R. Butler

Thats it. You've answered a question I posed in a different post. 401(a)(4) is what happens when deposits are made more than 12 months after the plan year. I knew they were not counted in ADP/ACP, but for whatever reason I failed to read a few lines down where it says test under 401(a)(4). Fortunately our clients aren't that tardy with deposits & the issue doesn't arise. If it ever does though, now I know.

You should be able to do an internet search & find quite a bit on both the advantages & disadvantages of 401(k) plans.

Don't forgot to consider ASG rules.

Unless its a management group, you almost have to think that there is some kind of relationship between Jim & John or the question doesn't make sense.

I don't see how not having an entry date at the first day of the plan year accomplishes that purpose.

As Tom Poje states hypothetically its possible; although you do have a problem if it is possible that someone won't enter within the at the earlier of.... I assume this a 401(k) plan since your in the 401(k) forum. Do you have at least 2 entry dates? It seems to me that at least 1 of the entry dates would have to be the last day of the plan year or you would always have a potential issue.

What are the eligibility requirements?

What does the SPD actually say about the match?

Joe Smith owns 100% of Co. A Co. A owns 75% of Co. B. Thus through attribution Joe Smith owns 75% of Co. B Joe Smith's adult son owns 10% of Co. B. That ownership is also attributed Joe Smith since he is deemed to already own 75% of Co. B through other attribution.

Yes

I am not rcommending that you do that, I've just always been curious about that question

I'm a little curious. What would happen if the plan sponsor just didn't deposit that late deferral until more than 12 months after the plan year? §1.401(k)-1(b)(4)(i)(2) requires that in order to be considered in the ADP test the deferral must actually be deposited within 12 months after the end of the plan year. If there is penalty because refunds don't occur within 2 1/2 months after the close of the plan year, that penalty may very well exceed the exicse tax on late deposits. What would prevent the HCE in this situation form doing this? I've never done this & don't advocate it; I've just always wondered what would happen if someone did do this.

Allowing participants to choose investment options & allowing participants to take loans are 2 very different things. Unless you have a copy of your plan's SPD or plan document, I wouldn't assume that the plan allows loans.

In scenario 1, if it a straight profit sharing an A's employees don't benefit, then as Tom Poje states you don't consider their compensation. In scenario 2, could it be that Co. A's employee's do benefit, but that the contribution would be made by Co. B because Co. A has no profit & can't make the contribution? If that is the case than Co. B can deduct pursuant to §404(a)(3)(B) §404(a)(3)(B) -- Profit-sharing plan of affiliated group In the case of a profit-sharing plan, or a stock bonus plan in which contributions are determined with reference to profits, of a group of corporations which is an affiliated group within the meaning of section 1504, if any member of such affiliated group is prevented from making a contribution which it would otherwise have made under the plan, by reason of having no current or accumulated earnings or profits or because such earnings or profits are less than the contributions which it would otherwise have made, then so much of the contribution which such member was so prevented from making may be made, for the benefit of the employees of such member, by the other members of the group, to the extent of current or accumulated earnings or profits, except that such contribution by each such other member shall be limited, where the group does not file a consolidated return, to that proportion of its total current and accumulated earnings or profits remaining after adjustment for its contribution deductible without regard to this subparagraph which the total prevented contribution bears to the total current and accumulated earnings or profits of all the members of the group remaining after adjustment for all contributions deductible without regard to this subparagraph. Contributions made under the preceding sentence shall be deductible under subparagraph (A) of this paragraph by the employer making such contribution, and, for the purpose of determining amounts which may be carried forward and deducted under the second sentence of subparagraph (A) of this paragraph in succeeding taxable years, shall be deemed to have been made by the employer on behalf of whose employees such contributions were made.

I'm sure the actual prototype document actually has language indicating that if unrelated employers adopt it will be considered individually designed. Every prototype I have seen has that language in the underlying document.

I would return as a mistake of fact.

Are they not issuing it or are they just delaying issuing it? We work with several insurance companies where the Sch. A's are being delayed due to the DOL Advisory Opinuion b2Kates mentions. Its not new legislation, the DOL just further clarified some info. that should be included on the Sch. A. At least one the insurance companies we work with is redoing their Sch. A's to comply with the guidance & thus we won't get them until June.

Cases include: In re Scott 142 B.R. 126 (E.D.Va. 1992) In re Anes 23 EBC 1953 (3rd Cir. October 27, 1999) Harshbarger v. Pees, 66 F.3d (6th Cir. 1995) Look at the plan document. It should specifically state when the default occurs

I am assuming entry dates would be 06/01 & 12/01. Based on the facts you've provided I see no reason plan could not be amended & thus have the effect of delaying entry for the employee in question until 12/01.

Its the age. Wouldn't you need 20 1/2 for a single entry date following completion? Also post indicate amendment would be 1 year with a single entry date following completion. Doesn't that also present a problem?

I have the same question as WDIK, isn't there a problem with 410(a)(4)? Under the facts provided employees may have to wait more than 6 months to enter the plan after meeting statutory age & service requirements. As a general proposition why couldn't you delay, or possibly even eliminate, an employee's participation status by amending the service requirement?

I agree with rmeigs about taking the down payment from the IRA. You may be avoid early withdrawal penalty, at least on the 1st $10,000.

Again I failed to address in the previous post. We have one employer where this applies. It is a multi-state employer. We do have a clause in that loan document that says something to the effect that loans initiated in Florida are subject to the Documentary Stamp Tax. The stamp tax is assessed at the rate of $.35 per $100 or any fraction thereof.

Reasonable minds can disagree.

I meant to address this in the previous post. It is our understanding that this refers to situations where there is both an exempt & a nonexempt party. The taxable transaction is the loan itself (it triggers the stamp tax). The clause is saying that if there is an exempt party & a non-exempt party, the non-exempt party is still subject to the tax. "Documentary stamp tax is generally payable by any of the parties to a taxable transaction. If one party is exempt, the tax is required of the nonexempt party. United States government agencies; Florida government agencies; and Florida's counties, municipalities, and political subdivisions are exempt from documentary stamp tax...."