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DISCO, the indication is that they do not want PDF documents, they want the information either on spreadsheets, or such that they can import the information into their system. They do not want to type anything. We have been providing PDF files to this auditor in the past, but it seems they now want 'more easily accessible' data. I was wondering if anyone else, or any of the auditing CPAs reading this are providing/requesting information this way. This particular auditor is claiming that 50% of the TPAs they deal with provide them all three items! And yet I have failed to find even 1 that actually does it. Without some corroboration it would appear they are 'blowing smoke' and running up the bill.

It seems to be my week - NOT!!! An auditor for one of our plans has requested the following, and they maintain that they are provided this information from 'many' TPA firms: 1. Participant information in an electronic/downloadable format; 2. 5500 information in an electronic/downloadable format; and 3. Access to participant documents (such as enrollment guides!) and other correspondence on the web. Are other auditors asking for information this way, and is anyone actually providing information this way?

Searched and searched and searched! no luck. Sole prop establishes a 'solo' 401(k). Does not yet have to file 5500-EZ. I know he needs to get a Federal EIN, but when? When he first needs to file the 5500-EZ? If sooner, I need a cite cuz a broker is fighting me and I can't find anything other than instructions to the EZ! Can someone help?

The definition of comp in the plan is for testing purposes. Deferrals are computed on compensation as defined in the Salary Deferral Agreement. The SDA excludes certain pieces of taxable pay.

Can an employer limit administratively what pay is used for deferrals? That is, can the sponsor say that deferrals are not permitted on overtime, bonus pay, sick or vacation pay for time not taken or other segments? Pay for TESTING is not limited in the document. In fact testing is on total pay. Searching on RIA Checkpoint turns this up in the Pamela Purdue / Qualified Pension and Profit Sharing Plans which points to a regulation under 401(a)(4), but I am looking for any other reference. Thanks all.

Check you plan document to see if there is a 414(s) definition of compensation. If so you can always rely on that to do your testing. So if you use a SH definition under 414(s), you are golden!

Who is beneficiary of the estate? If daughter is a bene, then she owns her 'beneficial interest' in the estate of the 33% stock in the estate.

We interpret the law this way: 1. DB plan deduction comes first, based on 412 MINIMUM 2. DB plan may optionally deduct up to 150% CL. 3. If 1 above exceeds 25% of pay, you may ALSO deduct up to 6% in a DC plan 4. If 1 above is 19% or more you can deduct up to 6% in a DC plan 5. If 1 above is under 19%, you can deduct the difference of 25% and the DB %. 6. If you are using 2 above you get the OLD rule you can deduct up to 25% minus the DB which means you may not be able to deduct ANY DC. This would be the conservative approach until we get guidance.

This may be a Master plan, not a Multiple Employer plan. It works here. However, for the controlled group, either each of the three members must constitute a 410(b) group on its own, OR there must be some aggregation of plans for testing. Now that is a fine mess you have.

A plan must be for the exclusive benefit of the participants, who must be emplooyees of the plan sponsor, or their beneficiaries. On the surface it would appear that the beneficiary of the life insurance would be the sister. It is not likely that the sister would be considered a beneficiary of the plan participant. If you don't follow, the PLAN must be the owner and bene of the policy. Therefore for the sister to receive the policy proceeds, the participant must specifically name her. This violates the rule that the SPOUSE must be tne bene (assuming there is a spouse). Should the plan have J & S rules, then the spouse only needs to be a 50% bene of the total balance including the proceeds. The sister could then be in for up to 50% of the account balance. Will this work?

Let us look to the 'insanity' of the IRS position. Frequent reference for counting the 2 years is the nice 412©(8) (?) amendment made within 75 days of the year end. The IRS says the LATER of adoption or effective date. So does that mean if you make such an amendment radically increasing benefits for 2006 adopted by March 15th 2007, your first year is 2007? I think I heard the answer is yes. So you cannot use the 150% of the increase in AB for any HCE for 2007 and 2008. Side note - you CAN use 150% of the unamended AB during this period plus 100% of amended AB so it is not really that bad. However, if the counting year starts 2007, then you get to use the FULL AMENDED AB at 150% for 2006! I would suggest the correct interpretation of the 2 year rule would be the year for which the amendment is effective, regardless of adoption date. And why are they still picking on small plans? Why does the IRS have such deep-seated bias?

We took over the plan and put it on an approved GUST document in 2001. The IRS will require production of the original AA and basic document. We have the AA but not the document and the client cannot find a copy of the document (if they ever had it). So it is required we obtain the orginal document to submit the plan.

A takeover client wishes to submit their plan to the IRS. Unfortunately they cannot locate the Basic Plan Document for their 1999 Benefits National adoption agreement. It appears they company was sold in 2000 or thereabouts and of course cannot be located. This was the 'pre-GUST' document and does not have a 'Letter of Notification' to refer back to. Does anyone have a copy or know where to get a copy for my client? Thank you all.

You need to work with the 1.410(a)-7 rules on service spanning, and the break in service rules to see what you need to count and what you can ignore. Remember that you are working with elapsed time rules in this situation and you have special considerations.

And what will you do with the 'silver spoon'? Ok, have to see the presentation!

If you are so sure you are right, call IRS for technical advice. And report back to us who you talked to and their response. Tell us the plan name. I could use a bonus for reporting the plan for audit. I repeat if you cannot make a contribution, you cannot put in money to be reclassified as catch up! A catch up is a deferral first, and if you cannot make a deferral, you cannot even GET to catchup!

If the plan limit for deferrals is -0-, then how can anyone contribute to get a catch-up - deferrals are not allowed at all. That is a very bad choice (in my opinion). And if they are all HCEs, who cares? In your first plan, the first $5,000 over what the ADP test allows is catch-up, no problem. If necessary switch to prior year testing and you know your answers each year.

To answer several points - one a director MAY be an employee, but in this case as described, the person is serving as an outside director (my interpretation). Obviously in this business we live on the details and we don't have all of the information here. Second, an employer is permitted to sponsor a plan for directors and/or permit directors to be in a plan they sponsor. Trick is director must be paid on W-2 and again, we don't have that information. Therefore I gave the answer 2 ways. I didn't go to ASGs because the businesses were 'unrelated', but we never pursued who the person was lawyering for! We are all guilty of making assumptions based on incomplete information. Shame on us.

Below Ground, you didn't answer the question. If the director's plan is sponsored by the company for which he is a director, yes. If he sponsors the plan himself as a sole prop, then no because there is a controlled group based on the information given.

Also note - the calculation of the 'lost earnings' to be added to the participants' accounts, and the calculation of the 'amount involved' for preparation of the 5330s is different, although both of them can be done on the DOL calculator.

In order to be able to use the 'match' in the ADP test, it must be 100% vested AND subject to the same distribution restrictions as the elective deferrals. This is the definition of a QMAC. However, maybe the TPA is using the 'shifting' technique and not actually including the match in the ADP numbers. Now the match must still be 100% vested to 'shift' some of the percents to the ADP, but in this step I don't recall that the match must be a QMAC.

Take the Summary of Accounts report from crystal, and hide everything except the final total line for each participant - works fine.

Since there is no ADP test to shift to/from, how can you shift?

First I would bet it IS in the document. Second (Sorry Janet) how long did they work BEFORE the break, did they take a distribution, what was their vesting on termination? All of these elements enter into the equation, plus the document MAY also say they have to resatisfy eligibilty and enter retroactively!

I would bet that if you pushed the brokerage houses, they can provide a summary!