wmyer

OK, so if the SIMPLE IRA offers the 3% match, and the employee chooses not to defer in 2001, then box 13 should not be checked? And this will be the same for the SIMPLE 401(k)? And this will be the same even if the employee met the eligibility requirements and made deferrals in 2000 and in 2002, but skipped 2001? And whether this box is checked is one of the things that determines how much of your traditional IRA contribution for 2001 is deductible?

I don't think this works. The change in the PS deduction limit to 25% is effective for TAX YEARS beginning on or after 1/1/2002.

I agree with KJohnson that you could amend the NRA. Of course, then at age 59 1/2, everyone would become 100% vested, regardless of years of vesting service.

Yes.

The 1000-hour rule and last day rule which can apply to profit-sharing plans in a non-standardized plan cannot apply to the safe harbor non-elective or matching contribution. Vide Notice 98-52.

To all three questions: Yes. Additionally, regarding the short plan year, there's a lot more than just the 35,000 limit that needs to be prorated. Hour requirements, maximum compensation limit (170,000), and the SSWB for plans with permitted disparity also need to be prorated.

The broker is correct. See for example Publication 590, "Rollover from One IRA into Another" (page 15 of the 1999 version). There's a section entitled "Waiting Period between rollovers."

Hi, Belgarath, you can attach the .doc file directly to a posting on the message board...that way, all can benefit and you won't get e-mails from everyone asking you to send the MS-WORD file. (When you post a reply, there's an option that says "Attachment" underneath the smilies.)

Yes, it's accurate. Also, with the "might notice," if the employer decides to go safe harbor for the year, the employer needs to provide a supplemental notice 30 days before the end of the year stating that he will indeed make the non-elective contribution. He is also deemed to be a current-year ADP tester, whether or not he goes safe harbor. This can be done every year without restriction.

The below questions all relate to 2002. 1. Will a participant who elects to roll over 100% of his assets have to be given the OPTION of either rolling over everything or rolling over everything except her after-tax basis? 2. Can a participant elect to have his assets distributed to him (with appropriate withholding) and then roll over the entire amount, INCLUDING after-tax basis, to an IRA or another Qualified Plan within 60 days? If rolled over to another QP, will the new administrator take the participant's word as to how much is after-tax basis, or is some documentation necessary? I assume the new administrator will also have to track the after-tax basis? 3. If assets that include after-tax basis are rolled over from a QP to an IRA, can any of it be rolled over again to another QP at a later date?

Any thoughts on how to fill out the 5500 Schedule R, if the plans merge 12/31/2001 and the receivable contribution is made to the profit-sharing plan in 2002? Specifically, what would you put down for the required and actual contributions in 6a, 6b and 6c? If the entire pension contribution is made to the profit-sharing plan, would you make the required contribution equal $0.00, even though the formula calls for a contribution? Would you file a Schedule R at all?

84,900.

There is a 10% penalty though on the earnings. The earnings and principal are taken out proportionally for post-1986 post-tax money.

The forfeiture restoration does not count against the annual additions limit. Is the forfeiture restoration coming out of the forfeiture account, or is the employer sending in an additional contribution to restore the forfeiture? If it comes out of the forfeiture account, then it doesn't count against the deductible limit and is not included as a contribution on the 5500 form.

Line 7(d) on the new Form 5307 reads: "Are there any 'Other' boxes selected in the adoption agreement?" This is a new question that wasn't on the older Form 5307. The very brief instructions provided by the IRS say to "Answer this 'Yes' if you have selected any choice labeled 'Other' in the adoption agreement." OK , so I have an adoption agreement in front of me that has a category "Age Requirement" and option #1 is No age requirement, option #2 is 20 1/2, option #3 is 21, and option #4 is "Other" followed by a describe line. If someone checks option #4, should they check "Yes" on line 7d of the 5307? Now , I have another adoption agreement that has a category Excluded Categories of Employees. Option #1 is to exclude leased employees. Option #2 doesn't explicitly use the word other, but it says "Named Categories" and has a describe line following it. If someone selects this option #2, should they check "Yes" on line 7d even though the adoption agreement doesn't explicitly use the word "other"? Any thoughts??

Philip, the 401(a)(17) limit is based on the "limitation year," not the plan year. So it depends on how your plan document defines limitation year. Generally, a plan doc will define limitation year as the twelve-month period ending on the last day of the plan year. So for an initial short plan year, the compensation limit would not be prorated. This topic came up before. If you type "initial short plan year" in the search engine, you should be able to see the comments on this, or try http://benefitslink.com/boards/index.php?showtopic=323

No, post-tax is subject to 415 limit, but with comp. of 100,000, if he's over 50, he can do 41,000 as follows: 11,000 salary deferral 4,000 post-tax 25,000 company p/s contribution 1,000 salary deferral catch-up --------- 41,000

It seems he can also kick in an additional $4,000 post-tax, for a total of $41,000!

Because it does affect mandatory withholding amounts, it can be an important question whether this is a choice or not. If it's a qualified plan and the participant is taking the minimum, there's no mandatory withholding. If a participant wants to take out more than the minimum as determined by the "trophy wife" rule, but doesn't want taxes withheld, it may be to his benefit to elect to use the IMDB tables, if he is allowed to.

Even in 2001, the employer can put in more than a 3% discretionary contribution to the Safe Harbor 401(k) plan, subject of course to deductibility limitations under IRC §404(a).

You should just check "3d." For the matching 100% of non-excludable NHCEs benefited, because by IRS mathematics, 0/0 = 100%.

Some clarification...is the owner sole-prop or corp? this is for 2001, yes? and does the owner make $170,000 gross income or more than $170,000 gross income? E.g., if 2001 and corporation and he is only making 170,000, then the 15% limit is not 240,000*15%, but rather (240,000-salary deferrals)*15%.

This question is not answered in 2000-3 or 98-52, but most of the plans we administer which are in this same situation use full-year comp. We give them the option of using full-year or part-year comp.

Forfeiture doesn't count towards the 404(a) deductibility limit. As long as the deductible contributions (i.e. contributions to the plan excluding forfeiture, post-tax, etc.) are less than 15% for a PS plan or 25% for a pension plan, the 404(a) limit has not been exceeded and there are no nondeductible contributions.

No -- and the sole-prop would automatically pass ADP/ACP testing since there are no employees. But if the sole-prop is trying to maximize his or her contributions, then it usually makes more sense simply to have a profit-sharing plan or a SEP if you don't have any employees, anyway, because of the way the 404(a) limit is determined.