Bill Presson

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.

You are correct.

1. IRA owner Ed takes a withdrawal from IRA. 2. Ed loans the money to Tom with a promise from Tom to repay the loan within 60 days, so that Ed can replace the money in an IRA. 3. Tom uses the money for a real estate development. 4. The entire development and all of Tom's worldly goods are destroyed by Katrina and Tom can't repay the loan. Does Ed get any relief from any of the Katrina related legislation? I don't think so. Anyone have any ideas? Thanks.

The safe harbor provisions are the price for allowing anyone to defer up to the maximum amount allowed each year without worrying about testing. So that's not an issue. But I'm curious about why you feel your quote above is "very discriminatory in favor of the HC"? Especially if everyone is getting a 5% bonus in your example.

Larceny?? What are you talking about? If I'm taking over a John Hancock plan and the employer doesn't have a copy of the basic plan document and I get a copy from someone, I'm committing larceny? Give me a break.

The other thing that has always burned me up about this is the DOL recommending calling three banks. Now, if I did this once, no big deal. Call a couple of time, probably still not a huge issue. But if I called week after week, how long before the bankers tell me where to go? It's not in their business plan to constantly supply the pension industry with comparative data so that the participants don't have to go to the bank. This has always struck me as one of the stupidest "requirements".

If only I hadn't used my real name, maybe.... :-)

Lori, My second favorite thing to do is "beat up" auditors. :-) Can you give us an online summary?

Sorry, but S-Corp dividends aren't considered earned income. Unless you had W-2 income, you can't make a deductible contribution.

Yes, the money was taken from the employer's checking account.

I think you should do whatever you can to pay the fee and get the designations. If you are employed now, will your employer not pay the membership fee?

I don't believe so. I think in this case, we need to look at something that would be a functional equivalent. Offsetting fees for the employer (or the plan) would, in effect, provide the same benefit.