k man

some of the companies leased employees are allowed to participate in the profit sharing plan but since the company does not have a 401(k), they would like to participate in the leasing companies 401(k) plan. can they participate in both plans if one is a profit sharing and the other is a K plan?

i have tried to required they use our document. it is my perogative if i only want my people to administer and interpret one plan document. furthermore, as amendments are required you cant support another document so it is inevitable that you retate the document in the future.

our plan document is pretty clear on the subject. severance pay received after a separation from service is not considered compensation. this means you cant defer any of it or you dont consider it in testing.

what are an employer's disclosure responsibilities if an they would like to give a different matching contribution to different employee classifications? can they just continue to say the matching contribution is discretionary?

that qtrly contribution throws me. i am not sure what they mean. dpes anyone know how this works in practice? do you have to pay an excise tax if you apply for the ruling? there is no way they will give me a ruling before the end of the plan year?

a client of mine made a contribution well in excess of the allowable contribution for the current plan year. it looks to me that in order to use mistake of fact the contribution can not be in excess of 25,000. here the contribution was greater. as we are still in the same plan year it looks to me like you can return the money to the employer but only after obtaining a nondeductibility ruling. is this correct?

is that the way that distributions to trusts are normally handled?

do you withhold for distributions made to a trust when trust is beneficiary and participant died before RBD? i know you dont withhold the 20% but what about the 10% for non periodic payments.

blinky, that is incorrect. the fiduciary/lender is a 10% partner with the borrower in an unrealted venture. since the lender is a 50% owner of the employer than sponsors the plan i believe that the borrower is a disqualified person.

ERISA says a party in interest is, among other things, a 10 percent or more (directly or indirectly in capital or profits) partner or joint venturer with a person that is an owner of 50% of more of the stock of the employer. i am paraphrasing for brevity. our client loaned money to someone who is a 10 percent partner in a completely unrealted venture. when interpreting this provision do they mean ANY venture or the specific business that is the employer?

can someone explain how loans in DB plans operate? my main question is how do you account for it if there is no account balance?

There used to be a SPARKS standard. I dont know if it still exists.

i guess that can be done. however, the client has an aversion to amendments and additional participant notices (SMM's).

i agree you must be consistant. actually the person defaulted on a prior loan. that is why is say creditworthiness is bad.

can trustee decline making a second loan on grounds of creditworthiness? loan program does not say so specifically but allows trustee to consider creditworthiness.

that is another issue. it actually does not. it is a prototype and there are enumerated reasons. in order to allow funeral expenses you have to take the document out of prototype.

can you have hardships for something other than the safe harbor reasons (funeral expenses) from deferral source?

if the account had fees and expenses in excess of cap gains and dividends, would you still issue 1099's? if so what would be the amount?

mbozek, i have interpreted this matter similarly to you. the key issue seems to be whether he will hold greater than 50% interest in the bank. with regard to one of the other comments, after the investment he will own stock. the fact that the bank is closely held is immaterial.

with regard to this topic, the fees could get pretty eggregious when you add the record keeping fee on top of this. has anyone thought of the possiblity that in the case of small accounts, there may not be any money left for them to take a fee.

anyone have anything?

thats right. basic trust accounting rule.

mbozek, what is the basis for the elimination of the tax on the trust? this is the most important thing to our client.

anyone know anything about something called a "look through trust."

that was my conclusion as well. i cant believe this attorney is trying to insist his form is valid.