Earl

My opinion is "who cares?" I have 3 plans under audit and IRS is looking at 2000. At most 1999 is an issue. And, if you get audited, sponsor produces the records and you find out you guessed wrong, you change it. In all seriousness, anyone think the IRS/PWBA is going to care? (of course you tell them what you have to do in completing the questions and get them to indicate which way you will guess, current or prior.)

No, I wouldn't vest the TH min or worry about the guy getting a contrib due only to immed. elig. I am worried about the situation where I guess I have to correct my document by retroactive amendment to get the person entitled to a TH min 3% only up to the 5% Gateway. I am using Corbel's PPD Prototype and Volume Submitter and think I basically have a problem with all my new comp. plans. I can't find that I have any discretion to increase the TH min allocation over 3%, so I can't use the 5% gateway, only the 3x Gateway..... Best solution I have seen so far is to create a group defined by their eligibility for only a TH min. So basically there is no such thing as a 2 group plan. The most simple would be 3 group; key, nonkey and those elig only for a TH min.

and if you are solving the problem of how to get the terminees with less than 1000 hrs the extra 2% by a corrective amendment, that is where the meanful benefit/0% vested issue comes into play?

Blinky - You don't think the rule of parity would allow it under any circumstances? thanks -

Actually that's a breath of fresh air. I never met a doctor that wanted anyone in his plan! But seriously, that is the basis of my concern on this issue. Drs. typically have bad records and are unwilling to look up stuff. I am, at this point, just wondering how to make the data collection a reasonable process tht will result in good information. Asking "did any one of the PTers ever work 1000+ hrs?" seems to invite a "No" that does not really consider the downside of improperly excluding someone from an ADP test, etc.... Just wondering, again at this point, if there is a reasonable way to put a timeframe on it.

It seems like the rule of parity might be helpful here. Reading it, it seems (unlike 410(B)) no termination is required, only less than 501 hrs/year for 5 years (at least). My big issue is working with Drs. with lots of part time ees. Getting a realistic answer to the "did any of these part timers ever work 1000 hrs?" question seems unlikely. If the plan contains the rule of parity for eligibility/participation it seems like I could reduce it to "... ever work 1000 hrs in the last 5 years?" Again, my Corbel docs specifically state that they do not use the rule of parity for participation so i have a problem there in any case.

So what I think you are saying is that I would exclude service pre-2002 for eligibility (and vesting, potentially). So eligibility for 2002 would be complete 12 months and 1,000 hrs and enter on the 12/31 following (12/31/02), because if I use a period less than 12 months I lose the hrs flexibility and EE B will enter also. Although I guess that is becoming an area of maneuvering also. Then I think change to a more sensible 1/1 or 7/1 following 12 months with 1,000 hrs for 03 and beyond. Do you think a prototype handles this? My Corbel documents do not have any eligibility service exclusion. Thank you for your comments.

thanks - But do you think I must count years prior to 2001? Could I put in a provision to exclude service for eligibility prior to 1/1/01? I can't do it in my prototype, but can it be done in an individually designed plan?

http://www.blazessi.com/ call 'em up!

Setting up a plan effective 1/1/02. No prior plan exists. Dr. with two employees. EE A works over 1,000 hrs/yr and is in the plan. EE B worked under 1,000 hrs in 2002 but worked over 1,000 some year in the past. Do I have to let EE B into the plan (and give a contribution). Also, that person would be non-excludible for the ADP test even though working only 1 day/week currently (and for past few years). I understand that I can exclude service for vesting pre-2002 but can I exclude service pre-2001 for eligibility? (Count 2001 as elig. year so enter 1/1/02.) (I am thinking my fact finding may not have been as good as it needs to be: "Did any employee currently working under 1,000 hrs ever work over 1,000 hrs in any past year?")

only difference is completing about 6 questions rather than 106. Of course if they ever hire someone the provisions are generally more liberal than need be and they better take action first. Which every Sole Prop out there surely would do....

When you fail to distribute a 401(g) failure by April 15th, can you take the excess out of the plan?

ditto.... duplicate original requests months after original request and timely answer.

you mean like the commission he is getting on the money he already got a commission on?

I think one is proposed...

......a Partnership with no NHCEs

but for a Partnership does it matter? Couldn't you just determine the contribution and count the first $11,000 as a deferral, fund the catch up and complete with the PS Plan?

and complete flexibility

I have found a couple of mutual fund companies that will open IRAs for lost participants (without the IRA owners signuature). One wants minimum of $5,000 though and most lost people are under that. Forfeiting is a process I don't advocate as most small employers will not really give much of an effort if they know they will get 70 - 80% if they fail to find a guy. And what to do with a terminating plan. I have a terminating 401(k) with about 15 people with under $5,000 that have been lost. Who would get a forfeiture? I think pay as 100% withholding is the only solution. At least the person will get it credited to them. Personally, I can't wait for the forced IRA rollover process to be solidified.

Sounds like what I was afraid of. Even if it is required for one year, it is only deductible in future years to the extent that the 404 limit exceeds the 412 minimum and the guy passes up what could have been contributed and deducted for that future year to allow for the deduction of what was required for the past year. I guess that actually even makes sense. What if the plan terminates? Does he get to deduct it post-termination in any way? If not, does he have basis when he withdrawals it?

thanks - yes it is a one participant plan. I did find information on current year limit in 404. Probably a question for my actuary, but isn't it too late to meaningfully reduce the 2002 contribution by freezing now? and next year his income will go back up so i don't think freezing and unfreezing would get past my actuary. Just wondering about the un-deductable amount for 2002. Is it never deductible?

Sorry for the basic nature of this question. I did a search and did not find anything about it.... Guy is having a down year and his DB contribution will exceed his Schedule C income. Is his deduction limited to his Schedule C income? Is the balance deductible next year in addition to whatever is calculated as the required amount for next year? Is this in 412 somewhere that I can't find? Thank you

Company has 1 Key employee, a second employee is Non-Key but an HCE, employees 3-6 are NHCEs. Plan is top heavy. There is a Match. All the NHCEs defer and get enough of a match to satisfy the TH min. The non-key HCE does not defer so he gets a 3% PS contrib. He is the only employee to get a PS contribution. Does this have to go through 401(a)(4) to show non-discrimination? IOW, can a required contribution create a discrimination issue (and more required contributions)?

Form 4506; Request for Copy or Transcript of Tax Form I did it once, worked; but took a while (cost $23)

No PS cont, i don't see a prob in ignoring TH, but what about some minor forf reallocation? Tell the client that if he pays anyone out it will cause a TH min? yikes....