wmyer

Doesn't sound correct at all! However, if someone doesn't have any IRA currently, she could roll over her pre-1987 post tax principal and convert it to a ROTH IRA without being subject to any tax.

If the employer has an extension on the employer's federal income tax return, the 5500 deadline is generally automatically extended until the income tax filing deadline. If not, then you are correct, a 5558 should be filed prior to the 5500 due date.

I re-read Notice 98-1, but it doesn't address this situation directly: A 50%/50% S-Corp had a traditional 401(k) plan (owners are unrelated). The plan terminated 2/27/2004 and the corporation dissolved. One of the 50% owners then established a new S-Corp in 2004 and began a new traditional 401(k) plan for 2004. For his new plan, can he use prior year testing with a 3% assumed NHCE ADP? It seems to me that he can.

Anyone know where I can get a copy (preferably pdf) of IRS Notice 89-23 and IRS Announcement 95-48?

Plan years beginning 1/1/1999 and thereafter.

Since we're on this topic, is the 20% withholding on the $5,000 or the $4,925? If the guy is over 70 1/2, and his required minimum distribution is $5,000, has it been satisfied with this withdrawal, or does he need to take out an additional $75?

If the HCE has only worked with the new company since 10/2002, and you're testing plan year ending 12/31/2003, he hasn't been there one year. Therefore, he has to be tested along with all the other employees. Otherwise-excludable employee rule wouldn't apply. With the OEE rule, you do separate testing for an "upper" group (participants who have met the 1 year, age 21, entry date requirements) and a "lower" group (participants who are statutorily excludable).

Why is HCE hired 10/2002 in the "upper group" while NHCE hired 11/2002 is in the "lower group"? Are you testing for 2003 or 2004 plan year?

See Revenue Procedure 2004-6, Section 17 (2004-6). I believe the advance dates are still 7 days and 21 days. Instead of the key district office, the new address is: Employee Plan Determinations Internal Revenue Service P.O. Box 192 Covington, KY 41012-0192

If the existing plan is a 401(k) plan and the 2003 plan year is on the calendar year basis, then the answer is generally yes.

In other words, YES. A sole-proprietor does need an EIN for his or her 401(k) plan.

There are some differences between a 1-participant plan and a multi-participant plan...e.g. blackout notice requirement, fidelity bonding requirement, bankruptcy protection, etc. Also, you may need to file a 5500 or 5500-EZ even if the plan assets are less than $100,000 -- for example, if it is the final plan year, or if the employer is a member of a controlled group.

Does anyone know what the projected implementation date is for EFAST2? Will it be for 2004 plan years, 2005 plan years or something even farther in the future?

A Safe Harbor 401(k) plan that only has the non-elective or the match, and no profit sharing contributions, is deemed a non-topheavy plan. If the employer also maintains a SEP with a 3-year wait, does this still hold true?

well, that's correct...but currently the maxi/mini does not work with sole-proprietors, partners, etc. and if my plan has a match and the income nets down below 200,000, it's a lot of manual work!

OK, I'm new to the Relius Proposal System. I understand that you can't use Classes in Relius Proposal if the entity is a sole proprietorship or partnership. So, if the sole-prop's income is less than 205,00, what is the simplest work-around for this?

I agree with Blinky except for the timing. If you don't have a last day of the plan year rule, you can't restate the plan retroactively to September 1, 2003. The 204(h) notice must be provided within a reasonable time before the benefit reduction.

We have a client who amended from a standardized profit-sharing plan to a Safe Harbor 401(k) with a SHNEC contribution for 2003. Now, the client has changed her mind and wants to change to a Traditional 401(k) without any required SHNEC contribution for 2003. Is there any way that she can do this? If not, can she terminate the Safe Habor 401(k) with SHNEC mid-year? If she is permitted to terminate the plan mid-year, does she have to give any notice, does she have to satisfy ADP/ACP tests, does she have to fund the non-elective through any particular date, and where is the authority for terminating mid-year, since you are generally not permitted to have a short plan year Safe Harbor?

OK, I know that there is no maximum age in the SIMPLE IRA, because the IRA Answer Book has this question and answer: SIMPLE contributions are not subject to a maximum age requirement. The IRA Answer Book even references the IRS Code sections 219(d)(1) and 408(B)(4). However, these Code references do not seem to support the answer. Am I missing something? IRC 219(d)(1) IRC 408

If you are still working, a plan can only allow 401(k) access as a loan, or as a hardship withdrawal, unless another "distributable event" has occurred. If you want a loan, the plan must permit loans. If you are taking a hardship withdrawal, the plan has to allow for hardships, and you have to meet certain requirements, and (depending upon plan provisions) salary deferral contributions may be prohibited for 6 or 12 months. If you are not taking a hardship withdrawal, you will need another distributable event, for example, turning age 59 1/2 or disability or death.

What would be the wording for the Summary Annual Report, for the surviving plan, in the event of a plan merger? Let's say that the surviving plan's beginning balance is $100, ending balance is $300, and the amount received from the disappearing plan is $150, and there were earnings of $50 during the year. Do you think that following is appropriate, specifically the sentence in bold type, or is there specific language that is supposed to be used: The value of plan assets, after subtracting liabilities of the plan, was $300 as of the end of the plan year, compared to $100 at the beginning of the year. During the year, the plan experienced an increase in net assets of $200.... During the plan year, the plan had total income of $50 including employer contributions of $0.... Additionally, the value of plan assets increased due to net transfers to the plan of $150.

Note that the rule is SEVEN months after the end of the month, not 7 1/2 months after the date the last dollar is removed. If the plan is zeroed out in May, 2003, the 5500 filing deadline will be 12/31/2003, regardless of whether the plan is zeroed on May 1 or May 30.

If the plan is zeroed out in May, 2003, the 5500 filing deadline will be 12/31/2003, regardless of whether the plan is zeroed on May 1 or May 30. text added: whoops! this was supposed to be a reply to a previous post!

Rev. Proc. 2002-73 extended the GUST RAP until the later of September 30, 2003, and the end of the 12th month beginning after the date on which the IRS issues a GUST opinion letter for the pre-approved plan. Does this mean that plans can switch freely between current and prior ADP/ACP testing until 9/30/2003, even if they have already signed a GUST adoption agreement? Does this mean they can also change their election retroactively for 2002?

I agree. However, please note that even with a 2-year eligibility requirement, the participants will be able to make salary deferrals to the Safe Harbor 401(k) plan after only 12 months. The participants will also receive the nonelective contribution after 12 months. Only the profit-sharing portion can be subject to the two year requirement.