Lou S.

What if it is a prototype or individually designed SEP? You are correct. I was only thinking model SEP. http://www.irs.gov/retirement/article/0,,id=111419,00.html

If you have a SEP it is the only plan you can have. You can't have a SEP/DB combo. edit - see next 3 responces - this was model SEP I was thinking of not prototype or individually designed.

I took it that they were going to issue a 1099-R for the loan and then roll the remainder since the account is under $5K. Agree that this probably should have been done awile ago and now VCP is probably best solution if his has been on the books for "years". I was just giving some ideas for how to physically default and issue 1099-R at whatever platform they are using if they don't have a good address for the participant.

Can you default the loan and send the 1099-R with the letter forwarding service? I'm not sure of any IRS or DOL rule that allows you to NOT default the loan and issue the 1099-R. edit - or what about using c/o the Plan Sponsor adress for the defaulted loan portion?

and ACP test On the deferral I'd assume that's a typo with $16.5K + $5.5K = $22K max.

Short answer is no qualified 1 man DB Plan if you have more than 1 employee.

Eliminate hardship withdrawals?

Is it a cost issue? If I had an EGTRRA doc, which we now do strongly suggest the client restate but I don't think it is technically required. i think there is some discussion about DC plans that were terminating and if they needed to restate or not is you do a serach of the forum. As long as you have all the amendedments timely adopted by the earlier of the end of the remedial amendment period or plan termination (EGTRRA, PPA, HEART, 415, WRERA, etc.) you should be fine. We always recommend to our clients getting a DL on termination and the IRS will let you know if you are missing anything.

I'm not sure I follow your question. All plans have to amend for current law upon plan termination.

Consent is not required for an RMD.

Excellent question. I'm not sure the IRS has given additional guidance but the "best" answer I found was from Sungard http://www.sungard.com/sitecore/content/ca...statements.aspx Though admittadly I can't find an exact date for that web posting thoush it appears to have been late 2007 or 2008 and all similar reference I found were also 2007 or 2008 which indicated "PPA restatements are likely years away" well some how the years have flown. If I wasn't such a cynic I'd say the IRS will have fromal guidance out before Cyle E is complete - hopefully.

Under 100 on first day, no audit required. The 80-120 rule is OPTIONAL that allows you to file under the same method as the year before. Nearly every client we have ever had has taken advantage of the 100 - 120 corridor to continute to file as a small plan and nearly every client we have ever had has also dropped the audit when the fell below 100.

Just got our first "late filing notice" on a plan with a "good" 5558. I hate the IRS.

That's not what the IRS says.

You will have a deduction problem. The maximum employer deduction is 25% of pay, whether that is called profit sharing or matching doesn't matter. So if you are the only eligible employee and your wages are $100K, the max deductible er contrib will still be 25% or $25K. edit: plus the 401(k) deferral. oh and if you are or will be 50 on or before 12/31/2010 you can make the catchup contrib as well so you are limited to the $47K in your original post.

If your plan offsets T-H for match received, yes on P#1 & P#2. Is it better to switch? Maybe. Depends on turnover and what you are providing. I'd guess that a 3% NE safe-harbor would problably work best with 2% t-h and additional gateway if needed but without seeing demographics and knowing the employer's objectives it's just a guess.

Yes, you can do that. Though you'll probably want to amend to current year testing for the second year and you would then be locked in to current year testing for 5 years. Also if it is a small plan, watch out for top-heavy. edit: also if you have multiple HCEs the HCE average could be 5% and if you have HCEs over 50 they can make cacth-up contributions too probably.

I'm not aware of anything in 72(p) that would restrict you to 50% of the deferral account. Unless your loan program limits it to 50% of the deferral account then I would say the loan limit is 50% of total vested account balance not to exceed the deferral account total (since that is the only source they can borrow against).

Yes per capita allocations are allowed in a PS plan.

I'm pretty sure it is all covered in 410(b)(4)(A)-© And If you have an age and service condition that applies uniformly to all ees that 410(b)(4)(A)(i) - (ii) pretty explicited states its OK to excluded those people from testing. It is 410(b)(4)© that becomes problematic IMO if you bring in, or cover, people who don't meet the plan's general eligibility condition, such as an "anybody employed on the effective date is eligible" or "any one who is a participant prior to making eligibility more restrictive is still a participant" that you can run into testing problems in operation. They may or may not be discriminatory but it would be based on ee population.

Yes. If no contrib is being made to DB they you essentially default to the DC rules as if you did not have a DB/DC combo.

See §1.401(a)(9)-5, Q&A 3 You'd use 8/31/09 adjusted for contributions and distributions through 12/31/09.

No 204(h) notice is required. If you are submitting for a DL you need the Notice to Interest Parties. We give an SMM that says plan is terminated as of X date and your are 100% vested in you account as of X date along with a withdrawal package that says return this completed withdrawal form within Y days or we may rollover your balance to an IRA as the Plan is now terminated, assuming no annuity language is in the Plan. Hope this helps.

Personally I don't see a problem with either of these methods, the other people simply don't meet the entry conditions. Where you would run into a problem would be having an amendement to the plan in a "relatively short time after adoption of the plan" that then raised the entry to 21/1 dual entry. That in my opinion would be a pattern of amendments designed to favor HCEs and would fail testing. Though the predecessor service would most likely be a discriminatory providion favoring HCEs as I don't think there was a predecessor business in this case so you'd be picking up service from an unrealted business for just the owner as I understand it here. Though maybe I'm making a faulty assumption.

PBGC plan? We had one like this several years ago and niether the PBGC nor the IRS had a problem with the majority owner waiving along with spousal consent also waiving. But like I said it was several years ago and their positions may have changed. The plan was also underfunded and in employer was in bankrupcy at the time so that might have something to do with the PBGC & IRS both approving it.