bdeancpa

At first I thought the same thing, the 15th business day in January or as soon as administratively feasible, whichever is sooner. But if you read the DOL rules (CFR §2510.3-102) it talks about deferrals which are withheld from an employees paycheck or paid to the employer by the participant. A slef-employed individual's deferrals are not withheld from a paycheck or paid to the employer. Thus I don't think the DOL ruling on employee deferrals applies to them. If it doesn't apply, then the IRC treats a self-employed individual as an employee for qualified plan purposes and treats deferrals made by employees as employer contributions. For tax deduction purposes, an employer contribuiton must be deposited by the due date of the tax return. Does this sound logical?

What is the deposit timing requirement for a self-employed individual who is making a $10,500 deferral all at year-end? Is it January 15, as soon as administratively feasible after December 31, or the due date of the individuals return, including extensions?

I have a client who owns about 25% of his employer and participates in his employer's 401(k) Plan. In addition, he is a director of an unrelated entity and received directors fees for that work which he reports on Schedule C of his tax return. He has had a 25% pension plan for several years with respect to the directors fees. In addition, he has many personal investments and this year he rented office space and hired an employee, just to keep track of these investments. The expense of the employee and office space are treated as investment expenses and deducted on Schedule A of his personal income tax return, subject to the 2% of AGI floor. The pension plan he maintains for his director fees has an immediate eligibility provision in it. My question, as you've probably guessed by now, does he have to make a 25% contribution to a pension account on behalf of this new employee? If the Schedule C buisness is a separate business form the investments (which I think they would be since one generates SE income and the other does not), would the investment business have to specifically adopt the plan before she would be eligible. If so, would the investment entity have to adopt the plan to keep it qualified? If so, could they adopt in 2002 and use the otherwise excludable employee exception to keep from failing the coverage test for 2001. Thanks for any help you can give.

When a beneficiary inherits several IRA's from the same individual (a parent who died at 77 years of age), is there any prohibition against combining all the IRA's into one? Since remaining distributions can come out over the beneficiaries life expectancy all the IRA's should be using the same factor to calcualte the minimum distribution. Thus, the distribuion amount should be the same whether they are combined or not. Also, does the rule that agreggates IRA's for calculating the minimum distribution amount, but lets you take the calculated distribution from one or any combination of the IRA's, apply to inherited IRA's the same as it applies to an original account owner over 70 1/2. Thus, if 12 IRA's were inhereted, and they were with different custodians, could the required minimum distribution be calculated, based upon the beneficiaries life expectancy, and then the distribution come from any of the IRA's? Thanks in advance for any guidance.

In reading the definition of Qualifying Plan Assets for purpose of the exemption from the small plan audit requirement, I don't see that contribution receivable is listed as a qualifying asset. Is this correct? Logic would seem to dictate otherwise, but we all know some of these rules aren't driven by logic :confused:

When you say "name on the plan" do you mean ABC Co. is in the plan name, or do you mean the plan says ABC Co is plan sponsor. It is possible to have a plan with one control group members name in the plan name and another controll group member as the actual plan sponsor. It should be the actual plan sponsor's EIN on the 5500

I talked with Relius tech support yesterday and they told me the CD's were mailed out this past week. I haven't seen mine yet, but it sounds like we should be receiving them any day now.

If a participant receives a lump sum distribution that includes employer securities and rolls the distribution over to an IRA, I assume they loss the ability to withdraw the securities from the IRA at a later time and postpone any tax on the net unrealized appreciation. Is my understanding correct? If not, can anyone give me a citation for some authoratative guidance. Thanks in advance for any help you can give.

When calculating the 3% match for a SIMPLE plan do you include deferrals under a 125 plan as part of compensation? The definition of compensation in the code says Wages as defined in Code Sec. 6051(a)(3) and §6051(a)(8). 6051(a)(3) references the definition of wages for income tax reporting purposes under Code Sec. 3401(a). I scanned this code section and I don't think it includes cafeteria deferrals. This would make sense because there is no income tax withheld on pay deferred under a cafeteria plan. 6051(a)(8) references elective deferrals under §402(g)(3) and §457. §402(g)(3) covers 401(k) deferrals, SAR-SEP deferrals, 403(B) deferrals and SIMPLE deferrals. 402(g)(3) doesn't include cafeteria deferrals. Once again, this makes sense since the purpose of 402(g) is to impose a limit on compensation deferred under various retirement plan vehicles and this limit doesn't apply to cafeteria plans. Based on this I think the match shoudl be calculated on gross minus cafeteria plan amounts. Most of the time I see it calculated on gross including the cafeteria amounts. Does my reasoning look correct. Thanks for any insights you can provide.