Bill Presson

Use Penchecks instead.

No, as long as it is not a controlled group. It's comparable to working for Ford and GM and getting contributions in both plans. Just make sure his sole-prop compensation supports the deduction.

135

I don't have a specific cite for you, but I believe that it is. We had a very similar situation and the ERISA atty on the plan told the doctor that he could invest his personal money or plan money, but not both because it would be a PT. The doctor believed him and I believed him so neither of us asked for documentation.

In our instructions to our employer clients, we reminded them that they are REQUIRED to print a copy of the 5500 and sign it for their files. That would be the paper version that they would copy for distribution, if needed.

Tom, let's say the formula is implemented and the BRF tested and it fails. What is the correction? I would think the correction would be an amendment to increase the match for one or more groups until BFR is passed. Excellent. Don't know that I ever contemplated failure.

Tom, let's say the formula is implemented and the BRF tested and it fails. What is the correction?

http://www.irs.gov/pub/irs-tege/se0509.pdf

But in your scenario, he doesn't want another loan. He wants inservice distributions because he doesn't intend to pay the loan back. Just amend the plan to allow for in-service and have him stop paying the current loan.

Can he not just stop paying the loan and accomplish the same result?

No. It's the lesser of 2% difference or 2X the NHCE amount (I'm ignoring the upper 1.25 limit). So the HCE can defere 2X 0%.

I'm saying that your time involved in typing the message and replies is worth a lot more than $.08 and forfeiting it will be very unlikely to cause any issues with the plan. Is it 100% accurate; probably not. But it's what I would do and I'm usually a real stickler for doing things right.

Why don't you just forfeit it?

Austin, For this very reason, we have the deferral election and investment election as two forms. When completed, the deferral election form goes to the payroll department (or office manager) and the investment election form comes to us. We maintain the investment elections in our recordkeeping system, but the deferral election is irrelevant to us. Also, most of the investment advisors have chosen a QDIA. So, it isn't uncommon for a participant to complete the deferral election form and turn it in at the enrollment meeting. They then take all the investment "stuff" home. If they return it by the due date, we set it up on the system. If they, don't the money goes into the default. They can always then go online and make changes to existing money or future elections. It's worked pretty well for us.

We've assisted clients on several over the years. I would recommend having legal counsel. Remember that technically it isn't an "audit" like the IRS. It is an investigation. They will/can ask you anything about the plan and they will be very specific. The questions won't concern technical design aspects as much as protection of the assets in favor of the participants.

I don't see anything odd about it at all. They are acting on what the PA is telling them and that's perfectly alright. It's up to the PA to make sure they have the appropriate instructions and forms from the participants. We do almost no work with the insurance company type products. Almost everything is open architecture and we use 4 different custodians. Participant instructions are completely irrelevant to them and I think it should stay that way.

This is actually a payroll question, so you need to check with your HR department. And each payroll operates independently of the other, so it will be up to you to monitor and make sure you don't exceed the limit or request the excess back from one of the plans.

Welcome to these boards and message boards in general, the land of no subtle comments and misinterpreted intentions.

If you thought Tom's response wasn't being tolerable and kind, then I would like to welcome you to what has to be the very first message board upon which you have every posted. I actually thought it was quite nice with playful jabs at the quirky nerdy name.

Too funny. The 2004 question was mine that Larry Starr submitted for me.

The two possibilites are stay or go. You've now ruled both of them out, so I'm not sure what else you want.

#1: Yes #2: Yes How an insurance policy is paid isn't really the issue. The issue is the taxation of the amount that is paid for the policy and whether that amount meets the incidental benefit rules. In performing the incidental test, you are correct about what is counted. Rollover amounts are not contributions and cannot be counted in meeting the test. If the premium doesn't meet the incidental test, then the premium is taxable.

Search Davis Bacon plans and you'll see lots of examples like that.

Actually, we charge a maintenance fee to cover a small part of our cost of processing the loan payments each year. Not to try and cover the auditors fee.

Any chance that someone might not like this idea? "Please explain to me again why I get charged more in fees just because That Guy took out a loan and those extra fees I'm paying are because of That Guy's loan." Just sayin'. An annual loan maintenance fee sounds like a workable solution if it's based on some reasonable cost estimates. And I agree with Kevin C that the timing could be an issue. But if you're going to do that what about: 1. the guy that doesn't defer, but only has profit sharing 2. the guy that doesn't take a hardship withdrawal 3. the guy that didn't screw up the payroll files and the auditor has to spend extra time checking deposits (none are late just not clean) 4. the guy that didn't mess up the schedule c etc. etc. I would find it very difficult to start allocating audit fees specifically based on the attibute being audited.