Bird

user fee appendix It seems clear to me that it's 7/1 for individual DLs. Page 4 has headers for "pre-7/1" and "on or after 7/1" and the individual DL listings are on pages 5 and 6; I understood those headers to apply to everything following so I thought that they (new DL fees) were effective 7/1. If the chart should be read otherwise, then I agree it is confusing.

Whatcha think?

No. (There's an "or" in there; sorry if I didn't outline it so great.) But in this case, there was no bond, and that's one of the requirements for the exemption from the audit.

A bond is always required, unless it's a one-man plan. The audit requirement does not apply, for small plans, if: They have the usual 10% bond, and at least 95% of the plan assets constitute “qualifying plan assets” or additional bonding is obtained (not less than the value of non-qualifying assets), or The accounts are self-directed. (Plus yada-yada about disclosure in SAR and participants getting statements.) Unless the assets were self-directed, I don't think this plan met the exemption. Of course, if it was self-directed, there were not SARs, so they didn't meet the disclosure requirements... This is a really good question. Fixing it right will cost way more than the plan is worth, no doubt.

sez who? As noted, a "solo" or "uni" k plan is a plan that is marketed to one-man businesses. There is nothing inherent in the document that would make it not qualified if other employees are eligible. It may be very unattractive to the sponsor, but that's a different matter. Wow. Even if the others only made $5?

I think you have to look carefully at the "uni-k" (as noted, it's just a marketing term) and see if there were any eligibility/contribution issues that need to be addressed. If not, then I'd look at simply merging the uni-k into the new plan.

I agree with Belgarath; depositing $18,000 or whatever is WAY overcorrecting for a failure to withhold deferrals. It wouldn't be hard to show that the present value of the "lost" deferrals vs. having that money paid in taxable salary is a couple thousand bucks, at most. But logic and dollars aren't necessarily relevant, and if the IRS feels that putting in the whole amount is what you have to do, well then... But I like the idea of suing to recover the paid salary. Not that it's practical, but it really makes perfect sense.

So required minimum distributions to the husband had started during his lifetime? If not, then I don't think the payments to her were RMDs, since they wouldn't have to start until her age 70.5. If so, then I think she has to take the RMD now and pay the penalty.

The law permits systematic distributions over his life expectancy if they start by the end of the year following death. You already said that the plan only has the 5-year option, so this doesn't seem to be a choice unless the plan is amended. However, the bene might be interested in pending legislation that would allow a non-spouse bene to roll over to an IRA and take systematic distributions from it. I am pretty sure it made it through both the House and Senate pension reform bills and is in conference right now.

I would leave the Roth money alone. Maybe it's not a huge amount but I don't think it's so hard to to just let it sit. (It's not clear to me whether you have 2006 money in there already that needs to be fixed somehow.) For additional savings, I'd just open a regular account and start shoveling money in. You'll pay some current taxes on dividends and capital gains, but only at 15%. It's nice to have that accessible money in additional to the 401(k) and/or IRA stuff.

...and not all HCEs are owners. There might be a highly paid salesperson (any discussion about this is usually accompanied by a rant "...I pay him (her) enough without giving another 3%...").

I agree, you can switch to current year testing at any time.

To be honest, I don't deal with this end of reporting at all, but my take on it is that it is no big deal to file a corrected 5498, and that Scottrade is being ignorant and/or lazy, and you just need to make a bigger fuss. It's probably just a matter of getting to the right person, who understands what you want.

You use the 12/31/05 account balance, unadjusted for the distribution that occured in early 2006.

Someone faxed me a copy of that letter. I'm pretty sure the "endorsements" were actually amendments. It sounded like everyone involved, including the agent, was clueless and inept. It turned into a rant about how the IRS knows about these "unintentional non-compliance issues" and is attempting to raise revenue. It was kind of a sad story, but somehow it didn't make me very sympathetic.

I think you'd have to file a tax return for the trust (1041). I'm not really sure though...

I don't mind admitting when I'm wrong, and I think I blew this one. I was thinking that SEPs had the same 100% limitation as qualified plans, but it's 25%. Sorry. (But Gary, the catch-up, if available, is $4,000, so the 2005 limit with catchup would be $5,200, right?!) [Yes, $5,200 is Correct. I changed (corrected) the $14,000 to $4,000 in prior post - gsl]

If it's a matching safe harbor, that notice had to be given before the beginning of the plan year. Good question.

How 'bout this: Comp = $10,000. Employer 10% = $1,000. Max total = 100% of pay = $10,000. Max deferral = $9,000. It could be argued that the maximum deferral is $10,000 and the employer's contribution is the one to be limited; depends on plan language, but I don't think we have to go there. The 25% limit is on employER contributions; the employEE contributions are just part of the employer's payroll and (after 2001) don't count against that limit.

John G, FWIW, my daughter intentionally used the Roth as a parking place for some summer earnings with the intent of pulling it out...and I wasn't the original poster who made the withdrawal.

If it's a Roth IRA there is no tax on the withdrawal. If this helps - I did my daughter's taxes on TurboTax a couple of weeks ago, and she had made a Roth IRA withdrawal. The first time through, it said the distribution was taxable...they would probably say I used the software incorrectly, but I thought I answered all the questions accurately. I knew it was wrong, and kept digging - unfortunately I don't remember exactly how I fixed it - maybe I went to the "Forms" section and then found a worksheet that let me put in the basis; honestly I don't recall, but I got it to do it right (without taxation). For something that it fairly common, it was, IMO, poorly laid out.

There are lifetime RMDs for 2006, determined as of Jan 1 when he was alive (right?) but they are paid to his beneficiary instead of to him.

Yes.

I found that language to be bizarre and dug a little more - pax is absolutely right. It's explained a little less cryptically here: NC directive Curiously, they say it applies to an "eligible rollover distribution" but they don't appear to limit it to amounts that are not rolled over - i.e. the plain language would appear to mean that it applies even if the amount is rolled over(!) Thankfully, we're not too close to NC... (Edit - I guess this takes care of rollovers - "Except for eligible rollovers, a recipient of a pension payment who has federal income tax withheld can elect not to have State income tax withheld." - "Never mind.")

The second method is correct. You can't arbitrarily assign amounts as catchups, but if you fail the test that's one way they can become catchups. In your case, it's the same result. Had the younger HCEs deferred more, then they'd have to get refunds, and the potential catchups would be wasted.