rcline46

Sieve, it is a pension plan and has the same in-service rules as a defined benefit plan. Basically prior to age 62 the participant must actually terminate to receive an distribution. In service distributions are only available after age 62 under the (to be published) IRS regulations.

K2retire - There is no provision to stop the 3% Non-elective in the code or regs. This is discussed in many other threads. Inconsistent - yes.

Jim, Relius stores employees by employer, not by plan. So everything you load into one 'plan' is automatically available to any other plan of the same employer. That leaves only the question of how to tell other plans to 'see' the information? It is really easy once you know the trick. It only has to be done once for each new employee. It is really simple, but not intuitive. Ok already! Get to the point! Import just the SSN. No other fields are necessary. That's it. Try it, you will like it!

Then you do NOT terminate the plan per se, start a new plan and immediately merge the old plan into the new plan. That is a de facto termination of the old plan, final 5500, but no distributions. WOuld not that activity kill the SH contribution? Interesting that in conferences, the IRS has said you could not START a safe harbor that way.

Lori, I don't remember what function you perform (broker, TPA, atty, cpa, etc), but PayChex makes a LOT of mistakes on any of their documents that I have seen. At the very least you need to get the document right before the client signs it. PayChex may be using a document provider and not their own document and preparing it through software, but that is irrelevant. It needs to be correct. 404© has been discussed at length, and whether ANY plan really complies. Assuming compliance with 404©, the client is insulated from bad participant choices among the offered options, but not insulated from offering bad options from the start. Because PayChex is handling the plan (usually) a QDIA or a 'good' default investment is highly recommended.

If the employee/employer relationship is severed, there is a severance from employment. If the person is free to find employment elsewhere I don't think the term used for the termination is relevant. It is a facts and circumstances test.

See Rev Proc 2005-80, 415 violations.

If benefits became restricted, the employer was required BY LAW to distribute a notice to ALL participants describing the restriction. Get a copy of the notice. There are rather draconian penalties for not distributing the notice.

The Final 415 Regulations amendment is due by 12/31/2009 and is required (for all plan years beginning after 6/30/2007). I would think that at least this is needed. Also, would not optional provisions under HEART be due by 12/31/2008?

Does the plan have a specific category exclusion of 'illegal alien'? If not, then the plan has no such exclusion. The person is a valid participant with an invalid SSN

The simple response is ask the client. There is such a thing as a profits partner, and 'owning' more than 5% of the profits makes the person an HCE for plan purposes. You really need more information from the client.

To add a bit of clarity. The IRS claims this is NOT a rollover, it is a transfer. This preserves the non-rollable taxation treatment of the lump sums.

If excludable, then the HCEs can defer up to the maximum. If not excludable, then the 3% rule allows at least some deferral.

BTG, the money is already in an IRA. What distribution?

You can start a 401(k) this year, and using the 'prior 3% rule', you and your partner can deposit up to 5% of your earned income, plus any profit sharing you want, a new comparability plan it it works. Then in 2009 (like do the amendment now!) a safe harbor plan. This is very doable. You do need to know or have an idea what your earned income will be. There are many of us on this board who can help you.

First, your accountant does not know 'Earned Income' from 'W-2' income. That is why accountants are not pension professionals. Second, as said above, you and your partner will need 'Earned Income' of a positive nature on your K-1s in order to make any deductible contributions. YOu will need to act fast to have a Qualified plan established (signed!) by 12/31/08. A SEPP you can establish for 2008 up until at least April 2009, but you need to know the advantages and disadvantages of IRA plans VS Qualified Plans. I believe www.asppa.org will provide you a list of firms in your area, or your business contacts may tell you who they like for firms to take care of your plan. Good luck!

Janet, on this I disagree with you. Distribution fees are charged per distribution and not as general admin expenses because there is no way to estimate the number of them per year. The distribution process involves checking the paperwork for valid signatures, confirming deposits and settlements of the last deferrals in a 401(k) (and watching for the FInal 415 reg payrolls), tracking the requests until payment date, ordering correct liquidations, and in many cases capturing 1099-R information and producing the 1099-R. Now if all one does is compliance, and some other organization is doing the 'work', fees can be less. It all depends on what the TPA does. And if the fees are greater than the balance, so be it.

Go with the normal definition in the document, and use a class exclusion for leased employees and 'Sales Contract Employees'. Don't make life difficult.

Who is the named insured and what is the insurable interest in the named person? Is it prudent to invest all the funds in an insurance policy assuming it can be issued? What kind of policy? Variable life, whole life, term, universal life? Is this a 412(i) (now e) Plan in which case the IRS says NO to just life insurance. As a general answer to a general information question, NO.

Not all products sold by an insurance company are insurance policies. For example, an annuity is not an isurance policy. YOu will need to be more specific as to the type of product in question.

Question 2 - C - 5500 tracks activities of the PLAN, not the sponsor. Many of the questions require careful reading. Don't read into the question, but certainly read the question CAREFULLY

A 501©(3) client wishes to implement a Safe Harbor Match in their 403(b) program. However, they also wish to exclude an identifiable class of non-highly compensated employees from receiving the match. Can they do this? If not, can they set up a second 403(b) plan just for those employees? Thank you.

The payment options must be defined in the plan document. Look there to see what can be done. However, if a benefit WAS taken at age 55 and you are looking at increases after 55 - you now have MASD - multiple annuity starting dates. Good luck.

Since the 8 can appear in each of the positions, I think it is 111,111,111

Owner has history of only employing people a short time. Seems this one stuck around longer. Probably will not be here very long. MUST WATCH FOR PATTERN OF AMENDMENTS