Bill Presson

That was understood, but because it is a sole proprietor, and not another, more formal type of business, I think the sole proprietorship exists as long as the individual is alive, even if he is not actively running a business. Now you're confusing me. What entity would adopt the document? I think most people here would use the term "sponsor" to mean the employer adopting the plan, even though Vanguard or someone else might "sponsor" a prototype...but that's just semantics; the bottom line is that you need an employer to adopt the plan, and I'm not sure who you're suggesting would adopt it. As noted, I do think it is ok for the adopting employer to be an inactive sole prop. Bird, I think he means "hopefully not risky" because he won't divulge to the IRS the EIN or SSN when he calls to ask their opinion.

It's not unusual for a member of an LLC to receive guaranteed payments (which is what the $245,000 likely is) and then have a loss on the K-1. The compensation for qualified plan purposes is the net of the two. If the loss is large enough it's possible for the CEO to have 0 compensation. We have several situations for 2009 that are likely to result in this same scenario.

Craig is with ASPPA now.

Am I bad that I chuckled when it was shown that they forgot to file a 5500?

I agree. This is another example of regs that just don't work in the real world. So we all use prime + 1% and wait for the "knock on the door".

Agreed. The 4th Circuit decision nicely dissected the employee issues of ERISA plans from the tax issues over which the IRS has administrative jurisdiction. Yes, they did...and gave even more employers a good reason to not sponsor a voluntary retirement plan.

Yes, there was one HNCE who was already in the Plan for 2008, and worked over 500 hours, and terminated before the end of the year and did not get a Profit Sharing Contributution. The P/S allocation was done via New Comparability. Am I correct to say that this person should get a P/S contribution in order to Pass the 410(b) minimum coverage test? You are correct.

Not to be rude, but I already answered this above and even gave the specific treasury regulation. "Life insurance proceeds in excess of a policy's cash surrender value are excluded from income under Sec. 101(a) (Sec. 72(m)(3)©; Regs. Sec. 1.72-16©(2)(ii)). "

Life insurance proceeds in excess of a policy's cash surrender value are excluded from income under Sec. 101(a) (Sec. 72(m)(3)©; Regs. Sec. 1.72-16©(2)(ii)).

The owner and beneficiary should both be the plan.

Laugh if you want, but every one of you would offer to help mentor her through the early rough spots!

Dependent care max is $5,000 per family. The medical accounts are plan dependent and can be much higher.

I don't believe so. Since efast2 filing is required, I think it's still going through some permutations.

I'm not aware of any requirement that insurance contracts be on the same year to be included in the same wrap plan. We've been filing wrap welfare plans for years with differing insurance year ends and never had an issue.

We use this: http://www.therpc.com/default.aspx

I agree with this. Another downside of waiting is we bill when the 5500 is out the door.

If you get paid to prepare the form, then you are a paid preparer.

Sorry, but in financial matters, I just don't think an old fashioned handshake is good enough any more. We won't take a client without a signed engagement letter.

All your comments got cut off. You'll need to repost the question.

BP- Issue is volume submitter template does not allow that option so we are hesitant to change the vs underlying language for this. You did mention that. Can you use someone else's document? That seems to be a pretty standard provision.

Why not just amend the plan to say forfeitures occur on payout? Then your plan would match your operation.

I always enjoy it when you strongly opine.

Generally an S-corp K-1 will be reporting only investment income, not earned income for retirement plan purposes. The W-2 would report the ONLY income that can be considered. Mike knows that. He was just wondering if the OP mistyped the question. Guess we'll have to wait and see.

Why did the TPA not ask about a terminated participant with deferrals every pay period? Especially if they are processing a distribution every pay period? Did I read that right?

You can use as much of the account as you want to purchase insurance. However, there are consequences to what you do. If you satisfy the incidental rules, then the participant just reports the PS 58 costs as taxable income. If you don't satisfy the incidental rules, then the participant reports the entire premium as taxable income.