Lou S.

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.

We go one too about a month ago. And gave a similar, "not required, no withholding response"

I have to admit I'm confused by the RMD rules for cash balance plans. Am I missing something obvious in the regs? Do I convert the hypothetical account balance to an annuity benefit and that is the RMD using the DB rules? Or do I treat the account balance like DC Plan and simply divide by the applicable table to get the RMD? What happens when a 5% owner continues working, getting contribution credits and interest credits but is alos recieving RMDs? If treated like a DC plan no problem, if annuity method; do I recalculate each year based on account balance or add the current year annuity eqivalent of this year's contribution credit to prior year RMD annuity benefit? Hope this question makes sense.

What does your document and 415 amendment say about comp for allocations and testing?

Is a short PY? If yes prorate. Is is a full 12 month PY but 401(k) becomes effecive 11/1, then don't prorate.

Is this a cross tested plan passing on a benfits basis? If so you are OK assuming you pass all relevaent tests under the general test. If you are relying on a proto-type with the "traditional 70% 410(b)" coverage then no because the sole NHCE is going to get 3% and sole HCE is going to get (3 + X)% if you make a PS contrib so for purposes of 410(b) I don't think your NHCE is considered benefiting in t his case.

There are no maximum age restritions for participating in a qualifed retirement plan. I believe this goes back to ADEA. No problem for someone age 70 1/2+ making 401(k) contributins if they are covered by a plan.

Off calendar year 401(k) plans bite, largerly for this reason and when you get some HCE who doubles up the 402(g) limit in a single plan year and really blows the test. That said, generally speaking yes you can recharaterize. The rules are written though that what gets recharaterized in pye 6/30/xx isn't available as cacthup in pye 6/30/xx+1 so sometimes you just wind up pushing the problem a year out.

I assume you mean after taking a hardship he doesn't have enough left in the account to satifsy the refund amount? We had this happen once. We recharaterized part of the hardship as ADP refund. Not sure if that is the correct way to do or if any formal guidance exists (we couldn't find any when we looked) but it seemed like a reasonable way to handle it. We just issued 2, 1099-Rs. the auditors didn't have a problem with us treating it that way.

No problem. We have a plan with this exact set up.

What does the document say? My understanding has always been you use the self employment income on line 14 for partners as your starting point. Is there some reason the accountant doesn't think royalties should be included?

No problem making 401(k) contributions. I assum this person is under the income limit for making a direct ROTH_IRA contribution. If they are not you have to go through some song and dance about making a traditional non-deductible IRA contribution and then doing a conversion to a ROTH-IRA. That always seemed silly to me but unless the IRS has changed the rules that I'm unaware of that where we are at. Edit - also when you say "early in 2010" was that a 2010 or 2009 roth-ira contribution?

We have run into similar in the past. Fees have always been waived when we sent in copy of the acknowledgement file and an explaintion of what happened. Some times it took a few phone calls as well as a couple of letters but it was always fixed in the end. It's kind of a pain.

I'm guessing it was probably a DB plan that had a funded percentage under 80% or 60% that had a full or pratial freeze on lump sum distrtibutions due to funded status.

Is there something I don't know about amended 5500s? That could be the case. I was unaware you needed a filing ackowledgement ID to send in an amended return. Going forward, it would seem you can grab a copy of the 5500 that was filed from the EFAST site, if you are concerned whether or not it was filed, and simply send in an amended filing. My understanding is the amended return will replace the orginal that is up on the site. The client can go in with their log in to see all plans filed, pre & post amended but what is up on the public disclousre site would just be the amended one. Do I have this wrong?

Just a guess but it was probably to save money on contributions when it was originally setup.

Thanks.