SMB

Have a somewhat similar situation to that already discussed in this thread - with one additional "twist". In my case, the owner wants to retroactively amend to a cross-tested class allocation for its Profit Sharing Plan for the 2011 plan year, so that he does not receive a contribution - but he wants to make one for his eligible employees (on extension, no $s contributed yet for 2011). However, based on the TAM that Kevin was so kind to provide the link to, it doesn't sound like it matters whether or not the "cutback" would only apply to an HCE. So, assuming the owner is adamant about his receiving no contribution for 2011, looks to me like the only option is to make no contribution for the 2011 plan year. To further complicate matters, under this employer's poorly drafted prototype plan, there is NO service requirement to be eligible to receive an allocation of an employer contribution. So, participants have already accrued the right to have any 2012 employer contribution allocated under the current Plan terms. So, my proposal for 2012 will be to terminate the original PS Plan and establish a new plan with a cross-tested allocation. Any thoughts, insights or better idea(s)? Thanks!

Is not a 401(k) Plan that provides ONLY employee salary deferral and SH match "deemed" NOT to be top-heavy - or am I thinking of something else?

I seem to recall a somewhat related question that was raised in conjunction with a business owner's spouse who works for the business, but is not compensated - but I couldn't find the thread. My situation: business owner worked all of 2011 - but took no compensation (it's an S Corp, but he had no "W-2 reportable" salary or wages). Question is: can this HCE be included for coverage and testing purposes (would be REALLY helpful), or must the HCE have actually received compensation to be so included? In recent years, even when the HCE owner has received comp, he did not receive an employer contribution allocation. He's in "pre-retirement" mode and has all the $s he thinks he needs. His son (an employee) is the "up and coming" heir to the business and it would be significantly more "benecficial" for the son - contribution wise - if Dad receives a $0 allocation. Any of this making ANY sense? Thanks for any and all input.

I have calculated what I think to be the "optimum" amount of earned income that a 50+ self-employed business owner can make in 2012 in order to be able to receive the maximum annual addition (i.e., $55,500) in his/her solo 401(k) plan. I came up with $174,158.30. Was wondering if anyone else has made (or will make) this determination and confirm my calculation. Thanks!

Does anybody know, previously encountered a similar situation or care to hazzard a guess as to whether a 401(k) Plan participant's spouse's father (i.e., the participant's father-in-law) qualifies as a "parent" for purposes of a "safe-harbor condition" hardship witrhdrawal for payment of funeral expenses? Thanks for any and all input/comments.

Lou - thanks for the "confirmation". Sieve - thanks for the "inspiration". Just so I'm clear, your approach would entail: (1) a short plan year 01/01/2011-11/30/2011, (2) a full plan year 12/01/2011-11/30/2012, a short 1-month plan year 12/01/2012-12/31/2012, and (4) back to a full calendar year plan year 01/01/2013-12/31/2013 (and, obviously, all of the amendments necessary to provide for same)? This way, a full salary deferral contribution could be made in December, 2011 and another in the following plan year. May be too "convoluted" for my client to be able to absorb, but glad to know it's a "possibility".

Been a while since I've encountered a similar situation and am just looking for confirmation (or condemnation!) that the following is "doable" - Existing Profit Sharing Plan (calendar year plan year) wants to add a 401(k) arrangement yet this year. Definitely a "safe-harbor 401(k)" candidate, but obviously too late for SH for 2011 at this point. So, for 2011 the Plan will adopt a "traditional" 401(k) arrangement effective December 1, 2011, using "prior year testing" with "deemed 3% deferrals" and "deemed 3% matching" for ADP/ACP purposes, allowing the HCE participants to be able to defer 5% of comp and receive a 100% match (i.e., also equal to 5% of comp) for the 2011 plan year. Switch to "safe-harbor 401(k)" effective January 1, 2012. Viable approach? Anything better? Thanks for any and all replies.

Andy, Thanks for the info. My first bit of advice to this individual would be to "Take thee to thy DB Actuary." My initial concern was that it might simply be "too late in the game" for a 64-year old business owner (no ees) to even consider adopting a DB Plan. I had also assumed, depending on the benefit desired, that the funding cost could be "substantial". But, again, that's the actuary's area of expertise - not mine.

First, I fully admit that I'm a "DC" person. You know - know just enough about DB Plans to be dangerous! With that in mind, I need to know whether it is within the realm of possibility for a 64-year old self-employed doctor (of course!) with annual earned income of ~$250,000 to adopt a DB Plan? Yes, no, maybe so? Pros and cons? Thanks for any and all replies!

I am looking for a 401(k) plan platform provider willing to service micro plans - i.e., 50 or fewer participants - and willing to work with a Plan's TPA. I am familiar with ASPire, Employee Fiduciary and First Mercantile. Can anyone recommend any other micro plan platform provider that I should check out? Thanks!

The owner of a 1-participant owner-only profit sharing plan wishes to terminate her plan (not making any further contributions) and roll over plan assets to an IRA. Plan currenlty holds some precious metal and coins as investments, but not enough to warrant using one of the "self-directed IRA custodians" willing to hold such "non-traditional" items. These assets could obviously be sold and cash proceeds rolled over. However, if the owner prefers to retain these items, would it be a "prohibited transaction" for her to sell the precious metals and coins from the plan to herself for (readily ascertainable) FMV? The plan may end up simply distributing these assets next year as part of her RMD, but wanted to make sure we had considered all "viable" options. Thanks!

With regard to "$1,000 or more" criterion under the 408(b)(2) service provider fee disclosure, is that $1,000 or more paid from plan assets/participant accounts - or does it also include fees billed directly to and paid by the employer?

Austin3515, Can you - or anyone else - expound a bit more on the fact that "brokerage accounts are exempt from an awful lot of these rules"? First I've heard mention of this, although it would be "music to my ears" if at all the case! Thanks!

Is a spouse of ">5% owner" in a QP deemed to also be a ">5% owner" for required minimum distribution purposes - or can she wait until her actual retirement to commence her RMDs a la "non-5% owners"? Thanks!

Agree with Tom re: short plan year (10/01/2010 - ??/31/2011). If memory serves (and it tends to do so less and less!), final Form 5500 needs to be filed NLT 7 months (unless extended) from the end of the month during which all Plan assets were distributed.

You could remit the withheld amount via EFTPS, assuming you're set up to do so, and then file the 2011 Form 945 when it becomes available. That way, you at least "zero out" the assets and can file a final Form 5500.

Employer terminated a solo-401(k) and did a direct rollover distribution in 2010. Also established a new PS Plan effective for the 2010 plan year. Looks to me like a "successor plan" issue. If so, which event - the distribution from the 401(k) plan or establishing the new PS plan - is actually the 401(k)(10) "violation", what are the ramifications of same - and any way to "fix"? What if no contributions are made to the new PS plan for 2010? Almost hesitate to ask, as I am fully aware that logic and IRS regs are often mutually exclusive, but does anyone have any idea as to the original "thinking" behind the successor plan rules? Thanks for any and all input!

Similar to Bird (I think), I set up a separate business checking account (TPA, Inc. FITW Paying Agent) and enrolled as a "Batch Provider" under EFTPS (Bird was also correct that the program is not as "intuitive" as it might be and the initial "lead time" is a bit protracted). Processed my first deposit "payment" earlier this week and - so far, so good. Think this will be kind of like electronic filing of Forms 5500. Once you get things "up and running", should work as well as the 8190-B coupon approach. Plus, you can now actually "inquire" regarding deposit history. Again, I work with "micro" plans and not a lot of mandatory withholding activity.

QDROphile, Thanks for the input. Sounds like a "logical" approach to me, although I've been in the business long enough to know that "logic" does not always enter into the equation! SmB

Husband and wife worked for the same employer. Wife quits. Husband mentions to the employer that he and his wife "may" be getting divorced. Wife wants a distribution of her PSP balance. Nothing "official" yet as to any divorce. In fact, the husband and wife still reside in their home - just in different parts thereof. Employer suspects they can't "afford" to get divorced. Any liability to the Plan if a distribution is made to the wife of her vested balance? Would obtaining the husband's acknowledgement and approval be waranted? Anybody been down this road? Thanks!

Bird & GMK, Thanks - most helpful! SmB

I seem to recollect that contributions may no longer be made to an IRA after an individual has attainted age 70.5. Correct - or no? What about SAR SEPs and SEP IRAs? Also, I am fairly sure that's NOT the case with qualified plans. Thanks!

A new dental practice, being operated as a partnership, is owned 50:50 by two (2) unrelated incorporated dental practices - i.e., the corporations - not individuals - are the 2 partners of the new practice. Any "controlled group" or other retirement plan "issues" to consider? Thanks for any and all feedback!

R. Butler, Are you submitting witholding for your clients via EFTPS as a "batch provider"? SmB

Does California require withholding on non-periodic (e.g., lump-sum) distributions? Does anyone have a current list/spreadsheet of which states require withholding on non-periodic distributions? Thanks!