E as in ERISA

The HCE requirement relates primarily to the amount of the loan. The "reasonably equivalent basis" requirement is the one that allows you to consider the creditworthiness and other factors that a commercial lender would.

A couple of free sources on the web for salary data: www.salary.com http://www.bls.gov/oes/home.htm

Whether something is a "distributable event" is a separate question from whether it is subject to the "10% penalty."

Exactly. When I said "approve the plan," I meant "approve the plan document." I considered specifically noting that at the time of the resolution, the board should have in front of it the plan document that is being approved....

For qualified plans, the board of directors resolution approving the plan is accepted as the "signature" for a corporation even if the document itself isn't signed. (Any signature on the document is just a "proxy" anyway). Do you have corporate documents approving the arrangement?

I think that your 5500 filings are the least of your worries. I'd get to work on the SPDs and the wrap plan document. And file the 5500s in accordance with whatever those documents are ultimately going to say. Many (most?) welfare plans do not have the "plan document" that is required by ERISA. When determining how many plans you have, the SPD is a good starting point for at least a couple of reasons. First, it is what has been communicated to employees. Second, it has the plan numbers.

Aren't you going to limit compensation to $200,000 anyway?

So you're trying to decide which contributions are catchups? Wouldn't it just be the excess over $11,000? The plan allows someone to contribute the full $11,000 during the last three quarters, doesn't it? The regs require you to apply the plan limit on a plan year basis. When you have two different plan limits during a year, you are supposed to use the sum of the two limits. So that would be .20x + $11,000 (with x being 1st quarter compensation). But the 402(g) limit will always limit you to $11,000, won't it?

What does the plan say about in-service distributions and offsets?

Under the tax code, the term "principal residence" generally connotes that it is both "owned and used."

The deed will indicate who is the owner of the house.

Go look at the code and regulations on any topic. They generally don't contain details about what proof is needed for substantiation. That doesn't mean that the IRS doesn't ask for that proof.... In order to protect the plan and themselves, most plan sponsors, administrators and fiduciaries are smart enough to have procedures in place to obtain documentation of the required facts.

You might consider amending all returns where the statute is still open.

I have some swamp land in Florida I can sell the guy....or an interest in the Brooklyn Bridge....

No corporate level taxation. The income is reported at the shareholder level. Example: C-Corp has $100 of income. Pays $34 tax. Distributes a $66 dividend to shareholder. Shareholder pays $24 tax. Shareholder ends up with $42. S-Corp has $100 of income. Pays no taxs. Reports the $100 to shareholder. Shareholder pays $36 tax. Shareholder ends up with $64. Of course, it is much more complex than this. But that will give you the basic idea.

The only time that I've seen the Schedule P have any significance is an IRS audit -- where the party signing the Schedule P was the one who had to sign the extensions of the statutes of limitations (in order to give the employer additional time to negotiate with the IRS). Therefore, its probably best to have the Schedule P completed by the fiduciaries who would have the most "relevance" in that process.

Note: Always make sure than an "asset sale" is in fact an "asset sale." If the subsidiary is a disregarded LLC, then the tax people might be treating the sale of the interest in the LLC as an "asset sale." However, it is actually the sale of the legal interest in the entity, not just the assets. Accordingly, certain responsibilities may flow to the buyer if the agreement is silent.

I think that your drafter did intend to extend vesting credit to those with less than 1000 hours. But you were suggesting that the participant had to work 50% of the participant's own regularly sheduled hours (8 out of 16 hours per week)( in order to be vested. That doesn't make sense -- it gives vesting for any participant who only shows up for work half the time. I'm suggesting that the participant has to work 50% of the regularly scheduled hours for a full time participant in the same position. A lot of full time jobs require less than 40 hours per week. There are many 35 to 38 hour per week jobs (to make commuting easier, etc.). I believe that some full time jobs require as few as 30 hours. So your participant might be entitled to full vesting if full time employees in his position are only required to work 30 hours per week.

They're not legally required give credit a year of vesting service to an employee with less than 1,000 hours of service during the year, are they? So aren't they giving the part time employee more than he/she is legally entitled to?

I think in practice, clients will generally provide the most recent Schedule A that they have and that is what gets attached. In many cases, they would already have th 3/31/2003 Schedule A. So that gets attached. But then it messes you up in later years...

My interpretation of the phrase "50% of regular scheduled Hours of Service" is that a part-timer has to work at least 50% of the hours that a full-timer would work in that same position. 1,000 hours of service is about 50% of the hours required in a position that normally works 40 hours per week (assuming 2 weeks vacation). If the normal hours for a full time position were 30 hours per week, then a person working 16 hours should meet the hours of service requirement.

No. You use the Schedule A for "the insurance contract or policy year ending with or within the plan year." For the 12/31/2002 plan year, you use the Schedule A for the insurance contract or policy ending 3/31/2002.

There are some differences -- e.g., the 401(k) monies will typically be invested in various funds and the FICA isn't. So there is a little more admin that has to take place before the 401(k) can be deposited. Of course, a lot of it is done electronically. But one can argue that a good plan administrator would review to make sure that the dollar amounts all match up before depositing the 401(k) monies.

You're right! Although it appears that may have been unintentional? (They were mainly adding the exception for bullion)? I'd still be careful...since 408 doesn't typically apply to qualified plans.

Be careful about relying on the transition rule if you have a standardized prototype (or any plan that by its terms covers all members of the controlled group). The wording of the plan may require that everyone be covered. Then the transition rule would be irrelevant.