DP

Blinky, that's exactly what I wanted to hear!

Here's a follow up to my above question. The plan has a Normal Retirement Age of 65 and 5 years of service. The participant wanting the distribution is age 66 and still employed. She's been a participant for about 30 years. Since she has reached NRA, could she take a in-service distribution of her MPP balance?

A client has a new PS 401k plan that holds merged MPP money. The PS plan allows In-Service Distributions from all accounts after age 62 and 5 years of service. Would this apply to merged MPP money also? Thanks.

Thanks quinn.

A doctor has her own practice and gets a $40,000 contribution to her Profit Sharing Plan. This doctor also is employed at the VA Hospital and participates in their Thrift plan. For 2003, is she limited to a total contribution of $40,000 between the two plans.

I have a client who was a 33% owner in a medical practice with a 6/30 year end. For the 6/30/03 plan year, he received a $40,000 PS contribution. He terminated his employment on 6/30/03 and started his own medical practice where he owns 100% of the stock. He opened a new PS plan effective 7/1/03 with a 12/31 year end. Since he has already received a $40,000 contribution in 2003 from his previous employer, can he get a PS contribution from his new practice in 2003? Thanks!

Thanks for verifying this. I was thinking too hard about the 25% corporate limit versus the 100% individual limit and getting myself confused.

Can an employee who has a Solo 401k with compensation of $112,000 receive a total contribution of $40,000 for 2003? $112,000 x 25% = $28,000 Maximum 401k = $12,000 Thanks.

This client is retired so there are no contributions coming into the plan. Could the corporation that sponsors the plan pay the tax bill, and then the client reimburse the corporation? Thanks.

Chris, thanks for your information. I have a follow-up question. This client has rolled over all his assets in the Profit Sharing Plan to his IRA other than this piece of property which he is trying to sell. The client has a property tax bill due on the property. In the past, he used plan assets to pay the property taxes on the land. Now he has no assets in the plan with which to pay the taxes due. Can he pay the tax bill with personal money? If not, how should the tax bill be handled?

I have a client who has a piece of property held in his self-directed Profit Sharing account. If he sells the property to an unrelated party, can the closing costs and other fees related to the sale be paid with his personal assets? Or does these fees have to come out of his plan assets? Thanks.

Thanks to all of you.

Thanks for the information about the Maybe Notice. But can the discretionary match be reclassified as Safe Harbor at year end if it looks like the ADP test is going to fail? Or does it have to be set in stone before the beginning of the plan year? The participant's are still going to get the same rate of match. And it would be to the participant's advantage if it was reclassified as Safe Harbor.

Can the discretionary match be classified as a Safe Harbor enhanced match at the end of the year, if needed, without giving any kind of notice?

I have a client with a 401k plan which has a discretionary match. The company historically has given a match of 100% up to 5% of comp. This match has a last day of employment rule. I want to give out a Maybe Notice that this match could be "classified" as a Safe Harbor contribution for 2004. Am I allowed to say this in the Maybe Notice? Or does the Safe Harbor contribution have to be a separate match? Thanks.

I have a client who merged his MPP plan into a new PS 401k Plan as of 11/1/02. The PS 401k plan was effective 11/1/02. In early 2003, the company rehired three former participants from the MPP plan. All three were rehired within five years of their termination dates. Since the PS 401k is a new plan, can these former MPP participants automatically enter the PS 401k plan on their rehire date? Or will they have to meet the PS 401k plan's eligibility since they were never participants in this plan? Thanks for any guidance.

Thanks, Appleby!

The plan does not allow for the $10,000 limit. So the new loan would be for $8,480.23. After paying off her existing loan balance of $4,776.98, she would receive loan proceeds of $3,703.25. The payments would be based on $8,480.23. I'm confused now. Where does the highest loan balance in the past 12 months come into play? Thanks.

I have a participant in a PS plan who currently has a loan. She is wanting to take out a new loan and pay the current loan off. The plan allows this. From my calculations, she does not have enough money in her PS account to get a new loan. Can someone please recheck my figures and see if I am doing something wrong? Profit Sharing Balance 9/30/03 is $16,960.45. 1/2 of Balance is $8,480.23. Highest Loan Balance in past 12 months is $5,855.61. Current Loan Blance is $4,776.98. Thanks in advance for your help.

Tom, I guess I meant discretionary match. But I think Brian's suggestion will work best if it will fly with the docs.

Well, that's something we'll have to find out. There are only 3 staff members deferring (out of 15) who are not already 100% vested. The current plan puts a last day restriction on receiving the match. That's another item we'll have to discuss with them if they go with a SH match. Thanks for your suggestion!

I have a takeover Profit Sharing Plan (cross tested) with a 5% Match. There are three doctors who max out their contributions every year. I noticed that the past several years, the plan failed the ADP test, and it's running very close this year. I want to restate their plan to a Safe Harbor 401k for 2004. The majority of the Safe Harbor plans we set up use the 3% non-elective contribution. However, this client likes the 5% match. I need suggestions on how to set up the match(es). If I set up a Safe Harbor match plus an additional discretionary match, how will this affect the gateway for the cross testing or for top heavy contributions? Would the client be better off with a 3% non-elective Safe Harbor and then an additional 2% SH Match? Thanks for any ideas.

Here's what the plan document says: Leave of Absence. A temporary cessation from active employment with the Employer pursuant to an authorized leave of absence in accordance with the nondiscriminatory policy of the Employer, whether occasioned by illness, military service or any other reason shall not be treated as either a termination of employment or a Break in Service provided that the Employee returns to employment prior to the end of the authorized leave of absence. So she will be still be an "employee" at the plan year end of 5/31/04. But she won't have worked 1000 hours during the plan year to get a contribution. She's a key employee and the plan does not provide Top Heavy contributions to key employees.

She is not receiving a paycheck from the practice during her fellowship. She will return to the practice after her fellowship is over.

I have a radiology practice with a Non-Standardized Profit Sharing Plan. Has a 5/31 plan year with a last day rule. One of the doctors left the practice on 7/27/03 for a fellowship and will be gone over a year. Will she not receive a contribution for 5/31/04 since she will not be an employee on that date? Or are there special rules for fellowships? I've never seen this addressed before.