jkdoll2

I have a staffing firm that has internal employees (work in the office) and around 200 external employees that work on jobs about 9 months out of the year, work over 1000 hours. They all get W-2 wages and health insurance. They want to start a 401k plan but want to exclude the external employees (known as contractors) and only have the internal employees be part of the plan. I am thinking they cannot do that since the "contractors" are getting W-2 wages and work over 1000 hours and some may work 12 months within a 12 month period. The staffing firm says other staffing firms are able to have a 401k plan and not include their external employees (insist they are W-2 waged as well). Am I missing something? Wouldnt they have to be included if they worked 12 months, 1000 hours (some leave and come back within 12 months)? They would not pass coverage testing if they exclude the so called "contractors". There are about 20 eligible and there are only 6 internal employees. I keep reading that contractors can be excluded - but arent most 1099 waged not W2? How are staffing companies excluded contractors that are W2 waged? Thanks

Are you able to freeze a 412(e)(3) Plan that is fully funded with life insurance and annuities? If so - what about the premiums that are required?

A husband and wife want to start a cash balance plan. They each have a solo 401k plan. Can they keep their solo 401k plans along with the cash balance plan or do they need to open a different 401k plan with both as a participant?

Thanks for the answer - I get it now.

Same question as this in 2004 - we dont know why there is an exemption to age 26 - see above. Why doesnt the plan have to become PBGC covered when the daughter is 21, why can they wait until she is 26? Where is the rule for that? Thanks

Where can I locate the code to look at? Thanks

Husband and Wife married in October (2nd marriage for both) the minor kids are from wife's first marriage that they claim as dependants on their taxes. Kids are not adopted my husband. Husband is a doctor and the medical practice (and all property contained in that) were stipulated as separate property before the marriage. His (husbands) medical group and the his C-corp are in no way associated with his wife's business and are not community property and were completely segregated as such in pre-nuptials before they were married. Husband has a DB plan and 401k plan already in place with 2 other doctors. He owns 1/3 of the holding company where the DB plan is at. He owns 100% of his C-Corp where his income is passed through the holding company. So his income in his C-Corp is used for the calculation of the DB plan and 401k plan that is housed in the holding company, where he owns 1/3 of. The wife wants to open her own DB and 401k plan. Does it look like the husband needs to be part of that plan? Since the minor children are not his and his business is totally separate from hers (there is nothing in common with her business) it is hard for me to determine. The husbands income is already being used in a DB plan. Do I need to test his portion of the DB plan with hers? Would you consider them a control group? Thanks

I would just verify the control issue - the IRS is funny sometimes and they may not think that is the conservative approach - it depends on the auditor. They may thiink they are getting to much benefit. Thanks

In the ASPPA Defined Contribution book - it says the employer (the doctors) would have to have control over the leased employees to consider them in the plan. Under IRC 414(n): [*]The recipient must be paying a fee for the services of the individual [*]The individual must be providing services on a substantially full time basis for at least one year [*]******The recipient must have primary direction or control over the individual's services and [*]The leasing organization, not the recipient, must be the common law employer of the individual So I guess I question the 3rd point for leased employees. Thanks

When calculating the earned income for a sole prop or partner in a partnership in a 401(k) plan I have been using a spreadsheet that includes a reduction for the employee's salary deferrals. (i.e. earned income minus 1/2 SE tax, minus employee deferrals and employee's employer contribution, minus the sole prop/partner employer contribution. Argument is subtracting the employees deferrals. Our software company does not do that - has that changed? Do you subtract the employees deferrals (not owners deferrals) to determine the comp for the sole prop or partnership? This is for earned income only - not for deduction purposes. Thanks

Thanks - that helps

Thanks for your response Where can I look up the requirements and restrictions for a plan loan? Does he need a fidleity bond since it as an investment in the plan? Is there some kind of colateral needed?

One participant (owner only) Defined Benefit plan. He wants to do a plan loan - give money to an outside investor. I know plan loans are allowed (not participnat loan). What are the requirements for a plan loan - is there a dollar limit and time limit (same as participant loan)? Does he need an ERISA bond since one of his assets is a plan loan? Thanks

Off the hip I can't find anything. This is only for DB plans mind you, in a DC plan it doesn't matter. I asked around and if I find something written down I'll pass it along. I know I have read it and heard it several times. I work plans drafted by attorneys that do it, though I've seen attorneys do things I would NEVER do with plan design. I know it's silly that they tell you not to do it but don't care if you create a category with the obvious intention of creating their own group. Does anyone else have an actual cite? I'll keep looking. This is just a proposal plan I was running. I will do one including the participant, and one with excluding him since he is an HCE (tests pass) If we exclude him I will put in the document "HCE - non-owner excluded". I will not be naming him. Thanks

Two Owners, One employee - Employee is Highly Compensated - does he have to be included in the plan or can we carve him out since he is Highly Compensated? Thanks

So do we not have to do an extension for the 8955-SSA since the deadline was moved to January 17,2012? I know the 5558 is not out yet that is suppose to include the 8955-SSA on it. Any news on when the new extension will be ready? Thanks

Yes - Datair just put theirs out 2 days ago

Im not really combining them - Im only reporting for 2010 because there is nothing for 2009 - Do I use 1/1/2010 thru 12/31/2010 dates - since Im only reporting 2010 information? Thanks

Another question - if you have a plan with nothing to report for 2009 but has something for 2010 - what dates do you put on the form 1/1/2010 thru 12/31/2010 or 1/1/2009 thru 12/31/2009? Do you put the participant count in 6b for the the 2010 plan year when you have nothing for 2009? Thanks

But do you include the Code D participants (paid out) in the count for 6a and 6b?

I'm trying to run a proposal for a plan. They are Farmers and the owners are 77 years old - want to retire at 85 comp is $250,000 and they are a partnership Can you do a 412(e)3 plan and what about the RMD's required in a fully insurance funded plan? What about PS-58 costs? Is it worth it? What a about a tradtional DB plan - the RMD's are calculated differently and they can be high also. Thanks

It shouldnt be a problem he was not totally funded and he had a shortfall in 2008. He is not near his 415 limit. But - thanks for pointing that out it is good to know.

Thank you - that is exactly what I needed. I appreciate it.

Does the DOL determine tax value? I guess not - so would you use the PERC amount to purchase the policy outside of the plan? That seems to be the way everyone is leaning towards. Thanks

That really didnt help me with my question. I just want to know what value you use for purchase outside of the plan - PERC amount or cash surrender amount. This is a insentive life policy - he only put in 25% of the Defined Benefit Contribution to the life insurance. I cant find where the DOL states how they determine Fair Market Value and tax the rest. I was just asking for my boss who is a life insurance agent and says he always heres conflicting answers. I appreciate it if I can just get comments on the issue. Thanks