Earl

The contribution for 2005 made in 2005 exceeded 25%. I gave him a 2005 estimate based upon comp numbers he gave me and, despite my telling him it was an estimate and not to fully fund until after 12/31/05, he funded it all. Comp numbers turned out to be too low to support estimated contribution. So there are contributions for 2005 made in 2005 in excess of 25%. So 10% excise tax. No one told him to fund it, in fact I told him not too. But he did. So, how to treat the excess? (And now he wants a 2006 estimate....)

client put in more than 25% of pay before the end of the year. 10% excise tax unless return as mistake of fact by 3/15/06. There is no mistake of fact. What do you do with the money? Allocate but it's not deductible? Hold till next year and include in allocation and deduction? thanks

Follow up to this: The fee for this "funding method change" filing is $2,800 starting next week? Am I reading this correctly? Thanks

More specifically, now that it is 2006, is a good faith amend for the new 401k regs needed. any one seen one?

There was something in writing not to long ago from Relius that talked about 500 filings per year for free. I questioned it and they said that "currently they do not track the count of forms prepared". You know this is a future componant of the "rate of price increase", right WDIK?

S-corp owner gets W-2 wages of $100,000. There are health premiums paid of $10,000 that are added on to his income on the W-2. The extra $10,000 is subject to income tax but not SS Taxes? (Is that backward?) Is plan comp $100,000 or $110,000? Thanks (At least its not a K-1 question)

In one of their more righteous statements, for which I have heard nothing to contradict: 2002 Annual Conference IRS Questions and Answers p 38. Spouse works for husband’s business for many years (over 1000 hours/year) without taking paycheck. In 2002 spouse begins taking paycheck. For plan purposes what is spouse’s hire date? When she originally started working or when she started getting paid? When she started getting paid.

I would pay out asap and include in 05 1099s and 5500 shows $0. I don't think the IRS would mind; like I think there is (at least there was once) in the instructions "if the only money left in the plan is to be a reversion you can report as paid and file the final." (or something like that...) And there is something somewhere about including income received shortly after the end of the year in prior year income. so the 1099 is not an issue. I wonder it that is still in the instructions... Have to go look That's what I would do.

Until a child is given 5%. Direct Owners of more than 50% of the corporate stock Direct Owners of 50% or less than 50% of the corporate stock Spouse of direct owners Children of Direct owners I try to make that pretty standard wrt keys/HCEs (tweaking the % when appropriate)

If you filed the 945 as if there was no withholding you could get that money back. I have never heard of the IRS catching it and fining a plan for failure to withhold and, even so, the penalty for that would be a lot less than the excess dist. But maybe that is what you are talking about....

I have a small plan where non-ower doctors are an excluded class. I pass 410(b) for coverage with him excluded. Is this non-owner doctor still in the 401(a)(4) testing (as a 0) or no? Thank you for any help!

I do not use the 1 year hold out rule and, as you say, I would be in the same position. Thanks for the 10/15 tip. I thought it was 8 1/2 months.... I'M SAVED!

My experience shows that the only time an extension is even recognized by the IRS is as an attachment to the actual filing. Wonder if anyone has any contrary recent (past few years) experience.

She was gone for about 16 months. July 03 - Nov 04. (Isn't breaks in service a vesting, not eligibility, issue....?)

She is eligible, but she didn't meet the accrual requirements (1,000 hrs). Its TH so she gets 3% because she is there on the last day. That is then bumped to gateway by the gateway amendment. So coverage is not an issue. Non-discrimination testing fails so I have to give a higher contribution to pass. But I don't think the plan has a provision for it. So I think I need(ed) to amend by 9/15. Of course this is a Sole Prop and I got the info after 9/15.

I believe it is the same employer. Same EIN etc... Just sold off the clinic. That might be a separate, also interesting, issue.

No. The document, pre-amendment, had no vesting schedule? Doubt it. And if it did, you can ignore it? Doubt it.

Write it tonight and get it signed tomorrow. You probably have two weeks to get the deferral elections so no HCE should be getting any advantage. First payroll under plan is probably not until 10/15. So you announce the plan Monday (10/03) instead of 10/1. Don't you believe in Karma? Earl

Sounds like a 4 month vacation to me. Especially if it happened twice. Since you could exclude the parent legitimately why would you go this route.

ER has a Cross Tested plan with about 10 EEs. Sells the clinic with the EEs and becomes a Public Speaker. After a time his old Admin Assist. comes to work with him again. So: 2004 AA is rehired 10/15/04 and works only 245 hrs. Plan has 1,000 hrs for accrual. Plan is TH so she gets the TH min. X-tested so she gets to Gateway, 5%. But she is older than him. Is she in the 401(a)(4) testing? (I think so.) So to get the guy a 20% allocation she has to get a 20% allocation. But the Gateway amendment only allow bumping up the TH to the Gateway. Am I missing something? I think she has to get a regular accrual but under what authority? Do I need a corrective amendment? Thanks

sorry, what's an SSA?

I file small plan returns and use the order TRIP. Just because its long and strange.

I would never(!) tell someone to commit perjury. I thought I stated as much above. I was trying to move the discussion beyond that point since it had pretty well been played out. I was truely wondering if any first year 5500-EZ had ever been audited. From the silence received in response to that question, I will take it that no one who has read this thread has ever heard of it happening. Just wondering....

and yet has anyone ever heard of any first year 5500EZ ever being audited?

I have handled the situation both ways and never had consequences or communication with regard to either.