FJR

Is it permissable to start a DB plan and fund the max. allowed in that year and then terminate it the following year? Reason for terminating is there is no more consulting wages going forward. Much appreciated

Just checking on what other TPA's are doing when they administer SH Plans under the following. Large Company who sponsors SH 401(k) Plan. Demographics are many min. wage salaried employees, few management and a few owners. Company gets SH notice out to EE's offering a basic SH Match. In addition to notice to EE's, they go through a very thorough enrollment meeting. Results - Owners want to Max out their 401(k) contribution, Managers as well. Of the 70+ eligible min. wage workers 7 sign up to defer. Here is the question. What are TPA's doing about the following: 1. Proof that the SH notice was given 2. Are you getting enrollment forms back that indicates the other 63 eligibles decline defering. If so, is that impartive Anything else missing regarding admin to a 401(k) SH Match? My concern is about the low participation, yet allowing the owners and other HCE's to max out.

Tom, Can I do the following: 3% Non-elective goes to NHCE's. Husband and Wife can still defer maximum 401(k) under Safe Harbor rules. Put Husband in Class 1 Put wife in Class 2 Put all others in Class 3 Allocate Profit Sharing to class 1(husband) at lets say 14%. Allocate 0% to Class 2 (wife) Allocate 2% to class 3 for a total of 5% If I can show that wife does not get a safe harbor or profit sharing contribution, then it passes.

Is it possible to design a cross-tested 401(k) safe harbor plan with the following: Husband and wife 4 eligible NHCE Offer the 3% non-elective to all participants including the Husband and Wife. Allow the Husband and wife to contribute max. 401(k) contribution (13k) each. Give the NHCE an additional 2% Profit sharing contibution, to satisfy the Gateway min. In order to pass cross-testing, can we eliminate the wife from receiving a Profit Sharing allocation. If so, does the 3% have to be used in the testing or does she not benefit for cross-testing purposes. Any suggestion other than completely excluding her from the plan?

alanm, I'm curious how the broker gets paid in that example?

They have found a Custodian that will do it. I guess my question is more about the PT issues. Are they the same under a DC plan? The individual wants part of money from SEP to pay for property and the rest to be personally mortgage under his name. Does that run into UBTI. If the property is for investment only and not the use of the individual, then I don't see a conflict there. What if the individual wants to buy the property later down the road and use it for personal use. Does this become a taxable transaction or can the money go back into SEP?

Gary, do you have any experience with SEP's owning investment real-estate in under their account? I assume SEP's are still subject to 406(B). Your thoughts would be appreciated

Don't forget it can also be used to help offset investment advisory fees as well. Most of the post assume there are only TPA admin. fees. Our plans never have a problem using all the Rev. share for both admin and investment advisory fees.

Don't know SARSEPS, but does the ADP test for these plan run similar to qualified plans. For example 1. Is compensation capped at 200,000 for average deferral 2. Can compensation for test be net of deferal Also, when allocating a employer contribution, is it allocated net of deferals or is it gross comp? Thanks.

I think John provided a very good explaination on the topic and explains most third party recordkeeping positions on the subject. However, I do think his remark on the "recordkeepers capabilities" is pretty ignorant.

Part owner (<50%) of Company A is a participant in a Profit Sharing Plan that Company A sponsors. Part owner is also an owner (50%) in company B, which is unrelated to Company A. Company B does not sponsor a qualified plan. Part owner in Company A wants to use some of her Profit Sharing assets and invest in Company B. It would be in the form of prefered shares. Is this a prohibited transaction?

Profit Sharing plan had 11 eligible participants at begining of Plan Year. At 12/31, the following occurred. 2 eligible HCE's 2 eligible NHCE's 7 Terminated NHCE's 1 Terminated HCE Question is regarding vesting. Should the terminated particpants be given 100% vesting? Thanks.

401(k) is a 3/31 Plan Year end. In determining the HCE's for the new Plan Year (4/1), is it the look back year definition that makes the determination. So if look back year is the Plan Year, then any Participant who earned over $90K as of 3/31 is an HCE. If Look Back is Calander year then anyone who had comp of $90K or more as of 12/31. In addition to owners etc. Thanks.

Thanks, extremely helpful!

Ask him if HIS clients do the same thing when doing their tax returns.

Have a signed QDRO, March of 2004. Determination Date is 10/1/2001. The Assigned Benefit is for a specific Dollar amount of the Participants Balance, assigned to AP, "without adjustment for losses". Should I calculate the earnings from 10/1/2001 until the last valuation (3/31/04) but not include losses? This does not make sense to me. Any help is appreciated

I am looking for someone to share the following: A participant statement program that will combine on one statement a 401(k) profit sharing and Money Purchase account information under the same plan. I would greatly appreciate it if someone has such a statement.

Have a situation with a client that has a PS plan and still maintains a Money Purchase. PS plan has a Hardship provision that allows distribution on all vested balance. By a great mistake, participant was given more money for the hardship then actually has as an account balance. Approx. 2,000 to much. Any suggestions on what to do would be appreciated. FYI, participants Money Purchase balance has plenty of money, not that this will help?

Wouldn't you want to make sure you first understand what is meant by "was not enrolled"? I wouldn't be so quick to give contributions away until you know the facts first. Did the participant have the opportunity to enroll, but did not do anything? That could be different.

Mike, yes you are right about Officer. So, if my 5% owner happens to be one of the highest paid, then the ADP test would be him, plus the next highest paid for a total of 2?

Need some clarification. I have a company with 10 full time EE's all eligible to participate in a 401(k). 7 of the 10 have comp. last year over 90k. of the 7, one is an officer by definition and one is more than 5% owner. If the Top paid group election is made, I am trying to calculate how many HCE's to use in the ADP test. 20% gives me 2. So is it 2 EE's with the highest comp. plus the officer and the 5% owner that will be used in the ADP test as HCE's? Thanks

I wasn't sure if the tax credit for covering the expenses of starting a new plan phases out. In other words if I have a company who wants to start a plan in 2005, can they still get the potential $500 credit for 05, 06, 07? Does it ever phase out?

I do not have much experience with Tiered Matches, but have a relatively simple question. Client wants to implement a tiered match based on length of service. If it is only going to be offered to NHCE's, then do I have to worry about any type of non-discrimination testing? Seems like the admin. would be very straight forward. Any input appreciated

Can someone briefly explain the three-year testing cycle for sch. T. Do many people use it?

When a participant is paid his/her entire vested balance during the plan year and has been reported on sch. SSA in prior years, is that person reported again with a code D once they have been paid?