Earl

I understand that there is a "grace period" when you can ignore the merger for coverage. Would that also apply for the definition of Highly Compensated and Key Employees? Thanks for any opinions

The idea of asking the software company is that if they say "to make estimates easy" her co-workers would not have an answer. It was not because they are regulatory authorities.

Ask the software company what is their intension in providing that option.

What seems interesting to me is if 2 non-married individuals own a C-Corp, say 50 / 50: 1. They have to file a regular 5500 (not an EZ), and 2. They do not have to be covered by a Fidelity Bond (so answer the Q on 5500 "plan was not covered") then The DOL has no way to tell from the filing if that is a problem. It makes the question a false indicator of non-compliance.

Yes, I did. Thank you very much, that helps greatly.

A guy is in two plans, violates 402g in combination, takes the refund from plan A. Does the refunded excess still count toward 415 limit in plan A for the year? Thanks

how about OPPC One particpant per category

the question is not about the availability of the EZ but about the requirement for a Fidelity Bond in a plan that has only owners of a corporation. But regarding the availability of the EZ for a corp with mulitple owners see that last line of the following (which I found today): SECTION 1103 of PPA see below; . 1103. REPORTING SIMPLIFICATION. (a) Simplified Annual Filing Requirement for Owners and Their Spouses- (1) IN GENERAL- The Secretary of the Treasury shall modify the requirements for filing annual returns with respect to one-participant retirement plans to ensure that such plans with assets of $250,000 or less as of the close of the plan year need not file a return for that year. (2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED- For purposes of this subsection, the term 'one-participant retirement plan’ means a retirement plan with respect to which the following requirements are met: (A) on the first day of the plan year-- (i) the plan covered only one individual (or the individual and the individual's spouse) and the individual owned 100 percent of the plan sponsor (whether or not incorporated), or (ii) the plan covered only one or more partners (or partners and their spouses) in the plan sponsor; (B) the plan meets the minimum coverage requirements of section 410(b) of the Internal Revenue Code of 1986 without being combined with any other plan of the business that covers the employees of the business; © the plan does not provide benefits to anyone except the individual (and the individual's spouse) or the partners (and their spouses); (D) the plan does not cover a business that is a member of an affiliated service group, a controlled group of corporations, or a group of businesses under common control; and (E) the plan does not cover a business that uses the services of leased employees (within the meaning of section 414(n) of such Code). For purposes of this paragraph, the term 'partner’ includes a 2-percent shareholder (as defined in section 1372(b) of such Code) of an S corporation.

50% / 50% 2 owner corp seems to have to file a 5500 (no EZ). Is plan required to be covered by a Fidelity Bond. I always thought no for owner only plan. So it would be a 5500, Schedule I indicating no Bond coverage and it would be correct? And there is no where on the filing to indicate that coverage is not required? Thanks

It seems S-Corp would be EZ eligible, if no employees. C-corp would not. SECTION 1103 of PPA see below; . 1103. REPORTING SIMPLIFICATION. (a) Simplified Annual Filing Requirement for Owners and Their Spouses- (1) IN GENERAL- The Secretary of the Treasury shall modify the requirements for filing annual returns with respect to one-participant retirement plans to ensure that such plans with assets of $250,000 or less as of the close of the plan year need not file a return for that year. (2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED- For purposes of this subsection, the term 'one-participant retirement plan’ means a retirement plan with respect to which the following requirements are met: (A) on the first day of the plan year-- (i) the plan covered only one individual (or the individual and the individual's spouse) and the individual owned 100 percent of the plan sponsor (whether or not incorporated), or (ii) the plan covered only one or more partners (or partners and their spouses) in the plan sponsor; (B) the plan meets the minimum coverage requirements of section 410(b) of the Internal Revenue Code of 1986 without being combined with any other plan of the business that covers the employees of the business; © the plan does not provide benefits to anyone except the individual (and the individual's spouse) or the partners (and their spouses); (D) the plan does not cover a business that is a member of an affiliated service group, a controlled group of corporations, or a group of businesses under common control; and (E) the plan does not cover a business that uses the services of leased employees (within the meaning of section 414(n) of such Code). For purposes of this paragraph, the term 'partner’ includes a 2-percent shareholder (as defined in section 1372(b) of such Code) of an S corporation.

Thank you E

A person is very young but making $350,000. I want to install DB & DC Plans. If the DB contribution is 25% or greater I am pretty clear that she can contribute another 6% under the Profit Sharing Plan for a total of 31%. If the person is so young that the DB contribution is, say, 20% can you then contribute 11% to the PS? IRS Notice 2007-28 (basically, I think) says to ignore the first 6.00% of Profit Sharing contributions. So can she make 6% of ignored contributions and then 5% to get to 25% (11% total to the Profit Sharing?) Or is the extra 6% available only if the DB contribution is 25% or more? Thank you

Thank you. I re-read my original post and find that it was very unclear. I am taking over a plan that has 1 owner, but has quite a few non-owner professionals that, based upon full year compensation, are all Highly Compensated. But in their 1st plan year of employment (a partial year) they don't make $100,000 so in the second year, their first year of eligibility, they are Non-Highly Compensated even though they are making $150,000 - $200,000 in the second year. And they stay non-owners. This group (based upon job catagory, not HC status) is excluded from all ER funding but allowed to participate in the 401(k) portion of the plan. I think that they have a problem having excluded the professionals from the SH during their first year of participation (second year of employment). I think the only way to not give them the 3% is to totally exclude them from the plan. I think your second response is agreeing with this now that (I hope) I have stated the problem more clearly. Am I correct? Thank you for reading this.

I am talking about having a class of employees that contains NHCEs that is 1)eligible for the 401k but also 2) ineligible for the SH contribution. I almost see it in the following but not quite. Thank you. VIII. INTERACTION WITH OTHER RULES AND TESTING METHODS A. In General A CODA that is treated as satisfying the ADP test under section 401(k)(3)(A)(ii) and section 1.401(k)-1(b)(2) will not be treated as a qualified CODA unless the arrangement satisfies the other requirements of section 401(k). For example, under section 401(k)(3)(A)(i), the group of eligible employees under the section 401(k) plan must satisfy the requirements of section 410(b), under section 401(k)(4)(A), benefits (other than matching contributions) must not be contingent on an election to defer, and elective contributions must satisfy the allocation and timing rules of section 1.401(k)-1(b)(4). A plan that satisfies the ADP or ACP test safe harbor must satisfy all other qualification requirements of the Code that are applicable to the plan, such as the nondiscriminatory availability of benefits, rights, and features under section 401(a)(4) and the limitations of sections 401(a)(17), 401(a)(30) and 415.

Can you exclude classes of NHCEs from the Safe Harbor contribution. Assuming you pass 410(b) and the plan is not TH they get no ER contrib and it is OK? Or do you then somehow create two plans (like the early participation rules) 1 SH and 1 Non-SH? Not 98-52: "a prescribed level of safe harbor matching or nonelective contributions are made on behalf of all eligible nonhighly compensated employees"

IRA time

I have "discovered" that the open asset # didn't match the prior year's close a few times on filings (Sch I) and never seen a letter about it. Has anyone ever?

We had a DOL audit where they told us the KEY EE money (defs & match) had to be forfeited and used to fund the employees. Then the IRS audited the plan and said that we couldn't do that and that we had to undo it.

I have called the EBSA Status check line and found some filings being requested by IRS are confirmed as received by EBSA. I point that out in response with mention of the date received.

I understand that 2007 is a pass (actually a "no test"), so no problem. But for 2008 I have NHCEs eligible under the OE provisions. But the prior year number for the HCE limit for 2008? 0%? A Looks like I have to use current year testing for 2008, or B Use prior year testing run using immediate entry (plan provision) because OE yields a 0% for the NHCEs. Agree? Thanks

Everyone is hired after 8/1/06 so they are otherwise excludible for 2007 ADP testing. Plan has immediate eligibility/entry. For 2008, to use prior year testing, do I have to run 2007 ADP test with everyone in the test? Is there anyway to exclude any of the employees but not all? (I don't think so.) I think otherwise excludible testing is "use statutory rules" as only option. 2008 would be first year of testing but not first year of plan. Bunch of new employees started in November and did not defer, so current 2007 year average is very low. So I have a 0% first year average for 2008 or I have to use 2007 actual and go current year testing for 2008, 2009, 2010 & 2011. 2012 I could switch to prior year. So, I guess question is, am I forced to use current year testing? Any techniques here to consider? thanks

I have gotten lots of notices with the reference to the prior (and never received) notices and been very successful in getting waivers. But I tend to basically never believe my clients when they say they filed but can't prove it. (How about a $10 user fee with the 5500? There's your proof.) I got one from a client with a penalty of $25. A one day penalty. I couldn't believe it. I have also experienced repeatedly a failure of the scanning to pick up the changes in the filing reported on the second page. Several letters have gone back with the response "... changed from prior year as reported on page 2 on the filing...." As for waivers of penalties, Health issues, deaths in the family and business relocation have been successful. Also lots of problems with 945 taxes. Posted to wrong year, posted to wrong EIN, wrong type of tax, wrong employer (similar name-different EIN in different part of country), to the employer rather than the plan (separate #s). Have phoned, faxed, mailed responses and it never gets corrected the first time. One time got a letter back "this is not a valid number" called and told it expired cause never used. Called and got a new one, got a letter, "you already have a number." On and on and on.... (just in case the IRS ever reads this)

Schwab: what's a 5500?

That's my theory (and what I meant by 'laziness'), but they said: IRS rules state that a 401(k) must be in place for at least one month during the year it was created. This means this must have been set up prior to 12/1/07 for the 2007 year. The managers of Xxxxxx’s Pension department, say they will not set up a 401(k) for the 2007 year given these IRS mandated restrictions.

Thank you