R. Butler

Our position is that it applies to all loans executed in the state Florida including loans from ERISA plans. The statute doesn't seem to exempt loans from qualified plans & we don't see where there is a preemption issue since ERISA doesn't preclude such a tax.

Your accountant appears to be wrong. There would be no "catch-up" contribution to a SEP. In the event of an audit the IRS will know something is wrong because the maxiumum contribution was exceeded.

Are the plans permissively aggregated?

Maybe I'm just not understanding what you're asking. I don't see that members of a controlled group maintaining different plans will necessarily have the same number of participants. If they do it is likely just a coincidence. Just because you are considering a broad group of employees for coverage & testing issues, doesn't mean that every member of that broad group is a participant. They are different issues. Standardized or Nonstandardized prototype? There is no prohibition against members of a controlled group maintaining a prototype, but if its a standardized prototype the employees of all members of the controlled group will generally be treated as eligible employees for purposes of the plan unless the IRC Section 410(b)(6)© transition period applies.

I guess I don't understand your question. If Corp. T's employees aren't covered by Corp. U & vice versa, etc. etc. why would you expect that they have the same participant count?

I assume that because there are multiple 5500's, the corps. are covered by different plans. If that assumption is correct why would the number of participants in Corp. T's plan necessarily equal the number of participants in Corp. U's plan?

If its just a SEP your accountant could be correct, just the terminology that is being used is wrong.

Is it possible that the accountant is just using terminology incorrectly? Is this really a SARSEP? (I never actually seen a SARSEP; I know they exist, but you couldn't have a new one after '96 I think.) Is it possible that the accountant is saying that he can participate in his employer's plan & still fund a SEP from his unrelated business? If that is what the accountant is trying to say than he might be correct.

SEP money can rolled into a 401(k) as long as the plan permits it. Hardship withdrawals are not subject to the 20% mandatory withholding. They are subject to the 10% withholding rule. The participant can elect out of the 10% withholding. Probably. See IRC §72(t)(2) for exceptions to the penalty.

The regs. require that in order to be a qualified CODA, the employee must be given an effective opportunity to receive the amount in cash at least once a year. The determination on whether or not there has been an effective opportunity is determined on the basis of all facts & circumstances. I am not aware of any clear guidance on whether the SPD or an SMM is sufficient. I would generally err on the side of caution & issue some sort annual Salary Deferral Agreement. The Agreement is clear that any prior, including a negative election remains in effect until the participant modifies the election.

Don't the participants get a statement that shows the contributions? If thats not enough then probably Blinky's idea would be good.

I hope its not me.

We work with several vendors that do now or by the end of the year will take automatic rollovers from plans in which they serve as recordkeeper. They include American Funds, ING, Lincoln, Mass Mutual and Union Central. There could be 1 or 2 others that I am missing.

If facts & circumstances see §1.401(k)-1(d)(3)(iv)©(5). If safe harbor see §1.401(K)-1(d)(3)(iv)(E)(1). Also check your document for loan amounts. C) Employer reliance on employee representation. For purposes of paragraph (d)(3)(iv)(B) of this section, an immediate and heavy financial need generally may be treated as not capable of being relieved from other resources that are reasonably available to the employee, if the employer relies upon the employee's representation (made in writing or such other form as may be prescribed by the Commissioner), unless the employer has actual knowledge to the contrary, that the need cannot reasonably be relieved— (1) Through reimbursement or compensation by insurance or otherwise; (2) By liquidation of the employee's assets; (3) By cessation of elective contributions or employee contributions under the plan; (4) By other currently available distributions (including distribution of ESOP dividends under section 404(k)) and nontaxable (at the time of the loan) loans, under plans maintained by the employer or by any other employer; or (5) By borrowing from commercial sources on reasonable commercial terms in an amount sufficient to satisfy the need. (D) Employee need not take counterproductive actions. For purposes of this paragraph (d)(3)(iv), a need cannot reasonably be relieved by one of the actions described in paragraph (d)(3)(iv)© of this section if the effect would be to increase the amount of the need. For example, the need for funds to purchase a principal residence cannot reasonably be relieved by a plan loan if the loan would disqualify the employee from obtaining other necessary financing. (E) Distribution deemed necessary to satisfy immediate and heavy financial need. A distribution is deemed necessary to satisfy an immediate and heavy financial need of an employee if each of the following requirements are satisfied— (1) The employee has obtained all other currently available distributions (including distribution of ESOP dividends under section 404(k), but not hardship distributions) and nontaxable (at the time of the loan) loans, under the plan and all other plans maintained by the employer; and

http://www.dol.gov/ebsa/programs/ori/advis...01/2001-01a.htm Specifically -- In the context of tax-qualification activities, it is the view of the Department that the formation of a plan as a tax-qualified plan is a settlor activity for which a plan may not pay. Where a plan is intended to be a tax-qualified plan, however, implementation of this settlor decision may require plan fiduciaries to undertake activities relating to maintaining the plan’s tax-qualified status for which a plan may pay reasonable expenses (i.e., reasonable in light of the services rendered). Implementation activities might include drafting plan amendments required by changes in the tax law, nondiscrimination testing, and requesting IRS determination letters. If, on the other hand, maintaining the plan’s tax-qualified status involves analysis of options for amending the plan from which the plan sponsor makes a choice, the expenses incurred in analyzing the options would be settlor expenses.

http://www.dol.gov/ebsa/programs/ori/advis...01/setq&are.htm

The Benefitslink home page has links to Regs., IRC, etc. I just followed the links.

See Treas. Reg. §1.72(P)-1 Q&A's 5-8 -- Q–5: What is a principal residence for purposes of the exception in section 72(p)(2)(B)(ii) from the requirement that a loan be repaid in five years? A–5: Section 72(p)(2)(B)(ii) provides that the requirement in section 72(p)(2)(B)(i) that a plan loan be repaid within five years does not apply to a loan used to acquire a dwelling unit which will within a reasonable time be used as the principal residence of the participant (a principal residence plan loan). For this purpose, a principal residence has the same meaning as a principal residence under section 121. Q–6: In order to satisfy the requirements for a principal residence plan loan, is a loan required to be secured by the dwelling unit that will within a reasonable time be used as the principal residence of the participant? A–6: A loan is not required to be secured by the dwelling unit that will within a reasonable time be used as the participant's principal residence in order to satisfy the requirements for a principal residence plan loan. Q–7: What tracing rules apply in determining whether a loan qualifies as a principal residence plan loan? A–7: The tracing rules established under section 163(h)(3)(B) apply in determining whether a loan is treated as for the acquisition of a principal residence in order to qualify as a principal residence plan loan. Q–8: Can a refinancing qualify as a principal residence plan loan? A–8: (a) Refinancings. In general, no, a refinancing cannot qualify as a principal residence plan loan. However, a loan from a qualified employer plan used to repay a loan from a third party will qualify as a principal residence plan loan if the plan loan qualifies as a principal residence plan loan without regard to the loan from the third party. (b) Example. The following example illustrates the rules in paragraph (a) of this Q&A–8 and is based upon the assumptions described in the introductory text of this section: Example. (i) On July 1, 2003, a participant requests a $50,000 plan loan to be repaid in level monthly installments over 15 years. On August 1, 2003, the participant acquires a principal residence and pays a portion of the purchase price with a $50,000 bank loan. On September 1, 2003, the plan loans $50,000 to the participant, which the participant uses to pay the bank loan. (ii) Because the plan loan satisfies the requirements to qualify as a principal residence plan loan (taking into account the tracing rules of section 163(h)(3)(B)), the plan loan qualifies for the exception in section 72(p)(2)(B)(ii). Also see IRC §163(h)(3)(B) -- (3) Qualified residence interest For purposes of this subsection— (A) In general The term “qualified residence interest” means any interest which is paid or accrued during the taxable year on— (i) acquisition indebtedness with respect to any qualified residence of the taxpayer, or (ii) home equity indebtedness with respect to any qualified residence of the taxpayer. For purposes of the preceding sentence, the determination of whether any property is a qualified residence of the taxpayer shall be made as of the time the interest is accrued. (B) Acquisition indebtedness (i) In general The term “acquisition indebtedness” means any indebtedness which— (I) is incurred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer, and (II) is secured by such residence.  Such term also includes any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. (ii) $1,000,000 limitation The aggregate amount treated as acquisition indebtedness for any period shall not exceed $1,000,000 ($500,000 in the case of a married individual filing a separate return).

It varies. Its possible, but you need to look at the options in your document. It depends. Its cheaper to match on a payroll basis, however, more difficult for anyone to verify your match. Most of our clients calculate & remit their own 401(k) & match contributions. We will not check match calculations for any plan that matches on a payroll basis. It requires us to collect too much data. We have clients are satisifed they can handle it properly & they match on a payroll basis. We have other clients that are uncomfortable relying on their own calculations & those clients match based on plan year comp.

The HCE should be included & that is the issue. For ADP/ACP test purposes only the NHCEs can be set aside as statutory excludible. At Relius 9.1.2 when you opt to exclude the "otherwise excludibles" not only are the NHCEs set apart, but also any HCE not meeting the statutory minimums. The HCEs should not be set apart & that is the problem. I know that 10.0 is now out & I just haven't had time to go get it. Per one of the messages in this thread; 10.0 may fix the problem.

If the only the employees are 2 50% owners & the owners' parents then all the employees are key. However, I do agree that you have to use a top heavy vesting schedule.

Hey what do you know I stepped into abyss too. At this point at this point that has done me little good. I like to stay with ERISA, but it has been difficult to find ERISA attorney jobs where we are currently living & we are really trying not to relocate.

You'll have a busy May. I was scheduled to take the DB exam last December. Due to a mistake at the testing facility I got cancelled & could not reschedule for that testing window. ASPA allowed me to postpone until 2004. However, my wife & I had our 1st child in May & I just couldn't get motivated to take the exam. I postponed until this winter period, but again no motivation. Its just so much more fun to play with the boy. Maybe next year. Anyway good luck & congratulations on your child.

As the others have noted there really issn't a right answer. I will say that I have a handful of designations, but the CPA designation has been the most beneficial to me thus far. If you do go the accounting route, I highly recommend going ahead & getting your CPA designation. It should help you not only get interviews, but it should also help you attract clients for your employer.

Really as of right now wouldn't we revert back to the old rules because this sunsets after 2010? I vote for this.