rcline46

I think that Belgarath is correct. The regulation under (g) states a 'simplilfied' plan which would refer to a SEP and not a SIMPLE.

I took a look at 1.415(g) on plan disqualification to try to guess what happens if a qualified plan is established during a year in which a SIMPLE 401(k) exists. One section says the employer chooses which plan goes out first, but another section says if a simple plan exists, it goes last (that is, the qualified plan is disqualified first!) Is this the general understanding? I know there was a thread on this a while ago, but my search criteria was of no help in finding it. Bad (too general) keywords I think. Thanks all.

QACA changes the plan to current year testing since it is a version of a Safe Harbor. ADP/ACP testing is run to determine if anyone failed the 402(g) limit (or other imposed limit), make sure people deferred the correct amount, and to make sure the correct matching contributions were made. So yes, the tests must be run to assure compliance.

It seems to me they elected to defer -0- to the plan, they did waive participation.

How does a PARTNER in an LLC have W-2 income? A MEMBER may have W-2 if the LLC is taxed as a C Corp or Sub S. If taxed a a partnership, he would have a K-1. If he has a K-1, then I think the accountant is correct. However, if he gets a W-2 for real, then I think he can defer from the W-2, and other business interests would not count. Unless the other businesses are in a controlled group/affiliated service group with your client LLC. It is very messy, and the facts have to be very clear. I have learned not to trust too many CPAs when it comes to any qualified plan issues.

Many associations have plans for members. ABC and NADART come to mind quickly. However, each member must separately adopt the plan, and they are not multiple emplooyer plans. Each one is a separate plan.

This sounds like a new comparability plan. if it is, your document should have everyone in their own group, so the son gets a -0- profit sharing. If you blew it and this is not so, then test using component plans and son becomes a non-issue.

The SARs distributed to the staff will not contain the assets of the separate owner plans.

Client has very old mandatory contribution accounts - tracing back to when the plan was a thrift plan. They would like to recharacterize the accounts as voluntary accounts to make the distribution options of voluntary accounts apply. It seems that eons ago as mandatory accounts fell out of favor we amended plans to treat those accounts a voluntary accounts. Today, it seems no one remembers this happening. Does anyone know of any prohibition from doing this? Note that this is not and was not ever a Money Purchase plan, nor were the accounts from a defined benefit plan. Thanks in advance for any thoughts.

Why don't you use a pre-approved document from one of the many vendors - then the reviewer could not make any changes. So - withdraw the application and submit on a pre-approved document.

Its a bad result of IRS regulations. TO terminate a SH plan mid-year, you must give notice that the SH is being stopped. Stopping a SH causes ADP/ACP testing. Bummer. Also reinstates Top Heavy rules, double bummer. FInal 415 regs requires a proration of comp limit (as does stopping sh) when a plan is terminated mid year. Also pro-rated 415 limits. Triple bummer.

Yes the total taxed would be the same, only timing on the taxes. I see no problem with cashing the policy and rolling over the entire amount with no basis.

I always understood that reporting PS 58 was optional, and was done so that the death benefit would be paid tax-free - ie the PS 58 covered the death benefit cost as if paid by the employee. THe result of not paying the PS 58 was that the death benefit would have been taxable. Since the PS 58 became a cost basis, no PS 58 - no cost basis. Since the insured 'beat the odds' and did not die, I don't think there is any problem at all.

YOu will need to read the prevailing wage law(s) for the state of the employer, and possibly engage the services of a labor attorney in that state.

Review the definitions of a 'disqualified person'. If the brother meets any of the definitions, you have your answer.

Under EPCRS QNECs are allowed even if prior year testing, because you are now in a different situation.

b,r,f problem on level of match, addl match not a SH and must pass ACP tests, double failure.

History lesson - b,r,f problems - DOL gives $1,000 minimum as ok, anything higher has to be tested under b,r,f to prove non-discrimination. Will you client pay for the additional testing?

Starting with 'However....' in the 5th line from the bottom - this little item will just about kill using the FIRE system for everyone.

This question has come up often on this board with the same answer. Read carefully the 415 amendment for the plan. YOur answer in in there.

First, are you discussing the 401(a)(4) testing, 410(b) testing, ABPT or ABP? The answer varies based on exactly which test your are doing. Then we go to whether you are using Statutory Exclusions. We work in a very detailed, fact specific world - with apologies the 'The Prisoner' - we need information.

My client wishes to submit his plan to the IRS for termination. He does not have the OBRA 93 Amendment for his Kemper Prototype plan. This would have been a sponsor (not employer) add on amendment from 1994. I contacted Expert Plan (the end of a long line of successor providers) and the either cannot or will provide the amendment. The client does not want to pay for VCP in addition to the IRS now $2,000 fee for submission. Does anyone have a copy of that amendment? It would not be plan/client specific, only document specific.

Any document letters in the name of either 'former' TPA must be reissued in the name of the new entity. The IRS actually has a procedure for doing that - see the lates rev proc and form 8717. The lead on the document (Corbel, ft William, etc) is also familiar and can guide you through it.

Re characterize the hardship distribution - do 2 1099-rs. If under 59 1/2 then the corrective distribution will not be subject to the 10% excise tax.

Hi. I am looking for the Highlights for the Prototype 401(k) document for versions 2.0,3.0,4.0 and 5.0. THey are not on the Relius Support site and Relius says they don't have them. Anybody out there who downloaded them and still has them, I would appreciate copies. Thank you.