Santo Gold

I'm not real familiar with SIMPLE's but an employer has maintained one for 5 years, and has gone over 100 employees in 2004. They will use a 401(k) in 2005. Can the employer continue to actively fund the SIMPLE through the end of 2004, or does the employer have to stop in the month the company exceeded 100 employees?

I talked with a doc's office who just recently discovered that their 401(k) plan has been top heavy since inception (mid 90's) and they have not been making the required 3% contribution for all non-key's (the 3 keys have 401(k) contributions well over 3% of pay). They are in the process of determining the liability for all of those years and turning themselves into the IRS. In the meantime, they's like to start a second 401(k) plan with the goal of eventually terminating plan #1. I assume they want to "freeze" if you will 401k #1, with no new money coming into it. Keep it around until they resolve matters with the IRS. Starting in 2005, they want to start 401(k) #2, for the same group of ee's (all employees) with probably the same or similar plan specs. Other than plan #2 not really being necessary, is there anything wrong with this scenario? Am I correct that they should not terminate #1 until after the problems are resolved?

This probably has an obvious answer, but I had to ask: Client wants to have a loan feature in his 401k plan. He understands that there will be a small fee that the loan participant will incur and must pay, to the TPA. Client's question is, can he (the owner/employer) also charge a nominal fee for his aggravation involved in approving the loan? He is talking in the $30 - $40 range, not much at all. Also, could this be paid to the employer?