katie58

I think you said it much better than I did! Thanks for all your help.

I have a client with a payroll system that stops taking contributions when the maximum allowable comp reaches $245,000. They have an employee that reaches this limit mid year. Since he is only contributing 5% of pay, he has only contributed $12,250. In realty, he would actually like to save the full $16,500. Can they just over ride their payroll system until he reaches the $16,500 limit? This is a safe harbor paln. At testing time will the vendor just consider that he save 6.7 percent of his comp then? Thanks in advance!

Thanks for your reply. I guess this is something else I should investigate.

We have a client that made late contributions 4/06 and 10/06. The contributions were made but they did not include the earnings missed. The missed earnings are $20.52 and $112.55 and have been added to accounts this week. I understand that they need to file a 5330. I believe that they only need to complete line 3a and schedule C. It is my understanding that they will need to file a 5330 for 2006, 2007, 2008 and 2009. Would you agree? Now the big question. How should I calculate the tax? I think it should be 15% of the prohibited amount. (20.52 plus 112.55 times 15%.) Would it be the same calculation for all years? Also, what description should I use under the "Description Of Prohibited Transaction"? Any guidance would be appreciated. As you can probably tell, I have never completed a 5330. Thanks in advance!