Jim Norman

Sorry to hear this, I worked with Kirk on a couple of mutual clients over the years and always enjoyed our conversations. RIP Kirk.

Congratulations! Well done, Dave. Jim

I agree with the others that the TIC purchase with the IRA is potentially a PT. One must also remember that the penalty for IRA PTs is DEATH. The whole IRA is deemed distributed and taxable when the PT occurs. This is an area where an abundance of caution is warranted.

Tell us how you really feel, Bill! Not to mention that many approved plan documents have language providing that forfeitures may reduce "Employer Contributions" without any further language limiting what sorts of "Employer Contributions" may be reduced.

I don't know enough about what they do to really opine on the B-Org issue. However as you note, you specifically addressed this issue with their attorney and were "shot down". So why pursue it further? If the attorney were saying something that was clearly wrong, that would be one thing, but this is a F&C determination and he is coming up with a plausible result.

Since they are LLCs the "professional corporation" rule for the A-Org FSO is not applicable. An LLC is not a corporation (are they electing to be taxed as a corp?) and any unincorporated service organization can be an FSO to an A-Org.

You ask a lot of good questions, the sort that a TPA can answer. But you won't get good, knowledgeable answers from an online service charging $195 per year. Much like choosing to use something like legalzoom.com for DIY legal documents, or hiring an attorney who can advise you as well as create documents. Some thoughts. One 401(k) plan can cover both you and your wife, as can one SEP document. You don't need to roll the SEP accounts into it though you can. The maximum SEP is $49K the maximum solo 401(k) is $54,500, depending on your income of course. Also assume you have no employees and neither of you are part of a controlled group or affiliated service group with any other employer except each other. You can mix and match SEPs and 401(k), but you have to read the plan documents, especially the SEP documents to see if this is allowed. No real advantage to doing so. You will likely need to file an annual 5500 form and also keep your documents up to date for legislative and regulatory changes. You can self-trustee a 401(k) plan opening up lots of other investment options. You can have separate accounts for each of you in a 401(k) or pool the plan assets for both of you perhaps reducing investment costs. Good luck.

What is the client trying to accomplish? Why do they care if they can defer on their commissions? Usually when clients say they want to limit comp, what they really want to do is limit the employer contribution expense. If it is a matching contribution, could they accomplish a similar result with a cap on match? If a PS contribution, could they limit the PS contributions and pass a general test?

4971 relates to failure to meet minimum funding standards, not applicable to a PS plan. Even if it were, that doesn't change the deductibility timing under 404(a)(3)(A)(i) or 404(a)(6).

I think you can get flux capacitors on Amazon...

Still a brother sister CG, minor child deemed to own both: http://benefitslink.com/modperl/qa.cgi?db=...ployer&id=9

At the risk of admitting my ignorance, how did you calculate that? I also get 45%. 8.5" * 11" = 93.5 sq in. Take away 1.25" each margin = take away 2.5" in height and 2.5" width = 6" * 8.50" = 51 sq in remaining area 93.5-51 = 42.5 sq in lost area. 42.5/93.5 = 45.45% lost

That's why DOL and Miller are going after plan fees, so the government can add its own 60 bps load. Brilliant!

If the 12-c is a cult calculator I guess I'm a member of a cult, I've got 3 of them: http://online.wsj.com/article/SB1000142405...0326458056.html

The newsletter seems a little overly broad. If a 401(k) plan is established, the SIMPLE is invalidated back to January 1. Question is, what are the consequences of this and are they worth it? Per 408(p)(2)(D), the SIMPLE would not be "treated as a qualified salary reduction arrangement".

Yes, it is a 2011 deduction.

Thank you much. Had a chance to research it this morning and also found Notice 2010-84 that states the same.

An employee terminates employment in 2010 and takes a total distribution of her 401(k) account, apparently paid as a direct rollover to an IRA and immediately converted to a Roth. So far so good. The income from the conversion will be recognized 50% in 2011 and 50% in 2012. Now here’s the twist. After converting to a Roth, she withdrew all the money from the Roth. Does this change the way the Roth conversion is taxed? The Roth withdrawal is not a “qualified” withdrawal because she did not wait 5 years, but this only affects the taxation of any earnings. Principal can always be withdrawn from a Roth without additional tax. So, did she just figure out a way to take a 100% distribution of her 401(k) in 2010 and pay the taxes over 2011 and 2012?

The 2010 contribution is not deductible in 2010 as it was funded after 3/15. However, since it was funded within 30 days of the deadline so the 2010 contribution still counts as annual additions for 415 in 2010. Because the contribution was made after the due date, it now comes under the general rule of deductible in the year made. So it is a 2011 deduction. 2010 tax return should be amended to reflect no deduction. The 2011 contribution can be determined normally and contributed timely for 2011 in addition to the 2010 contribution deducted in 2011. HOWEVER, you need to watch the 25% deduction limit for 2011, based on 2011 compensation. The total deduction cannot exceed this limit. Might need to limit the 2011 contribution or carry some over to 2012 if the limit is a problem.

Don't we have to ask Carol Zimmerman first?

Are you familiar with DOL Field Assistance Bulletin 2004-2? Escheat is not the DOL's preferred option, though it is permissible in a plan termination situation, though DOL typically would prefer to see the funds sent to an IRA on behalf of the missing participant. From the FAB: ------------------------------------------------------------------------------------------------------ In our view, plan fiduciaries must always consider distributing missing participant benefits into individual retirement plans (i.e., an individual retirement account or annuity).12 Establishing an individual retirement plan is the preferred distribution option because it is more likely to preserve assets for retirement purposes than any of the other identified options. [snip] In deciding between distribution into a state unclaimed property fund and distribution into a federally insured bank account, we believe that a plan fiduciary should evaluate any interest accrual and fees associated with a bank account against the availability of the state unclaimed property fund’s searchable database that may facilitate the potential for recovery. In any event, transfer to state unclaimed property funds must comply with state law requirements. ------------------------------------------------------------------------------------------------------- That said, if you do escheat, the FAB specifically says that it is in fact a plan distribution and that the assets are no longer plan assets under ERISA. The FAB does not address withholding, but on this basis I would do the normal 20% plus state as applicable. If you decide to do an IRA rollover, Penchecks offers missing participant IRAs. Full disclosure, I am a Penchecks shareholder.

No.

On the IRS teleconference call today on Form 5330, they reiterated that there is NO de minimis amount for the 5330 for late deferrals. So you've got it right, lots of work for a trivial amount of tax.

Sure he can have an eligibility period. But why? If the PW ees are not in the plan for that first year, then there are no plan contributions counted toward satisfaction of the PW. But he still must meet the PW requirements of his contract(s). So for the PW employees who are not yet eligible for the plan, he will have to pay them the full PW in cash, plus FICA, Medi, and workers comp premiums (read - extra cost). And then when they become eligible for the plan and he intends to count the plan contribution toward the PW requirement, the newly eligible employees get a cut in their wages. That will go over well.

A few years back there was a case reported where IRS had disallowed a plan contribution deduction where the employer had filed their tax return prior to March 15, then realized they needed more time to make their contribution, so filed a 7004 by March 15 requesting an extension. IRS denied, saying extension was invalid because the return had already been filed. I've tried but been unable to find a cite for this which would be handy to have. Does anybody recall this and have a cite? My client's situation is different. Client's CPA filed the 7004 two weeks ago as the client needs more time to fund the plan for 2010. CPA then finished up the tax return and sent it to client. Client, not thinking about the plan contribution went ahead and filed the 1120 return on 3/11. Question - does the client have until 3/15 or 9/15 to fund the plan contribution and qualify for a deduction for 2010? It seems to me, unlike the first situation, my client's extension should be valid, it was filed timely prior to the due date of the return, and the return had not yet been filed. Merely filing the return by 3/15 should not invalidate the extension. I'd like to get the cite to that other situation as I recall the specific reason IRS gave for disallowing was that the extension was filed after the return was filed.