K2retire

Remind the trustee that failing to follow the terms of the document creates the possiblity for the entire plan to be disqualified, and that he or she probably doesn't want to be liable for that.

Unless their mother directely owns part of the business, the step children are not HCEs. You can't attribute the ownership more than once (once to wife, then to her kids). If a low paid employee has met eligibility, on what basis would you exclude them from the testing?

What if it were NOT a spouse? I ran across a case today with a rehired NHCE. Rehire date is 12-27-2010. Comp and hours zero, presumable due to timing of payroll. Does she count as a zero in the ADP/ACP test?

The 5500 indication of a trust certainly implies that there is a trustee somewhere. You definitely need to see the contract that they are saying can't be broken.

Finding a copy of the 2009 5500 on the DOL's website might be very enlightening.

I've heard similar arguments by providers trying to keep the business from leaving. If the accounts are properly titled in the name of the plan trustee fbo each participant, the signature of the trustee should be all that is necessary. If the accounts are not titled properly, you may have to go back to who ever set them up wrong to enlist assistance correcting them.

A new twist -- in a conversation with the client about the fact that their changes to the safe harbor contribution must have been in place before the plan year began she says, "That's why we back dated the amendment in the first place. It wasn't signed until after January 1, 2011." Now what do we do?

I was always told that if the benefit is paid by the employer it is included and if it is paid by an insurance company it is not.

You also need to consider the cost of obtaining an appraisal of the property for each valuation, and liquidity to pay distributions. Both of those have the potential to raise questions of whether something is truly suitable to be a plan investment.

But the sole HCE doesn't want to be limited in her deferrals AND they have verbally promised the new hires that they will get a 3% non elective contribution although the document says they aren't eligible for the discretionary non elective until after 2 years. If only they would learn to read BEFORE they sign things....

I've recently changed jobs and found myself working on QACA plans for the first time. I think I remember that the change rules are the same as the traditional safe harbor plans, but I'm questioning my memory. A plan has 2 year eligibility for discretionary contributions (both match and PS) and 1 year eligibility for deferrals and QACA contributions. The client had conversations 8 months ago with consultants from two service providers who understood that they wanted to amend their plan from a 3% non-elective contribution, to an Enhanced Safe Harbor match at 4%, retaining the QACA features. A letter of intent was signed indicating a desire to amend the plan. Both consultants subsequently left their jobs before action was taken. Based on the letter of intent, a new employee of one of the service providers obtains a second, more detailed letter of instruction from the client and prepares the amendment. The amendment is signed in late December and the QACA notice showing the revised terms is provided to the employer at that time. It is not known if the notice was ever distributed to the employees. The client now says that they did not want to make this change (despite signing multiple documents indicating otherwise) and wants to know what their options are. Short of destroying the signed amendment and everyone pretending to have never seen it, do they have any options for 2011?

If the plan covers any employees other than the business owner and his or her spouse, a fidelity bond is required.

Generally those classes are taught by the same people who write IRS instructions!

I've heard it argued that new contributions to a participant who was previously 100% vested could be segregated and subject to a vesting schedule. As a practical matter, that doesn't seem to work very well.

Where I used to work we were told that if you didn't use all of the benefits that the employer deposited to the plan you got 25% in cash. My impression was that was an IRS rule, although I'm not positive. It could have been a plan provision.

Find the documents that established each plan. There should be a section that define what compensation to use. It might include a reference to an Internal Revenue Code section that will not be clear to you, but people on this board or your tax accountant can help explain that.

And that is the great irony!

This was my thought also --- was hoping someone would tell me I'm worrying over nothing. I think I have found another way out. The doctor is leasing her 3 new "employees". They are definitely not her common law employees and will have to work for a year to become "leased employees" under the terms of the document. Therefore, if I just waive the one year requirement for all EMPLOYEES employed as of the start date of the entity, she will be the only eligible participant. Thanks for your input. It is good to know for the future. Happy New Year. James It's my understanding that waiving eligibility can cause discrimination issues and that's why it is no longer allowed in prototype documents.

Form 5500 preparers may or may not be required to obtain a PTIN and ultimately ERPA, even though the 5500 is not a tax return. Using the same sort of "IRS logic" what are likely to be the requirements for those preparing VCP filings?

Not necessarily. A corporate resolution directing that the plan be amended is not an amendment. An amendment needs to be an agreement between the company sponsoring the plan and the plan trustee.

Because the allocation was already completed, is there an anti-cutback issue if they prefer to reduce the HCE amounts?

Further complication of your example: Susie wants to get a PTIN, understanding that it is required despit the lack of logic to the requirement. Legal department at Joe's TPA says 5500s are NOT tax returns so no PTIN is required. Now what do you do?

Since the package was primarily at the insistence of the Republicans, who also claim the Tea Party, we have a bit of contradiction here, don't we?

And just in case it is not clear, a mutual fund company and/or their recordkeeper are NOT banks. Therefore they cannot qualify under this definition of "custodian" even though they have physical custody of the money.

Are you over age 59 1/2?