M Norton

Today someone said that they thought ministers are considered self-employed and therefore ineligible to participate in a retirement plan sponsored by the local church or ministry. Does that sound right? If so, that could be the resolution.

ER sponsors a calendar-year Safe Harbor 401(k) with 2% NEC. They want to change to a SIMPLE IRA for 2010. I understand that you cannot contribute to a SIMPLE IRA in the same calendar year that you make contributions to a qualified plan. An associate believes that means you cannot make deposits to the 401(k) in 2010 for contributions accrued for the 2009 plan year. Does the ER really have to make all contribution deposits for 2009 before 12/31/09 in order to avoid violating the exclusive plan rule? Thanks.

I think maybe it could be a problem because the ordained ministers can participate in a denominational retirement plan. The plan is not sponsored by the individual church but by the denomination. Does that cause a problem with the ban on an employer having both a SIMPLE and a qualified plan at the same time?

HCE took a loan from his profit sharing plan in prior year. Now he wants to repay the loan in part by transferring an investment into the plan. Is that allowed? He wants to use an investment in a limited partnership. Thanks for any guidance on this!

Can a church set up a Simple IRA plan for its lay employees? I seem to remember that the Simple IRA is not an option for churches, but I can't find that documented any place. Thanks.

Thanks, Tom! That's exactly what I needed.

Does the same apply for the annual addition limit?

It was my understanding that in a fiscal year plan, the limits that apply for compensation and maximum annual addition are the limits for the calendar year in which the plan year began. A prospective client has a DC plan that has been using the limits for the calendar year in which the plan year ends. Is that permissible?

I guess I didn't make it clear that this is not my client. The client's attorney called us asking for advice. The client does its own plan administration, which is why the plan is in trouble. We are trying to make a recommendation to the attorney about options available. Our first recommendation is that the client find a competent third party administrator for their plan to prevent problems like this in the future.

2-doctor medical practice sponsors a profit sharing plan. Doctors are the trustees; employer is plan administrator Participants have self-directed individual brokerage accounts. Plan allows for plan loans and hardship distributions. No other inservice distributions are allowed In 2007 one doctor took $59,500 out of his account as a plan loan. Repayments were deposited into plan account in 2007 in amounts sufficient to restore excess loan amount and pay interest. Loan balance at 12/31/07 was $46,940 No loan payments were made in 2008. In November 2008, same doctor took out an additional $25,000 loan from his account. The first loan is in default (no payments in 2008), but can a fiduciary default on a loan? Any suggestions on how they can fix this plan - VCP, VFC?

Vanguard has been administering a money purchase plan for one of our clients. Client got a notice from Vanguard that they aren't doing small plans any more and referred them to a company called ExpertPlan. Does anyone have experience working with ExpertPlan or know anything about them? Thanks!

Client has a 401(k) plan with safe harbor match. Plan compensation is defined as wages, tips and fringe benefit comp as reported on W-2. Client paid 2008 Christmas bonuses to all rank and file employees in a fixed net amount ($250), and grossed them up for FICA and Medicare. No deferrals were withheld from the bonuses. Then on the last paycheck of the year, some employees' deferrals were REDUCED by the amount of deferrals that should have been withheld from the Christmas bonuses. So deferrals for a lot of people are incorrect, plus the related SH match - small amounts for each, but sizable for the plan as a whole. The plan is being audited by a CPA firm. Does this need to be corrected? If so, how? Thanks!

Thanks for the reply, ipod! Do you have a cite that I can give to the client?

Medical practice has a 401(k) plan. The plan operates on a calendar year basis. One physician retired as of 6/30 but will be receiving payments based on A/R receipts for 18 months. Plan defines compensation as 3401(a) comp. A/R payments are included in the physicians' W-2 income. Should the plan continue to treat the A/R payments as compensation for this physician under the plan even though he is no longer working? Thanks!

IRA owner had already attained RBD and was taking RMDs. He died in 2008 prior to taking RMD for this year. Does the RMD have to be made for 2008. If so, to whom? The designated beneficiary? The estate? If the designated beneficiary is the spouse, does that change the answer? Thanks.

A client has informed me that their 2006 match contributions were not deposited timely. The match for the employees (plus earnings) was finally deposited in April, 2008, while the match for the owner and his wife still have not been deposited. It is my understanding that all deferrals are deposited every pay period. Questions: 1. What is the penalty for late deposit of match contributions to a SIMPLE IRA? 2. Does the 2006 corporate tax return need to be amended to remove the deduction for the employer match? 3. Can match contributions for prior years be deducted on the 2008 corporate tax return? 4. Does the client still have a SIMPLE IRA plan? Thanks!

The PPA allows rollover of eligible distributions to an IRA for a non-spouse beneficiary. All the commentary I have seen refers to rollovers from qualified plans to an IRA. If the distribution is coming from an IRA, can it be rolled over to a non-spouse beneficiary's IRA? Thanks.