actuarysmith

If I am not mistaken (happens alot though........ ) a plan participant can contact the DOL on a confidential basis and file a complaint about untimely deposits. It would still be better to try and pursue your own remedy working with the employer, unless you are talking about a great deal of money.

Kjohnson - cute story, but I have one question.... Exactly WHO built the "competing company" that all those plumbers ended up working for? Why did the person build that company? What was the motiviation? Why should he or she have taken the risks involved in building that company? Do you think that the plumbers in your story pay the same taxes as that person who built that company? should they? Ok, I will step down (carefully) off my soap box and stop preaching now..........

What if you just bill the plan for some related admin expenses and use up the forfs that way? Make sure the document allows for this..........

Belgarath - technically true, but the service has stated that if the investment opportunity (for example) requires a minimum investment that exceeds a nominal amount, then it is effectively not available on a non-discriminatory basis. Same issue then..........

When you say "Opt out" - do you mean an irrevocable election not to contribute? OR do you mean that this HCE just does not plan to contribute NOR do they wish to recieve and employer allocation? The latter approach might be more beneficial to your testing results..... In other words, they are getting an allocation of 0% (i.e. EBAR of 0%) - this will clearly help things with regards to testing.

This client should find a local chapter of PA- (Plans Anonymous) The first step on the road to recovery is to admit you have a plan........... lol

I disagree with Katherines response (or more likely I don't understand it......... lol) You cannot exceed the 402(g) limit no matter how many plans you are a participant in. You are obligated to inform the employer of at least one of the plans that you have contributed in excess of the limits. If the refund is not corrected by March 15th (I think), then the excess will be taxed and you will NOT be able to distribute. Then the amount will be taxed again later when actually distributed at termination - double taxed. Look it up, I am not making this up!

I assume you are going to limit the ability to "roll" out to employees with at least five years of participation, and possibly who have attained a certain minimum age - otherwise you run afoul of the in-service distribution rules.

I whole-heartidly agree with the last two posts - PT's and Beneftis Availability Rights and Features violations galore.......... Run, don't walk to your nearest ERISA attorney and tell your client to bring their wallet.........

A 403(b) plan does have ADP testing if there are any employer contributions.

401(k) deferral only do not count against 404. Therefore no problemo - forge ahead! this can tricky when there are employees, though - still must pass ADP test.........

You certainly have collected a lot of information. Fortunately, most of it is extranious. (spell checker please!) You do not appear to have the same five or fewer owners (including family stock attribution) with greater than an 80% overlap. Therefore, I concur with your analysis that you do not currently have a controlled group. I would be careful to document your files and warn your client that if any ownership changes take place to call you ASAP! Also, if they are using a standardized proto document, all members of a controlled are required to participate. If there are any ownership changes in the future, it could affect participation, coverage, and discrimination testing. It could also require you to add the other employer, or use a non-standardized document so they do not have to be included (in the document - still included in testing........)

How do you get around the prohibition related to not sponsoring any other plan during the same plan year as the SIMPLE? I would agree with Gary Lessor's conclusion..............

You've got to know when to hold 'em, know when to fold 'em, know when to walk away...... (oh, never mind). I would imagine that the forfeitures would best be handled at this point by treating them as though they are forfeitures accruing to the profit sharing plan into which they were merged. What does the profit sharing plan document say about forfeitures? (Probably allocated in addition to any employer contribution. If true, then there's your answer).

Gburns beat me to the punch. I would redefine exactly what you are searching for - bigger definitely does not mean better. In fact, it very typically means more mediocre. Smaller organizations may give you more opportunities to be more creative, have more say in the definition of job, more opportunities for advancement, etc. etc.

I agree with the follow up posts. However, I wanted to "chime in" on one particular comment made in the original post by GORDY. The statement is made that since it is deferral only, that Top-Heavy is not an issue. The reason that Top-Heavy is not an issue is due to the fact that this is a Safe Harbor plan - period. It has nothing to do with the fact that it is deferral only. A traditional 401(k) (i.e. other than safe harbor) can be Top-Heavy even if it consists of salary deferrals only. This is one of the most understood facts regarding Top-heavy. For example, if you have a new plan (first year.) One Doctor, two employees. Doctor Defers $12,000, one employee defers $6,000, the other employee defers nothing. The plan is Top-Heavy! (12/18 = 66.7%). All non-Key employees are required to receive 3% of pay. I only make a point of this because some wrongfully assume that salary deferrals don't trigger a potential Top-Heavy issue. They can.

Why are they continuing to maintain the plan? Do they have illiquid assets? Not sure if they want to continue the plan with additional accruals? Do they have some junk assets that they are waiting to see if they pan out? Are they having trouble with the concept of vesting everyone 100% immediately? (This could be avoided by merging the plan with another plan, such as a 401(k)) Are they trying to avoid plan termination expenses? (talk about shooting yourself in the foot..........) With the passage of EGTRRA, there are very few reasons for continuing with a MPPP.

More Information Required. What is your income level? If it is high enough, you may not need the Money Purchase OR the 401(k), just a Profit Sharing Plan. (BTW, why in world would you need a safe harbor plan????? if it is just you, there is no ADP testing problem to solve ) I am sure that Vangard would have a prototype profit sharing document you could use and get around the solo 401(k) issue. If your income is roughly $160K or above, you would be able to get a $40K deduction (i.e. 25% of pay) easily. This would also leave you with great flexibility. If you income is substantially below $160K, then you probably should consider a solo 401(k). Even if Vangard won't give you a solo 401(k) option, why don't you locate a TPA or CPA that handles plan admin and let them take of the plan document and tax filing. Then you could continue to use Vangard. True, it may cost a couple of bucks a year (probably $500 - $950), but then you don't have to worry about compliance issues, you can continue to use Vangard, and get your $40K deduction - which will save thousands in excess of the plan admin costs.

Unless the leasing organization provides for a 10% of pay (Money Purchase Plan) type of contribution, you cannot exclude these employees from your plan. The plan you have described is not comparable to what is required. Since you and the other employer and unrelated business entities, you cannot "offset" contributions made to that plan from your SEP. Any chance you are older (eh, more mature.... ) than the bulk of the other employees? If so, you may be able to benefit from a new-comparability / cross-tested profit sharing plan. If this is true, you should seek out a qualified Third Party Administrator in your area. Be sure to ask if they handle cross-tested plans, many don't have the capacity for this type of plan. Note- many CPA's are still not aware of their existence - so exercise caution with whatever advice a CPA may give. (I do not mean any offense by this statement. It has just been my experience that many CPA's steer clients toward SEP's, Simple's, etc. regardless of what is really best - they just don't know any better..............)

I agree with the last post. I don't know the individual mentioned in the last post, but I would try and find a review/ cram course somewhere. The real benefit to the class, in my opinion, is not so much the instruction (although that is great). It is getting away from family, friends, kids, hobbies, home projects, TV, office, etc. etc. for a few days to focus on nothing but passing the enrollment exams. The after class discussions around a glass of beer with the other students is usually very benficial as well - you compare knowledge, actual working techniques, networking opportunites, etc. It is a safe bet that more than one actuary has been known to find a job through networking with old classmates. It has been about 15 years since I sat for the exams, but I am relatively sure that the pass rates are such that the majority of candidates fail each sitting. Anything you can do to "up your odds" is extremely well worth it! Look, it may cost you $1,500 to attend a seminar (i.e. airfare, meals, room, etc.) However, if it saves you a year or two of sudying (because you avoid retaking the exam a couple times) it is worth every penny!! Good Luck !

I did not realize that there were ANY SIMPLE 401(k)'s out there.... My question is why? If the sponsor likes the concept of a SIMPLE plan, why not just go with the SIMPLE-IRA? What do you gain over the SIMPLE_IRA and tradition or Safe Harbor 401(K) in a SIMPLE-401(k)? By the way, to answer your question - I wuold go with answer number two. Continue the same plan, just convert (amend) it to a non SIMPLE-401(k). You could keep track of the employer contributions prior to the conversion in a seperate bucket, much you you do in a Safe Harbor Plan.

The scenario you describe above has some potentially tricky plan cooridination (aggregation) issues at a minimum. You will need to prove the the combination of plans does not exceed 404, 415, etc. However, before you get into all of that - why does this employer think they want to switch back to a SARSEP? P.S. good luck with GUST & EGTRRA updates!

I checked the specific language in the corbel prototype. Page 58 - 12.2(e) if a participant has Excess Deferrals for the taxable year, ......, the participant may, not later than March 1st following the closw of such taxable year, notify the plan admininistrator in writing of such excess and request............ In such event, the Administrator shall direct the distribution of such excess amount not later than the first April 15th following the close of the participants taxable year. etc. This language clears up several things- 1) it is the participants responsibility to notify the Administrator by March 1st (in writing) 2) the distribution must occur not later than April 15th. The passage goes on to state that any distribution of less then the entire amount of excess deferrals and income shall be treated as a distribution from the plan (even though not actually made).

I had the very same scenario. I went with - Group A - Owner Dentists Group B - all others You could modifiy this if necessary to specify a particular ownership %.

Fred- I think you are right on the employer paying no penality. It is not a plan level problem, it is the participant. I had this happen a year or two back. Check your plan doc - the corbel document (and probably the code and/or regs) say that the distribution from the plan needed to occur by 3/15 or 4/15/02. My recollection is that if it has not been completed within that time frame, the participant must leave it in the plan AND IT IS STILL TAXABLE. They are then taxed on it a second time around when they actually have a distributable event and take a distribution from the plan.