wmyer

The plan document will probably define compensation for self-employed individuals for allocation purposes. Without having read your document, I am nevertheless sure it won't mention W-2 earnings for partnership compensation, for allocation purposes.

Not true. Notice 2000-3 addresses the timing of the SHMAC. If the SHMAC is trued up based on annual compensation, the employer will have until the tax filing deadline plus extensions to make the deposit. If the SHMAC is based on a pay period method, there are some different timing requirements, however, as clarified in IRS Notice 2000-3.

You probably mean the 5500 Preparer's Manual by Janice M. Wegesin. http://www.aspenpublishers.com/Product.asp...E&ProductType=M

When you file the 5500, there is a space for a change of EIN. The plan name will presumably change as well, since it will be Something, Inc. The 5500 will also no longer have code 3B on it (plan covering self-employed individuals).

I am also guessing that the plan administrator did not file a 5500 since he thought he was the only participant. Or, at best, maybe he filed the EZ. That's an additional problem. Also, he will be subject to underfunding penalties, which will be quite a lot.

I assume the plan is topheavy, in which case a topheavy minimum must be provided.

ifebp.org

I have a 401(k) plan that had a match formula for the first half of the year, then they removed the match formula mid-year and added a non-elective formula. When doing the ACP test, do I use compensation just for the first half of the year, or the entire year? When doing the 401a4 test, do I use compensation for the second half of the year, or the entire year? When doing 410(b) for each component, do I use the employees who were non-excludable for the entire year...or do I use the ones who were non-excludable for the first half towards the matching, and the ones who were non-excludable for the second half towards the non-elective component? Any cites?

See http://www.reish.com/practice_areas/Techni...ps/IRStip91.cfm

What are you excluding these items from compensation for...just the profit-sharing contribution, I hope. If memory serves correct, you cannot exclude these compensation items for purposes of making the Safe Harbor non-elective or Safe Harbor match.

I have an ERISA 403(b) plan that provides for voluntary, basic and matching contributions. Although the plan does not have any exclused classes, some priests opt out of the plan and do not make or receive any contributions. Instead, their denomination or order provides for them. Has anyone else encountered anything like this? When performing 410(b) testing, 401(a)(4) testing and 401(m) testing, what do I do with these people? Some of the people who opt out are HCEs.

No, they shouldn't do this, because this would presumably be a "deemed coda" (i.e. bad). The plan should be set up so that next year one partner is in class 1 and the other partner is in class 2.

There is -- call 1-877-711-9682, choose option #1 and provide the 9-digit EIN, 4-digit filing year and 3-digit plan number. I haven't tried this recently, but it used to work, anyway.

After EGTRRA went into effect, 457 and 401(k) deferrals are no longer coordinated. Therefore, if you are under age 50, you can defer $14,000 into each plan for 2005, for a total of $28,000. If you are age 50 or over, you can make an additional catch-up contribution.

The recordkeeper is probably confused. For ADP refunds, there is a 10% employer penalty if the excess contribution is refunded after 2 1/2 months after year-end (March 15 for calendar year plans).

You need to have earned income in order to contribution to an IRA or a ROTH IRA. You don't need to have a minimum income--if you earn $100 during the year, you can contribute $100 to a ROTH (but not more than $100). If you earn $1,000 during the year, you can contribute $1,000. Wait, I just realized that SAHM probably means stay-at-home-mom. If you are married and your husband has earned income, you could contribute to a ROTH IRA based on his income.

Don't try to explain the concept, since that's pointless and will only cause frustration on your part and on the client's. Just show the numbers. Showing the numbers should work every time and should suffice.

If you take a lump sum payment in 2005, the amount would be taxable to you in 2005, regardless of when the amount was put into your name. Generally, as the beneficiary, you should be able to take 401(k) distributions in a systematic manner or partial withdrawals, rather than a lump sum. You would just have to make sure you take the minimum required distribution each year.

Can we use the concept of shifting here to shift some of the NHCE deferrals from the prior year ADP test to the ACP test?

Thanks Tom for that answer. FYI, I was using a range of 2.75 to 3.25 because of the alternative de minimus rule for DC plans that you could use .25% instead of 5% of the midpoint (that's why I specified it wasn't cross-tested or DB, because the de minimus rule there is .002%).

Yes, you will need to file a 5500 EZ for the final year of the plan. If all the assets are emptied from the plan during plan year 2005, then the final 5500 would be a 2005 5500. The final form must be filed within 7 months after all the money is emptied out of the plan.

I was wondering how practitioners in general are doing rate banding for DC 401(a)(4) testing (non cross tested) for large plans. Is there a standard way of doing this? How much flexibility is there in setting up the rate groups? For example, do you take the highest HCE allocation rate as the starting point and use that as the minimum of the top rate group or as the midpoint of the top rate group? And then, for the next rate group, do you repeat this procedure based on the next highest HCE allocation rate that does not fall within the first range? Let's say I have HCEs with accrual rates of 3.0%, 2.8%, 2.4%. Would my first rate group be 2.75%-3.25%? And then would my second rate group be 2.25% to 2.75%? Or, could my first rate group be 2.5% to 3.0% and then my next rate group go from 1.9% to 2.4%?

Money purchase plans are able to offer loans. However, they shouldn't offer hardship withdrawals...is it a non-ERISA plan or something?

Let's say that a plan is relying on the maximum disparity safe harbor from Notice 89-23 for purposes of nondiscrimination testing. For example, it gives a 5% contribution to NHCEs and a 9% contribution to HCEs. Okay, now let's further say that the plan's definition of compensation for allocation purposes excludes some things like commissions and bonuses, but it passes 414(s). When figuring out if the plan is nondiscriminatory, would this plan satisfy 89-23 or do you have to do a 401(a)(4) test using a safe harbor 414(s) compensation definition?

On the new form 5330, who do you put down as the disqualified person on line #27, if the employer remitted late deferrals? I assume you put down the name and address of the business entity, e.g. the corporation? Not the CFO, CEO, etc.?