K2retire

Does it help to think of it as a requirement for current year work related income? That is essentially how they define "earned income" for this purpose.

Limited is the key work here: we require a statement signed by the trustee of the receiving plan indicating that he or she has determined that it is an appropriate rollover into the plan.

It sounds like she has exceeded both the 402(g) limit and the 415 limit for the year. I don't see many of those, so I don't recall the deadlines for correcting them.

The plan cannot pay you more than the value of your ex's account. The first direction you should be looking is to get legal help. Why they took so much longer than the expected 60 days is your first question. That answer may point you to other options. As they suggested, it may be that you have to look to other marital assets to come up with some of the additional funds you were expecting.

Slight variation -- company begins the year with a SAR-SEP left over from years ago. Mid year they switch to a 401(k) plan. Does the 402(g) limit cross plan types? What other sorts of limits do they need to be watching for?

Related question that my brain can't quite figure out this close to March 15: Client wants to make their SH enhanced match plan less restrictive mid year. Currently they have semi annual entry and figure contributions on a comp. while a participant basis. They also have a 6 year graded vesting schedule on their profit sharing contributions. They would like to go to immediate vesting and calculate employer contributions (both SH match and PS) using full year compensation. Since both of these changes are things that are covered in the safe harbor notice, can they be changed mid year?

If your only profit is the $25,000, then your $25,000 will exceed the deduction limit because it is more than 25% of compensation.

Trying to make sense of IRS rules will make you crazy. Just memorize them and move on.

Is the objective here to include the child, or retain the exemption from filing Form 5500? If you want the child in, you should have no or low age requirement and no or low service requirements in the document. If you want the child out, require age 21 with 1 Year of Service for plan entry. I've had many clients who paid their children a salary so that they could be included in the plan. Often the "work" was nothing more than appearing as a model in advertising. I haven't seen any that were audited, however.

I agree with Mike for the reasons suggested by John.

At this point they are also subject to late penalties on the deposit of the FICA and Medicare taxes. If the client didn't want to use those funds as an employer contribution, he (as the employer) should not have deposited them to the plan.

I am a TPA, not an accountant, so my understanding of these details may not be precise enough for you. I am told that in some cases "guaranteed payments" can be counted as income. Not sure if that is the box 19 amount you mention. IRS Publication 560 may provide more insight.

Many tax advisers tell clients to pay themselves nothing but dividends to avoid Social Security and Medicare taxes. Unfortunately, they forget that also means no retirement plan income. You can't have your cake and eat it too.

The language that you are looking for is not likely to appear in the SPD -- go to the adoption agreement.

ASPPA has already sent comments to Congress about this. I believe I read it in an e-newsletter last week, although I don't recall if it was from Benefit Link or Plan Sponsor. The bigger question is if they can act soon enough. With nothing definitive on the horizon plans will continue to be terminated.

Generally the licenses you mention are required to sell securities. I am not aware of any licensing requirements to sell plans.

Recently ASPPA submitted comments to Congress recommending that relief was needed from the position that the only way to cease the requirement for for a safe harbor non elective contribution mid year is to terminate the plan. That strongly suggests that the IRS more than "suggested" that there is no way to stop mid year.

It may be a mute point. Do any of the investment choices actually have positive earnings numbers for the period in question?

Just make sure your document allows HCEs to receive a QNEC. Some limit them to only NHCEs.

Is there any sort of de minimus amount below which a plan can choose to ignore lost earnings? My gut reaction is no. Our record keeping folks are howling about dividing small balances among multiple participants with multiple investments taking considerably longer than the value of the earnings, so we're grasping at straws. Related quandary, now that most investments have losses rather than gains, do we get to adjust down?

Check with an insurance broker.

I wish someone could get that idea into the collective consciousness of the management where I work!

Although I am in complete agreement with the advice provided on this question, I have seen many takeover plans come in with a balance in a suspense account that was deposited but not allocated in the same year. Apparently somebody thinks it's OK.

I would think that a CEBS or ASPPA designation in addition to your CPA would be a powerful marketing tool.

I am not an expert either, but I would come to the same conclusion you have.