rcline46

COrbel prototype doc - 4.2 - contribution made after year end must be identified as to the year it belongs. No DATE given. Austin, it may just be possible that you can do 415 in one year and 401(a)(4) in another! I cannot find anything in the document to prevent it. However, I am not going to search the regs. My issue was with a 403(b) plan, and after reading the doc carefully, we are ok!

Austin, I feel your pain, I really do. (having been in the business for over 35 years, I really do!) My advice is reallocate based on whichever 'new' year it will be for. That is if the client cannot show that it was segregated before 10/15/10 (30 days after tax return) but you just were not given the information at that time. I actually have the same problem right now that I am working on!

You said it was a new comp plan - who cares how the allocation was determined. Its 415 and 401 that are the concern (and maybe 410). To use it for 2010, just say it is a 2010 contribution - you have until the due date of the tax return to deposit it, even if 2011. Or call it a 2011 contribution. Under 404 it certainly is not a 2009 contribution. Once you name the year, you have to use that year's compensation for testing because that is the year the funds are allocated.

The contribution will be an annual addition for 2010. At least I think that can be supported. And thank goodness it is already a new comp plan (everyone in own group I hope). Since an annual addition in 2010 (or 2011 if you want) then your testing comp must be from the year of the annual addition. Stated differently, how can you test annual additions on year Y pay, and 401(a)(14) on year Z pay? As for the idea of a corrective contribution..... since it is a profit sharing plan (discretionary contribution plan) it makes me nervous. Maybe it was in a plan checking account and you were slow to get it (vs a corporate checking account)?

or Owner of B? in any case, yes.

First, document probably states allocations are on current year pay, unless it is a new comp with everyone in their own group. If the former you need an amendment which probably puts you into 2011 for the allocation. Don't have 2011 comps yet so cannot do testing. Oh my this will be a problem.

You bet your life Employee B is an HCE.

Although many will say to look to the leased employee rules, I would suggest you look to the shared employee rules. There are only two rulings on it, both very old, but still applicable.

I think the language is fine. However as an 'additional match' I think it is subject to BR&F testing. Depending on other match rules, it does not say if EOY and/or 1000 hours is needed. Knowing my clients, I think BR&F testing would fail almost all of the time.

I do not think it can be discretionary. And if it were, it could not be discriminatory (ie only HCEs actually get the true up).

If doing a true up because the document (always check the document!) states match is on a payroll would disprportionately benefit HCEs, then you have discrimination issues under at least the BRF rules. Doing so would require there either be a section in the document permitting the additional match OR the plan be amended before year end. It is my opinion that a true up is either required, or you cannot do it.

What is the 990 if not a corporate return?

I do not believe that you can make any other benefits subject to participation in a 401(k) plan. In this case, they would be removing other benefits due to voluntary participation. This would/could be viewed as an improper barrier to participation. I would engage an ERISA attorney to research and give a written opinion on this particular structure. I would say it is problematic.

Aha, you are now waking up to the wonderful fun parts of Cash Balance plans.

Client required to take a RMD this year. However he rolled his account to a ROTH IRA early in the year and he was told it would cover his RMD since it was taxable. I never heard of this and since it went into an IRA (ROTH) I don't think it works. DOes it? any cites? Thank you.

Read The Fine Document - in most cases you will find that once TH vesting kicks in, it STAYS in.

I try to take the following approach: Form of entity - a true partnership, a sub-s, a c corp, an LLC taxed as partnership or sub-s or c corp, or a limited partnership - get that from the accountant - verify with tax form for entity. many times true partnerships run 'draws' through the payroll system for tax purposes and then back it out at year end to compute the K-1. The K-1 then is correct and they do not actually get a W-2. If they really get a K-1 and a W-2 from the entity it must be taxed as a sub s, and the K-1 only has passive income and is irrelevant. If anything else, then have the accountant explain the laws and authority under which they are reporting income, and only use what the accountant reports to you and do not make your own determination. If necessary fire the client because you do not want to be a party if the IRS becomes involved.

limited by 415 only. How do you get a deferral of $22,500?

We allocate to each payroll the lost earnings for that payroll prorata to the contributions in the payroll.

Your plan document should list the default beneficiaries - usually it is spouse, children, parents, estate.

Actually, you can contract with RELIUS to have reports done. Fees are not unreasonable.

Go to the DOL website and search for 'settlor expenses'. There is a FAB directly on point on what a plan can and cannot pay.

Return the check to the attorney/participant. THere is NO PLAN anymore. The assets are now part of the estate for division, not part of a plan.

Audit is by plan, not employer. Check with auditor for additional cost, if any, to audit a multiple employer plan.

Be very sure the document/participantion agreements give each employer the 'maybe' safe harbor option. If not done correctly, the PLAN has the control and therefore the main sponsor has the control. Assuming each employer has the control, then you should be ok. Otherwise you have a failure to follow the document and now have big problems. The regulations may give you flexibility, but that flexibility must be incorporated into the document.