ETA Consulting LLC

"Like". I, typically, use the term non-elective, or discretionary non-elective. But, you're absolutely right that the term profit sharing is a huge source of confusion of the those outside the industry; not that the term non-elective would make it better

He's not particpating in the safe harbor 401(k), but the DB plan. This is no problem on the surface if you're only testing the DB and Safe Harbor 401(k) using 'permissive aggregation'. He's only in one plan. If he were in both plans, it wouldn't be a problem provided he is not an HCE. Providing he is not an HCE, you can pass permissive aggegation with the DB and Safe Harbor 401(k) plan by excluding his amounts in the other plan. I still don't see how it would be part of both 401(k) plans. Good Luck!

You can have a plan written to cover only the one owner and it would pass every test since there aren't any NHCEs. You can actually have a separate plan for each owner; again, as long as there aren't any other NHCEs. The key is to design the plan with the correct language and ensure that you immediately change the design when you employ and NHCE and they meet the age/service requirements for plan entry. So, you can do it. You should structure it correctly. Good Luck!

This match isn't required by law to be fixed and may be amended at any time to decrease it (or eliminate it) on a prospective basis. Good Luck!

On what date did they sign the plan document?

HCE determinations don't consider whether the owner is actually a participant, so she would still be an HCE. Good Luck!

I would recommend looking at the document and comparing to the operation. Then, ask the TPA what they did, if necessary. You can have various classes, but if you give each class the same rate, then you can run a single 410(b) test on a contribution basis. Look at it like this: A rate group is merely each HCE and all employees at or above the rate the HCE received. There is nothing that requires that "rate" to be cross-tested. It can be an allocation rate (which effectively puts everyone who received a contribution into a single rate group) requiring only a single 410(b) test. Given this, don't look at the way in with contributions are explained as the method to determine how they will be tested. Good Luck!

I just enrolled in mytaxcoursesonline.com. They have the 15 hours (including 2 hours of ethics). Price is $149. Very convenient. Not to advertise anything (as I am not affiliated), but it is certainly appealing given that you're paying only $10 per hour. Good Luck!

No. When you allocate to 2010, it will be based on Compensation received in 2010. You've already allocated for 2009, where the allocation was based on Compensation received in 2009. Good Luck!

MoJo, I agreed with everything you said until here. Once the sole owner dies, you can equally interpret this as a plan with no employer (so the plan became orphaned). I wouldn't let this type of event envoke ERISA, even though it "may" be a valid argument in the event a child of the owner is a beneficiary. Your overall approach, however, is pretty consistent. That, in my mind, appears to mitigate all risks until guidance is issued to address the exact situation and prescribe the exact course of action. Good Luck!

The same way they do in a 401(k) plan. It can be from the draw. Technially, each member receives their Compensation only one day of the year; which is the last day of the fiscal year. Good Luck.

I would actually take a different approach as the spouse is likely the designated beneficiary. Even though it is not an ERISA plan, the IRS does allow for the orphan plan termination process to be applied to this plan. This should be enough to provide the authority to the surviving spouse to close the plan down. Good Luck!

These contributions aren't subject to the funding rules of Section 412 merely because they are required. Hence, the deadline is really 12 months after the close of the year. Sure, they will be deductible in the year of desposit. Good Luck!

As soon as possible. It's not a 7 month because you're looking at the deadline for a 'final' return. Good Luck!

On a different point, 414(h) contributions that are 'picked up' by a governmental employer's plan are considered nonelective contributions. Until they are picked up, then they are treated as employee contributions that are not elective deferrals. My question, then, becomes whether the plan's definition is just W-2, or is it adding language? I'm asking, because, my immediate impression is that 414(h) contributions that aren't picked up would be considered pre-tax W-2 (that is basically income for FICA purposes, but it not an elective deferral). He should be careful in verifying the exact definition of Compensation before attempting to correct. Good Luck!

I would actually add it back to benefits paid (provided it there was some other benefits paid during the year to offset). Even if it weren't, I'd still attempt to do it that way. Maybe even Other income. If ever asked on audit, you have a detailed explanation of what each amount was. DOL auditors look for reason; not necessarily right vs. wrong. Good Luck!

This is still a stretch, as this section does not discuss taxability. Let's assume a DB plan issues a loan to a participant in the amount of $20,000. The loan is funded from a pool of money and is secured by the participant's accrued benefit in the plan. The participant dies. All this section is saying is that the accrued benefit payable to the spouse will first go toward paying off the outstanding loan in the plan. The stretch is whether for tax purposes, this becomes an amount taxable to the estate; or does it become a part of the spouses inherited benefit being used to satisfy the loan obligation under the plan (then allowing the spouse to fork over funds to roll such amount over). The section, as written, only ensured the plan's loan was paid by the participant's accrued benefit prior to any distributions to the beneficiary. If you inherit a company that has assets plus outstanding debt, you can either disclaim the entire company or use the assets you inherit to pay off the debt. Your decision on whether or not to disclaim should be based on the net value of the amount being inherited. How is this different? There is simply no clear authority to issue a 1099-R to the estate. Good Luck!

Only to the extent the 403(b) is subject to ERISA. I'm under the impression that the employer has no involvement in the plan other than depositing employee deferrals. May want to verify ERISA status. Good Luck!

I think the prohibited transaction rules are in IRC Section 4975. It appears to be one. 72(t) applies the 10% early withdrawal penalty and the exceptions. Good Luck!

The hospital is merely approving the vendor to offer investments under the plan; which is perfectly okay as long as the new vendor agrees to share information to ensure the 403(b) rules are followed. Good Luck!

Typically, you cannot retroactively amend a plan to conform to an operation unless you approve that method of correction under a VCP filing. That's certain an approach to consider. Good Luck!

No. You'd typically approve the 'vendor or vendors' that will be allowed to offer their investments to the employees. This is much different than selecting the individual investments. You would also need a written plan, but you're involvement may be limited to merely transferring the employee deferrals to the vendor to deposit into the individual accounts. This is, typically, the minimal level of involvment. If you were to fund "employer contributions" to the plan, then that would constitute another level of involvement. If you do so, you "may" want to structure the contribution in a manner to avoid problems with non-discrimination testing. It's not hard to do, but you'd want to remain fully informed on the impact of your design. Good Luck!

When trying to do this, it's hard to keep everyone on the same page. I would make a series of transactions resulting in the desired effect; no taxation with a loan in the new plan. 1) Directly roll over the cash into the plan of the new employer and offset the loan. Let's say you roll over $10,000 and offset a $5,000 loan. 2) Immediately take a loan from the new plan; $5,000. 3) Roll the $5,000 over, since you have a 60 day period to roll over the loan offset from the previous distribution. This will only work if you have enough in the cash rollover to secure a loan in the amount needed to cover the original offset. If it can be done, you'd acheive the desired result without getting all the other parties involved. Good Luck!

Don't you need someone's permission to do a credit check? No. There is a credit check mechanism that does not 'show up' on a credit report; and does not affect their credit score. You wouldn't, however, run a credit check as if that person was actually applying for credit. Good Luck!

Interesting, and good question. I imagine the IRS discontinued the program since you could likely find the missing person faster than the IRS can given the new technological advancements (e.g. internet). Imagine that; the IRS not being able to find someone I've found a few on the people find software. The next level of search would be to run a credit report, so any company offering these services should be able to "at least" do that step. Just a thought...