K2retire

We generally advise not making deferrals until the K-1 has been calculated, often that is in April of the next year or later.

My knowledge of SEPs wouldn't fill a thimble. But in that situation I've worked with many cross tested 401(k) plans. some paired with DB plans. This typically only works if the owner is older than some (perhaps most) of the employees are significantly younger than the owner.

I've got a similar situation, however the plan is trying to terminate. The missing participant has an account balance of about $165. I've not heard of any IRA provider who will accept an amount that small. Plan sponsor doesn't want to pay for a 2011 5500 while waiting on the IRS or DOL letter forwarding program. Any other suggestions?

Many of the answers you seek can probably be found in the Summary Plan Description. If you can't find your copy, the employer and give you another one.

The LLC and sole prop. (director's fee) are a controlled group, meaning they must be treated as a single employer for plan purposes.

I don't know which is accurate, but I can see an argument that the portion attributed to the spouse under the community property laws, cannot be attributed a second time to the spouse's child.

He has to reach a limit -- 402g, 415, plan imposed or ADP failure.

Are they after tax contributions or Roth contributions?

Yes.

The business structure, or more specifically, whether the business owner reports income on a W-2 or a Schedule C, determines whether or not the income must be reduced by self employment taxes and employer contributions when calculating the maximum employer contribution and deduction.

The information about correcting a failure to make a safe harbor contribution is very clear that testing is NOT part of the correction. Does the bankruptcy change that part of the equation too?

We are talking about a rollover to a Roth IRA at 70 1/2 to prevent MRDs. Why would a plan not provide that option to avoid the participant having to take MRDs? I dont know of anything the the IRC which prevents a tax free rollover of a Roth 401k account to a Roth IRA if there is a distribution event. In any event why can't the participant take the entire Roth account balance as the MRD at 70 1/2? Due to the concerns Larry mentioned, all of our plans a written to prohibit hardship, in-service and loans from Roth balances. Because we have no idea if our recordkeeping system will accurately track the basis vs. potentially taxable income following partial withdrawals, amending the plan is not an option at this point. Ironically, the document also specifies that the RMD can only be the minimum amount calculated, not the entire balance. And yes, the point is that he doesn't want to withdraw anything.

The plan does not allow for in-service distributions of Roth balances.

New 401(k) plan established in 2009. Business owner born in 1939. All of the money in the owner's account is Roth elective deferral source. Spouse/beneficiary is 13 years younger. It appears that the owner will be required to take 4 RMDs before the 5 year period is satisfied. (Obviously, he is annoyed that no one mentioned the 5 year rule, or RMD rules, before he set up the plan.) This year's RMD amount will be ridiculously small. Is it possible to specify that the distribution is all basis and leave the earnings in the plan?

On what basis does the employer not report the commission on the W-2?

Your attorney should be able to help you ask the appropriate questions -- and also ask the plan administrator for them.

You will find many of us are willing to share opinions. Just remember that they may well be worth exactly what you paid for them!

David, I remember that post from the original discussion. That's why I found the DOL agent's position so surprizing.

Sounds like a classic affiliated service group.

There are reasons why some of set up our accounts to use something other than our names! In my case it's a requirement of my employer's.

To further confuse the issue, a colleague asked a DOL agent. She said that because the person was without a green card and therefore inelligble to work in this country, he never met the eligibility requirements and all employer money should be forfeited. Has anyone ever heard that concept before.

I am NOT an accountant. But since we are talking about deferred compensation, it seems logical that it would go on the line for compensation. Particularly since it is the participant's decision (not the employers) to take it in cash or deposit it to the plan.

Peter. does your answer change if the fee is NOT the result of any sort of fiduciary breach?

Does anyone have a more recent solution to this situation? I have a participant who was illegally brought into the country as a child and just recently learned of his illegal status and that the SSN he's been using is not valid. He has quit his job and returned to Mexico. Both he and the employer want to do the right thing with his profit sharing account, but we're all unsure what that is.

It is my understanding that any deposit to the plan by the employer is a contribution and must be allocated according to the terms of the document. They could, however, pay those amounts as bonuses which the employees would have the option to defer into the plan. Or they can negotiate with the service provider to pay them directly, rather than having them charged to the participant.