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Lou S.

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Everything posted by Lou S.

  1. I would agree with everything Mike said. I have not heard about the "dirty little secret" he brings up. This is interesting (disturbing). I don't see anything in the Code or Regs that would support the IRS possition that he puts forth but that hasn't stopped them from taking odd positions in the past. I know on several non-cal plans we have used that technique to maximize contribuions w/o exceeding 415. In the past we have self corrected 415 errors due to deferral and large ER contrib but since finalization of 415 regs I agree an EPCRS submission is required to fix.
  2. Under 401(a)(13)(A) generally no. There are some exceptions for QDROs - 401(a)(13)(B) And some for "Certian Judgmnets and Settelments" 401(a)(13)© - if the garnishments is for one of these specific execptions then yes; if it is not then no.
  3. What does the plan's SPD say? If it references that participants may be charged fees you are probably OK. If not an updated SPD or SMM might be in order.
  4. Good point. On the PBGC covered small plans which is what I'm running into here. I found some additional discusion on this in the 401(k) section of the forum http://benefitslink.com/boards/index.php?showtopic=40008 That indicates that even for small non-PBGC plans it looks like you can deduct the maximum to the DB and the 6% to the DC.
  5. Assume an employer has a DB Plan and PS plan that covers the same employees in both plans. Covered Compensation is $1,000,000. The DB minimum under 430 is $300,000 The DB maximum under 404 (assiming no DC Plan) is $500,000 Can the sponsor contribute the $500,000 to the DB and also contribute 6% of pay $60,000? Are they limited to $300,000 to the DB and also contribute 6% of pay $60,000? Would they be able to contribute $500,000 to the DB but nothing to the DC?
  6. A Form 5330 is not required. The participant however will have taxable income in two years, the year of the deferral and the year of the distribution. 1.401(g)-1(e)(8)(iii). Also I'm not sure if they changed the rules on this with the final 401(k) but I think late refunds of excess deferrals are problematic now and may require EPCRS action. Maybe someone else can weigh in this part.
  7. In the past when this came up we have used the same method as allocating earnings on an excess contribution or excess deferral refund.
  8. Restricting the ablity to make contributions based on attainment of age 70 1/2 would violate ADEA. I agree with billgrady 100% on the yes, yes answers.
  9. You can exclude all HCEs from the safe-harbor match. I am not sure if you can have a safe harbor match that benefits some but not all HCEs.
  10. I wouldn't change it. Use the effective date in the adoption agreement. Tell them if they have a different position they should prepare the amded 5500s for their client.
  11. We have a client who holds property/mortgages in his profit sharing plan. His wife accidently paid a bill related to one of these properties with personal funds. The owner wants to reimburse his wife from the Plan assets. This is a one person plan. Is prohibited transaction? If so is it correctable under one of the IRS programs or can they just self-correct and document the error.
  12. Lou S.

    ADP Test Failure

    I'm a bit confused by your question. The plan fails the test but there is no compliance violation if the refunds are made timely. As Luara points out as long as the refunds are made within 12 months of the close of the plan year you don't need to worry about any of the correction programs. In most cases if the refunds are made after 2.5 months after the end of the plan year but before 12 months after the close of the plan year, the employer will need to pay an excise tax.
  13. Sieve, thanks for your insite. I found a really interesting IRS piece doing a google search that has quite a few practical examples. None fit my situation perfectly but a few were pretty close and in each case it would appear the BD is not considered a service organization and thus no ASG which agrees with your input. Here is a link to the document for those who want a bit more detail than the regs provide on CGs and ASGs though I'm not sure the date of this publication as it is just Chapter 7 of a larger document and I have not found the full document. http://www.irs.gov/pub/irs-tege/epchd704.pdf
  14. I agree with this. You need to keep the MPPM seperate as it retaing the money purchase charateristics - if you don;t separately account all money would be subject to MP rules. The only issue on vest is if it is not the same schedule, then it would be treated like a change in vesting. Assuming you are keeping the same vesting schedule then you would just march forward with it.
  15. To ask their pension people. Their attorney isn't an ERISA guy. Real Estate would appear apear to fall out side of the deliniated group of FSOs (Health, Law, Engineering, Architecture, Accounting, Actuarial Science, Performing Arts, Consulting and Insurance). I was just wondering if anyone else had something a bit clearer in this specific area without submitting a request to the IRS for determination.
  16. We have a potential client if he is not an affiled service group. He is a real estate broker who has Schedule C income. He also owns about 30% of a real estate broker dealer ship. About 90% of his Schedule C income is from deals run though the broker dealer he has ownership in. To me this sounds like an ASG but I'm not sure because real-estate agents often fall under some strange employement relationship rules. They clearly don't meet the controlled group ownership tests.
  17. Thanks for the input. QSLOB doesn't help as one company doesn't have enough employees to qualify.
  18. Looks like the answer is yes they are controlled. I can't find any thing that would exempt them from the CG rules.
  19. Since the lease and loans are to Corporation Y (I assume directly) I think you are OK under 3(14)(G). Since there is not 50% ownership based on your facts. But I'll be the first to admit this is not my area of expertise. If someone has something clearer, I would go with that.
  20. If a foreign parent cororation with no US employees directly owns 100% of the stock 2 unrelated business with employees in the US, do the two US businesses constitute a controlled group of corporations?
  21. Thanks, that's pretty much what I thought, just was hoping I missed something. We'll probably suggest to qualified replacement plan which should eat up the excess in 2 years.
  22. We have a 1 participant DB Plan that may be over funded by about $100K. The plan was underfunded so he delayed terminating but then had some good investment results along with getting older than age 65 and now the assets exceed the maximum lump sum limit. His 3 year high comp limit is only about $140K so unfortunately we are running into that cap on the lump sum. The question I have is can he payout 1-year worth of anuity benefits as taxable income and then roll out the rest to an IRA or does this violate the §415 limits? If he can't avoid the reversion, can he roll the excess to a qualified replacement plan and allocate to himself and avoid excise tax? He has never had any employees other than himself.
  23. It is allowable and is done with small non-PBGC plans quite often. A lot things are done that don't seem right but the IRS allows them. Just follow the rules of the plan doc and make sure that it is nondicriminatory. In most cases we've dealt with the owner waived a portion of their benefit to make the plan whole but they didn't have to be that nice.
  24. Sounds out of date. I think that was changed quite awhile ago. Perhaps as long ago as SBJPA.
  25. I'm assuming you've always used prior year testing. If that is the case why don't you use option 3. Re run the ADP/ACP test for 2006 with deferral in ADP and qualified match in 2006 in ACP and use those only as your prior percentages for 2007. I'm not sure there is regulatory athourity for this though.
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