Bill Presson

Yea, but I don't like him well enough to share a jail cell with him!!

This past week at the Relius Users conference, Craig Hoffman said that he has been told "informally" that the permitted disparity language is not intended to apply to DC plans. Not sure on when formal guidance would be released.

I assume it is a calendar year plan. If the plan distributions can be completed prior to July 31, 2007, you can use the exception in 29 CFR 2520.104-50 and just do one audit for the two years combined. That ought to save some money at least.

I'm at home and don't have all my reference material, but I'm pretty sure the permitted disparity disclosure information is only for DB plans.

You need to get the employer to stop sending you information on someone that isn't an employee.

I can't even imagine the difficulty in tracking this. I would handle it by billing a million dollars to the client for trades nor processed through our system. Seriously.

What about when a business moves? Since the address is in the SPD does that require an SMM?

Can you pay them a bonus that they defer into the plan?

I have just noticed this thread and saw this comment. I guess bayinsure still needs to go by the W-2 that the employer prepared, but if he is eligible to contribute to a 401(k) doesn't that count as an active participant?

I would have him sign a new form, but the money could be contributed to the same account.

The cite is actually from PLR 8940014. I got it corrected at my source.

What is your authority for treating commisions and other transaction expenses as contributions? Hope this helps. I think the conclusion is that if the employer put those amounts in the plan to pay the commissions, etc., it would be a contribution. Question: Are plan expenses paid by the employer deductible as business expenses? Or, do they count towards the deduction limit for plan contributions under Code Section 404? Answer: They are deductible as business expenses, and do not count towards the 404 contribution limit. The exception would be if the fees relate to commissions, which the IRS regards as contributions (for 404 purposes) even if they are paid directly from the employer to the service provider. The following is from the PWBA Opinion Letter 97-15A: Concerning the portion of the "Wrap Fee" arrangement consisting of fees paid to the brokerage firm generated by services rendered on behalf of Plan X, Rev. Rul. 86-142, 1986-2 C.B. 61, considered the deductibility of broker's commissions charged in connection with the purchase and sale of securities for a qualified employees' trust or an IRA. It notes that broker's fees are not recurring administrative or overhead expenses incurred in connection with the maintenance of the trust or IRA. Rather, brokers' commissions are intrinsic to the value of the trust's or account's assets; buying commissions are part of the cost of the securities purchased and selling commissions are an offset against the sales price. Based on this analysis, Rev. Rul. 86-142 held that employer contributions to the trust of a qualified plan, or direct payments by the employer to a broker, to pay brokers' commissions cannot be separately deducted as ordinary and necessary expenses under section 162 or 212 of the Code.

In the dependent care account, a participant can only be reimbursed the amount that they have contributed. In your example, it would be the $750.

What you describe is very common for recordkeepers. I'm not aware of any special licensing, but you need to make sure you have all your local and state business licenses.

Before you make a decision on how to defer the money, make sure you know how the match is calculated. If it is based on the entire year, then how much you defer out of each check is irrelevant. But if the match is calculated each payroll, you'll need to spread out the deferrals to get the maximum match.

Any amount of the deferral that exceeds the 415 limit can be reclassified as catch up (up to $5,000)

You can roll it over if you borrow the money out of the contract prior to it leaving the plan. Then those assets will be part of the rest of the PSP.

There is no requirement for a separate election.

I would use the simple IRA just because there is no 5500 filing.

Have Tom and Derrin ever done a duet?

I've found this to be a good resource: http://www.groom.com/_library/downloads/ER...Expensesv.4.pdf

Lori, Open the SSA and click on Help and Users Guide. In chapter 8, it describes a Link Map for a spreadsheet. That should get what you want.

Just don't wait around. As soon as the DOL letter comes, it's too late.

Not sure we have enough information here to answer the question(s), but I have a question: Are you sure you have new HCE's? Unless they are owners, I don't think they'll be HCE's until the second plan year. Just a thought.

You could also consider the possibility that with the failures that you don't have a qualified plan and haven't since 2001. You'll want to consult counsel on this, but paying back the contributions for two people and filing amended 1040's for five years might be much less expensive.