Lou S.

415 limit is prorated for short plan year. 401(k) and catchup are not pro-rated but 401(k) can be limited by 415 for very short years.

I believe the answer to this question is yes. Though the IRS might challange it as a disguised 401(k), especially if the HCEs are self-employed partners. It is usually a good idea to document at the organization level the zero allocation rate for various groups.

Isn't that a one-time thing that must be done prior to becoming a participant? Maybe. I've only actually seen it done once and I think he did opt out before becoming a participant but I thought you could do it prospectively at any time but to be honest I haven't checked in a while.

I think he make an irrevocable election to be excluded from the plan forever if the plan document allows for it.

I agree with BG5150 but I will say even in our office there is some disagreement, my boss thinks it should be done the way the OP describes.

Does he currently have any IRA? If no, then he could could make a non-deductilbe IRA contribution (for 2012 and 2013) and immediately convert it to a ROTH IRA. While it would be a 2013 conversion, he would only be taxed on the gain which would be nearly non-existant if conversion done on day account opened or next day; most financial institutions are set up to handle this kind of transaction as it is not that uncommon. Now if he already has any existing IRA it gets more complicated as there are rules for apportioning the after-tax basis based on the combined total of all the individuals IRAs but the CPA should be able to help with those questions..

The IRS not the DOL has the authority to rule a partial termination has or has not occrured. If you subbitted for a ruling that a partical termination did not occur and the IRS agreed then the DOL would be out of luck on the matter. Though I would assume such a rulling would have to be made before the DOL brought suit since I think you have disclose matters pending before other government agencies such as DOL, PBGC and Bankrupcy Court when requesting the partial termination ruling. If the DOL was already involved I suspect convincing the IRS that there was no partical termination would be much more difficult. Did the doc consider repalcing the fired employees and making them immediatly eligible for the plan? I always wondered if that would be a way around the partical term rules in a small plan.

It is the same person or one of them is lying. We had this happen once but in one case the SSN was for the owner (or owner's son) of company A and was correct. In the other, company B, it was a false SSN for a worker of questionable leagal status, so it was easy to insist that company B provide a corrected SSN which I think they did. This was easily 10 years ago but we ran into similar problems as you are experiencing. Not sure what to do in your case.

Yes

1. I have steady income about $400k - 600k every year from the practice. I try to avoid SEP-IRA or 401k etc startin this year since most of the plasn require me to cover employees and that become too expensive to me. Really? I think you are one of the reasons the IRS nonsidrcimination rules are around in the first place. Insurance in a DB can be a god thing, though I agree with others, I'd avoid especially if it is being pushed by a life insurance guy. And as David Rigby suggests, once you hit around age 50 the DB may be more attactive as a tax deduction vehicle but seriously rethink the idea about covering your employees.

Try this thread http://benefitslink.com/boards/index.php?/topic/52983-investment-firm-refuses-to-correct-1099-div/ I think the issues are simialr to what you are decribing here.

Why does your client have both a SEP & MPPP? That aside I think a similar issue came up about a week ago. Making sure the the insitution knows these are tax exempt accounts, possibly by filing an update W-9 with them should stop future 1099s.

In my experience the PBGC will usually allow the waiver (with spousal consent) if the waiver is the difference between a standard and distress termination but as others have said, run it by them to be sure.

I'm not an expert on business entities but if they have a sub-S election I'm assuming that means they are taxed like a sub-S Corportaion. If that's the case i would assume that the memebers get 2 forms of income, their W-2 wages as an employee that are generally eligible for pension purpose and their pass through dividends as member/shareholder which are generally not eligible for pension purposes.

Thanks masteff but to clarify we are not talking about doing the RMD on the 1st to return a from as your reply seems to suggest. I agree that would be pattently unfair. Our goal is to get all 4 withdrawal forms returned at the same time and close the account in one fell swoop by procssing the RMD and then the individual beneficiary elections immediately following the RMD. What I was getting at though was what ESOP guy touched on in his reply, if one or more of the 4 wants a taxable distribution, then that amount is going to be a lot more than the RMD, so my question really was can the other's roll their full 25% share w/o having to assign 25% of the RMD to each of them? And I understand getting all 4 at the same time may or may not be practical but we're trying to make it as smooth as possible. If all 4 do want to roll and that is a possibility given the size of the account, then we'll split the RMD between each of them but we'd like to avoid that if possible.

5% owner has been receiving RMDs for a number of years and dies late December 2012. She was not married (husband pre-deceded) and her 4 childeren were each named 25% beneficiaries. If I'm reading the 401(a)(9) regs correctly the RMD for 2013 is the single life expectancy of the oldest child. But how does the RMD get paid? Do each receive 1/4th of the required RMD or is the RMD paid to the estate or can one receive the RMD and the others roll? If one of the four wants a taxable distribution that is more than the RMD does that satisfy the RMD for all? That is can the other three roll over their 25% interest to inherited IRAs? I'm sure this has come up before but I haven't seen it (or if I have it has been so long ago I forgot) and my quick search of the sub-forum did not yield any results directly on point.

No You may find this worksheet helpful http://www.yourhsaadmin.com/MC/pdf/IRA_to_HSA_Worksheet.pdf Or you can go stright to the source http://www.irs.gov/irb/2008-25_IRB/ar09.html

We have a few who send it in but none who have a split definition of comp for calculating parts of the PS. Most of the ones who do it are 3% non-elective safe harbor who send the 3% in each payperiod. They do this mostly for cash flow so they don't get hit with a huge year end contribution. The definition of comp for PS is generally annual pay so sometimes a "true-up" is needed if they mess up on the deposit calcs. For the OP I would agree he check out the definition of compensation in the plan document. I also don't understand the OP's comment that it is 6% on one definition and 3% on the other coming up with 9% total. For exmple maybe it is 6% on base pay and 3% on bonus. An employee's total allocation that case will aways fall somwhere beteween 3% and 6% of total pay. Unless some compensation is counted in both calcs an employee's allocation will never exceed 6%. Now if an employee has anual pay over the comp limit that should be getting the 6% rate and the plan cdocument bases it on annual pay, it sounds like some true up calc may be required to make them whole.

Yes an error was made by the client when they failed failed to provide a correct w-9. It has been fixed. Most of us don't really see any problem. But if it bothers you that much, talk to your client about moving the assets to a diffrent custodian.

Was the loan improperly defaulted? If not, I really don't see what there is to correct.

If he terminated 1/31/2013 he has first distribution year of 2013 with a RBD no later than 4/1/2014. So yes, I would agree that he needs an RMD before any other distribution can be processed.

If you can do what you are suggestioning it would seem to be an end run around the IRS position that safe harbor plans can't be amended mid-year and another argument for always issuing a "maybe" notice over a "yes we are" notice. At least for non-elective safe harbors. Again like I said in my earlier post I really don't know the answer to your question, but I think it is a very interesting one.

I think you can clearly make the amendment because you currently are not a safe harbor plan. The real question is, does making such an amendment automatically have the effect of turning your "maybe" notice into a "no" notice for 2013? I don't have a good answer to that question but then I've never understood the IRS position on no mid-year amendments to safe harbor plans, particularly when rights are being expanded in some way for participants.

A participant has and outstanding loan in a 401(k) Plan and has also taken most of the allowable hardship limit. The participant's hours have been cut such that making the payments is most of their take home check. The participant would like to defualt on the loan but the outstanding balance is more than the allowable hardship limit. If the plan sponsor allows the participant to default, what are the qualifiaction issues for the Plan? Are there any options I'm missing? Loan is already amortized over maximium repayment period.

They were not an employee of the Sponsor. Absent some provison in the document that would grant them service for thier independent contractor time, why would they get credit for it?