there is more than a little tricky. One has to ask "what's the point" and then ask if the broker who sold this has a clue as to the ramifications. And yes, if you follow through with this, you almost certainly have to do an interim valuation. The plan should allow for it.

Some thoughts: 1. If the partners elected* a dollar amount, then they have no business waiting to know if they have taxable income. They made an election and need to follow through and deposit it. If it later turns out that they didn't have income to support the contribution, then they can take it out. If they elected a percentage, then they set themselves up for a difficult situation. 2. The brokerage firms have no business rejecting deposits after a certain date. Such deposits are simply "late," not "disallowed." Good luck fighting that one. If they refuse to accept it as a 2007 contribution, tell 'em it's for 2008 and document it. *What's that, they're waiting to see if they made money before making an election? Tough, the election had to have been made by 12/31.

In theory, yes, you could do this by amending the plan before participants have earned the right to certain allocations. But since you already have the groups set up, just choose an amount for each group that happens to be the same percentage. Then you test on a contributions basis instead of a benefits basis and all is well. You can even give a little more to those over the TWB and impute permitted disparity, and achieve the same results as if the plan had been a safe harbor formula integrating at 5.7% over the TWB.

If it's pain and agony you want, just poke yourself in the eye with a sharp stick. Fidelity is awful to deal with in a normal situation; thinking you're going to have any luck getting them to get something of that detail from a prior recordkeeper is pretty near hopeless. The value of getting the exact valuations on those exact days, versus interpolating from quarterly statements, has to be marginal at best.

Contract shmontract. Anyone who can't see the common sense of why you need this data, and wants YOU to provide some legal basis for why you need it, is a problem. Don't get caught up in proving that you need it, or why you need it, just keep asking for it and if you don't get it you don't have a client.

It's not too late...there's a penalty for late filing; I think it's $25 and I've never seen it enforced. If the participant has filed, well, they would need to amend. I don't believe there is any cross-referencing with Form 5500 and 1099 filings, so you could get away with doing a 2008 1099. It's not "right" though.

I don't know what antisocialism is, or whether you were just making a wisecrack. Sorry. If anyone cares, my concern stems from the (unstated but obvious) premise in the attachment that there is something "unfair" or wrong about allocating less to a grandchild of a prolific parent than to a grandchild of a less-prolific parent.

Wow, I have learned something today. What could be simpler and clearer than "per branch"? I had no idea that socialism had made its way into estate distribution. Very sad, IMO.

Good question. From what I understand about this case, I don't think it's too late to adopt a resolution rescinding the termination. You might even be able to tell the IRS "never mind" on the termination submission; if not, yes, I think you could just put it on a shelf. On the original question, if you go ahead with the termination, I see no reason to not process a hardship withdrawal. I agree that it's best to wait for the DL to process regular plan termination distributions, but this (hardship) is different.

Maybe if you gave an example of how different states could interpret "per stirpes" differently that would have meant something.

David, maybe I'm picking nits (or maybe I'm wrong), but the "per stirpes" part of your sample designation is not what assures Eleanor's children of getting her share, it is the contingent clause "if she shall predecease me." The "per stirpes" part is what assures that Eleanor's children's children will get their share even if her child predeceases her. I've always described it as meaning "per branch" (of the family tree). So if I designate "my children, per stirpes" and one of my children predeceases me, and has a child(ren), that "branch" will get its share. That has always made it instantly clear to a layman. FWIW, I like it - I don't know that a layman would understand "to her children, by right of representation, share and share alike" anyway.

An example is New Jersey's short term disability plan. The state pays the benefits, but then the employer has to add the payments to the employee's W-2. (I wouldn't mind getting hold of the brainiac who thought that was a good idea.) Anyway, with input from this board, we decided it was appropriate to exclude those amounts from compensation. (When we know about it!)

The IRS clarified a few years ago that the adjustment referenced for receivables generally does NOT apply to profit sharing plans; i.e. you include the full receivable. I can't remember now if they said it was optional, or someone interpreted it as optional, but, at least the way we run our plans, it would be messy at best to do it otherwise. I think it was an ASPPA Q&A, and I'm quite sure there is at least one prior thread on it. (Whatever Mike is getting at is over my head.)

Just a thought - you might simply name the new business as an adopting employer for now, and then when you restate in the next year or two, name the new employer as the sponsor and give credit with the prior entity. I've found it somewhat of a nuisance to try to ferret out all of the references to the "employer" when doing an amendment, or more particularly, the SMM or SPD. As far as allocating the contribution - do the best you can, probably pro-rating the compensation from both entities.

IMO it's a fair question. The poster did some research, came up with different answers, and posed the question. The real problem, and the thing that I find annoying, is that there are folks out there maintaining that you have to cut off deferrals after the comp limit is hit, and they're mucking it up for the rest of us.

I think they are permitted too. Whether it is advisable or not is a different issue. "Back in the day" (pre-'86 I believe) participants could do a 6% after-tax contribution as a freebie...not counted as an annual addition, and not subject to any testing. Now, they are annual additions, and also subject to ACP testing. Useless as [insert your favorite], IMO.

The answer is no, exceeding the comp limit does not preclude one from continuing to make deferral contributions.

<gasp> I thought there was something wrong with the Western World and now I know what it was! (g) Sorry... Um, I wouldn't bother. If it hasn't attracted anyone's attention by now, I don't think it will later. It just goes to show the extent to which a lot of our reporting is just "numbers on a piece of paper."

To my way of thinking, this is strictly a plan issue - the bene elected a form of payment, presumably irrevocable, and now wants to change it. That's what it boils down to - was the election of an installment irrevocable, and if so, tough.

You have a new entity (new EIN). I believe it is sufficient to amend the existing plan to say the new entity is now the sponsor.

I wouldn't start with a different beginning balance than the prior year's ending; I'm pretty sure that will get you a letter. I'd prefer to amend prior years, but to the extent that isn't possible, just make an adjustment to the current year's contribution to make everything tie out. No, it doesn't sound like that should have been carried forward from year to year.

We found the online system to be...painful...and went back to the off-line version. I don't want to knock them publicly and anonymously because otherwise we're happy. Send me a message if you want to discuss further.

Close, but when calculating SE tax you first take 92.35% of SEI, then multiply that by 15.3% for the tax. Then take of half of that for the deduction; you should get 32,746. Then 20% of that is 6,549. That's the maximum (25%) employer contribution. If you do it all as profit sharing, then you have no room for a match. (You could combine match and profit sharing up to the limit but that would be silly.)

I mis-read the first post... "never mind."

Well, one group of employees on each basis. I think someone needs to put up some numbers to make it less ethereal; I'll try to do something simple here... let's say you were sailing along with 2 older owners and 7 NHCEs. One of the owners brings his son in and messes up the ABT. The son gets the same employer contribution as the NHCEs. The idea is that you carve this into two plans - one with the 2 owners and 5 NHCEs (it's arbitrary, but you pick the youngest ones) and the other with the son and the 2 other NHCEs. "Plan" 1's ratio percentage test is 5/7 divided by 2/3, or 107%, so that's ok. "Plan" 2's ratio percentage test is 2/7 divided by 1/3, or 86%, so that's ok. Then, as long as each rate group test within each "plan" is greater than 70%, you don't have to run the ABT. The second "plan" will be 100% because everyone is getting the same contribution and you're testing that on a contributions basis. I'm guessing that the first "plan" will be ok too, tested on a benefits basis. I don't know how you get Relius to run the tests separately. Edit - I just re-read the original post and noticed that there was only one NHCE in the case presented. So the above is a more general discussion but not all that helpful to the OP. I'm not quite sure if there's a solution, other than increasing contributions to the NHCE.