himt4

Do the family attribution rules (for controlled group purposes) apply between a family member residing outisde the United States who is not an American citizen and a family member residing in the United States?

A company as two branches each covered by its own PS Plan. Each Plan covers about 70 participants. Therefore in total the company has over 100 participants, but again, each plan is under 100 participants. Assuming you meet all the other conditons by having all qualifying assets, do these Plans require IQPA reports?

OK. But even if you file by 3/15, is there any reason why you can't (or shouldn't) also file for an extension as the mere existence of an extension form seems to keep open some options for you?

Thank you. So that seems to be a reason that corps should always file an extension. A lot of clients seem to always want to file by 3/15. Is there a reason for this other than perhaps their CPA's charge for preparing the extension. I guess I am curious as to why some want to file by 3/15 each year.

I guess its the same logic if you were talking about a DB plan that's been around for years and years. If the person already had ten years of participation in a TH DB plan he is maxed out at 20%. So he is also not getting a TH min in his 11th and subsequent years in a TH DB plan. So I guess the sense is once you get a big enough benefit in a DB or DC plan, you dont have to be given TH minimums anymore (as long as your in a DB plan or DB/DC combo). So what is inconsistent is that if your only in a DC plan, you get TH minimums every year and never max out.

Let's say a Corporation with a calendar year Fiscal year and Plan year does not go on extension and files their 2006 tax return by 3/15/07. If they prepare an amended 2006 tax return filing prior to 9/15/07, can they increase the profit sharing deduction that they had taken on the original filing as long as they contribute this increased amount by 9/15/07. Is this allowable/deductible/possible/plausible....?

in reference to post #9, last sentence, the word "jite" used in "jite collar crime" Wasnt sure of this was a typo for "white" as I first thought, or if it was really a word that I wasn't familair with. No definition for jite was found in the various on-line dictionaries, but I did find an old wikipedia entry for jite: "Jite is alternate descriptive expletive for excrement and/or things and situations of little or no value to the observer. It is often heard used by people from the United Kingdom and by U.S. Christians who do not want to use a more coarse and offending cuss word." So typo or not?

How about... If there is no money to fund, pay the 10% penalty . Terminate the Plan now with IRS filing. tell the IRS that the beneficiary(s) of the owner have agreed to take a cut in their benefit to the extent needed to pay all benefits of the Plan. I don't think the IRS ever hits you with a 100% penalty after a Plan terminates. Will this work???

Just thinking...hmmm... And you make sure the plan formula is based on years of participation. And then you put fail safe language into the plan that says that if plan fails 410(b)/ 401(a)(26) then you add to the plan NHCEs from the "excluded class" (i.e. those hired after [date]) in the order of when they were hired until such point that you pass 410(b)/401(a)(26). It looks ok at first look. You've defined an excluded class (i.e those hired after [date]) that does not seem discriminatory, and failsafe language that does not seem discriminatory . But when you think about it, you've essentially changed the statutory one year waiting period to an "as long as it takes until we need you" waiting period. Perhaps you send the plan to the IRS for a determination letter.

"Entry date is first day of the year nearest completion of 1.5 years of service" so if someone was hired 2/17/05, they wouldn't enter until 1/1/07? I don't think that's ok. My understanding is that there is a rule out there that essentially says you cant keep eligible people out of the plan longer than a year and a half after their hire date (unless you're doing the 2 year/ 100% vesting thing). The above example person would be forced to wait 1 year 10 months and 15 days.

not sure I understand the situation. They used 1.5 years waiting period for eligibility, and then entry was exact date that waiting period ended? So if someone was hired 2/17/05, they entered the 8/17/06?

I'll answer first and then someone will undoubtedly correct me. If you are making the point that the two offices are not in a controlled group or affiliated service group situation, then he can get $45,000 from each of the two separate employers plans in 2007 (assumes that he is not eligible for catchup). note #1: for his deferrals in each plan. that is an individual limit, and he cant exceed the 15,500 in total when you add all deferrals together. note #2: a lot of doctors have a 401(k) plan for their 100% owned medical practice, and a 403b at the hospital where they work. In these case, the doc is restricted to the $45,000 in total because a 403b plan is considered to be 100% owned by the participant which automatically puts it in a controlled group with his own practice. I dont think this rule applies to 401k, hence the different answer I gave above.

primarily adding a post here just to send this thread into the exclusive "1000 views club". But since I'm here I'll add a comment. Isnt this like "if a tree falls in the woods..." I mean, If a law comes out with the intention to give combo plans a 31% deduction, but everyone is too scared to take advantage of it, then was there really a 31% deuction law for 2006? The clients who send in their data now are the ones who want to get everything finished early. When you tell them that you can get them a 31% deduction but it contains some risk, they say they dont want to risk it and they dont want to wait for some possible future IRS statement. They say just take 25% and lets finish the 2006 year up.

I am not very up on how this process works. Is there a date set where the IRS issues a statement giving the official interpretation of this rule? When is this going to happen?

To say that the RMD should have been distributed from the 401(k) plan but that there is no 50% penalty if you ultimately take it from the IRA, is essentially saying that you do not need to take it from the 401k plan. Doesn't feel right. Anybody else want to make comment?

the full 401k amount was directly rolled over from 401k to an IRA. And yes, anyone else who wants to chime in, please do so.

Thanks jevd. I definitely agree with you about the date and that the RMD should have been retained before the Rollover. My instinct is that there technically would be a 50% excise tax. You seem to be pretty up on this so you're probably correct about it. I just seem to remember as a rule of thumb that RMDs must be taken individually from each and every pension plan in which they are due (as opposed to IRAs where you can add them all together, figure out the RMD due, and take that amount from one IRA if you like). So if we've established that a RMD was due from the 401k plan, I just don't see how rolling over the 401K plan into an IRA translates into "satisfied the RMD" from the 401k plan. Doesnt it have to be withdrawn directly to oneself to satisfy the RMD?

"The RMD Should have been retained before the rollover" Yep, that's the answer I gave. So, is there a 50% excess tax imposed since a RMD was supposed to be taken from the 401(k) plan and was not?

OK, jevd, you've established the RMD is 4/1/07 in Dan's situation. So, you've answered WHEN. Please post an answer to WHERE (as in "from where")

2/5/07 Someone didn't like my answer to this question. So I am posting the question here to either validate my opinion or to be corrected. I am sure that similar questions have been asked here before. I will give the facts with out my opinion so as not to be accused of "leading the witness": "Dan" is 75 year old non-owner who is an active employee in a company and has a 401K account balance in that company's 401k plan. Document allows non-owner active employees to be exempt from RMDs. Dan has never taken a RMD from this 401k plan. Dan retires (terminates employment) in July 2006. Dan Rolls over his entire account balance to an IRA in August 2006. Question: what is Dan's RMD situation???

In my 8th post of this thread (himt4 Jan 18 2007, 12:26 PM) I first bring to everyone's attention a 9/14/2006 ASPPA asap. I was just looking at that asap again, and I now see that it was written by Thomas J. Finnegan. So, yes, if Tom is on these boards, perhaps he can provide some comments here.

Again, I must preface that it is not my goal here to interpret this rule. We all know that this rule and so many others in our line of work are not clear and that we all have our different interpretations. What I have been looking into lately is how our “industry leaders” are interpreting this law. And I’ve presented my research here in this forum to share. I really really think I’ve gotten it right when I say that it is Joan’s interpretation (or at least it was at the time of the ASPPA webcast and ASPPA conference) that if more than 6% is contributed to a PS plan that the deduction limit is (DB% + (PS%-6%))= 25%, plus the “free” first 6% in the PS plan for a total 31% limit. Listen to ASSPA conference I previously posted. I am not alone in this. I’ve asked people who atteneded the ASPPA conferences and webcasts. They tell me that ASPPA’s interpretation is this 31% limit, and they have pointed me to the source material that I shared with you. (And yes, again, everyone explains that this issue is not clear and that we’re talking about interpretation). I am glad that this thread was re-continued at this time, because, coincidentally, on Friday I listened to a taping of a 12/6/06 ASSPA webcast entitled “cash balance Plans Post PPA: Are they right for your client?” presented by Thomas J. Finnegan. slide 41 discusses the DB/DC combo and it says that “Appears that if the DC contribution exceeds 6%, only the excess would count toward the limit” and then he provides the example “ Example: if the DC contribution was 8%, only 2% would count toward the 404(a)(7) limit” Later in the webcast he does an example of a cash balance/ DC combo. On slide 90 he writes “in fact, since the DB contribution is less than 25% of pay, it appears that the DC contribution could be increased such that DB + (DC – 6%) = 25%” Believe me, there is no way I am misinterpreting his interpretation of this rule. AndyH. I know that you interpret this rule differently and your interpretation could very well end up to be the right one when further guidance is provided. However, I think your personal interpretation is clouding your ability to accept that not only can the rule be interpreted for a 21%DB/10%DC deduction, but that in fact many of the ASPPA industry leaders are interpreting it this way.

http://benefitslink.com/boards/index.php?showtopic=8842 Probably a few others on this topic, but I found this old one by googling.

Someone just pointed me to Workshop#19 of the 10/22/06-10/25/06 ASPPA Conference. - COMMON PLAN DESIGNS FOR MEDICAL PRACTICES— Norman Levinrad, FSPA, Summit Benefit & Actuarial Services- They told me there was a question about this issue at the workshop. I was able to find it in on the audio cd. At minute 42, the question comes up. Norman answers and then Joan fine tunes his answer by saying "the profit sharing contributions in excess of 6% count against your 25% limit, so effectively you have a 31% limit". From this it is clear to me that Joan is siding with the 31% deduction for the 21%DB and 10%PS example

AndyH, I think you are talking about the webcast "tax deductions after PPA: Cruisin on the 404". That's the webcast that my guy got the idea that the 31% would be deductible in the 21%,10% example, along with the "ASPPA asap" that I mentioned earlier. I dont have the transcript of that webcast, but I do have copies of the "slides". Slide #47 says that if the DC plan exceeds 6%, then 404(a)(7) applies and that you only count contributions in excess of 6%. This seems to be saying to me that you only count contributions in excess of 6% when applying the 25% limit of 404(a)(7), which would support the 31% deductibility of the 21%/10% example. i.e you dont exceed 25% limit because 21 +(10-6) =25.