Blinky the 3-eyed Fish

I won't be there . Not enough lakes.

See 411(d)(6). You cannot take away something that is earned. So, in your case if the employee had earned the right to the contributon already, then you cannot now impose a last day requirement. Where you could impose it is if say there was a 1,000 hours requirement and no employee had worked 1,000 at the time the last day provision was implemented.

Scenario 2 arises when clients go wild and for whatever reason end up deducting amounts they shouldn't have. A example of this occurrence is when a sole proprietor does not have enough earned income, but the accountant takes the full deduction anyway and the client is doesn't file an amended return. In the past I have treated the amount that was not allowed to be deducted as a nondeductible and reduced the 404 assets the next year. In the next year, when there is a spread between the minimum and maximum deductible contributions, the max calculation is only serving to see if the nondeductible from last year can be wiped away. Example: 2002 contribution and deduction - 50,000 2002 max deduction - 30,000 2002 nondeductible - 20,000 2003 min contribution - 50,000 2003 max deductible - 65,000 If the client contributes the 50,000, then 5,000 remains nondeductible for 2004. I am just soliciting opinions if this is a correct approach.

Mike, you are correct. I had wondered where you were. AndyH thought you were dead, but I just figured you were wounded in a remote area and left for dead.

For 404 purposes when performing a valuation how would the following 2 scenarios be treated differently: 1. The client makes a contribution that he does not deduct on his tax return 2. The client makes a contribution that he deducts, but he was not allowed the deduction. In other words, would you consider both nondeductible contributions or just the first one.

Mbozek, don't forget that the deferrals count against the annual addition limitation. So Chris, you are correct in that the deferrals don't count against the deduction limit, just make sure the total annual additions don't exceed the lesser of 100% of compensation (as adjusted) or $40,000.

The attribution rules under 1563 govern ownership for PBGC purposes. So, whether or not the brother who owns 30% is attributed his daughter's shares depends if the daughter is age 21 or not. If she's over 21, then the shares are not attributed to her father, he is not a majority owner and only the 50% owner can waive benefits.

Because you mention the 25% limit, I will assume this is a DC plan. That being said, the deduction limit is 25% of the compensation paid in the taxable year. So for the FYE 9/30/03 you can have a deduction of that amount even if the amount is allocated for the PYE 12/31/03. If say your allocation for the PYE 12/31/03 exceeded the deductible amount for the FYE 9/30/03, you would have room to pick up some more deduction for the short FYE 12/31/03 of up to 25% of compensation for that period. You can have a first year PY of 1/1/03 - 12/31/03.

I don't know of a promulgation explicitly allowing such, but I think the logic flows like this. First, you know that the deferrals and match cannot be used in the offset because of the rule (cite not handy) that doesn't allow contributions, except for matching contributions, to be based on deferrals. Safe harbor nonelective contributions are not contingent upon deferrals. Also, safe harbor nonelective contributions can be used as nonelective contribution in the general test and for top heavy. In other words they have similar uses to regular nonelective contributions.

Yes.

No, the record will be set by the letter we are still waiting for.

Looks right to me. You could do an -11(g) amendment to increase just the 45 year-old, but probably worth saving that (can't be a pattern of those) for another time.

Pax, I was just saying you can't change to IA for 1/1/2004. You are correct that you do have the UC option to change to.

I got a cash balance determination letter 2 weeks ago. Of course it was submitted 2/28/2002. Nothing like a year-and-a-half wait.

This doesn't come up too often, so I may be wrong. My understanding is that labeling a missed contribution an includible contribution is not the only way to deduct a contribution made but not yet deducted. Rather, it is a mechanism to deduct a contribution that would otherwise not be deductible because of the maximum deductible limits. I think back to some the plans that were part of the small plan audits years ago. An example client of ours had contributions that were disallowed and the plan was left with a nondeductible contribution. They were then able to deduct that contribution in following years where there was a spread between the minimum and maximum deduction limits.

Andy, you are thinking of Rev. Rul 77-2. It depends on how the amendment is recognized. Pax, I agree with your assessment. Although be careful because the automatic approval for funding method changes does not apply to frozen plans, so you may be stuck unless you change the method this year.

Close, but not quite for 401(a)(4). To pass the rate group portion you only have to be above the midpoint of the safe harbor and non-safe harbor percentage (27.75% in your case). Also, I think you should post the ages, allocation percentages (split by safe harbor and regular non-elective amounts) and testing assumptions for each of the participants. It would be unusual for the results to be so poor with the HCE getting 6.75% and the NHCE's getting 5.8%. There could be better results with testing on a contributions basis an imputing permitted disparity. What is the comp and nonelective allocation to the only HCE?

This may be a moot discussion with the overriding unfunded current liability maximum deduction. In this case the assets for this determination would be reduced by the nondeductible contribution, so there may be a good chance that you are able to deduct last year's contribution and this year's. The includible contributions would be limited by the FFL anyway.

I am not sure what the question is then. Whether she is on an authorized leave of absence or not, she won't get a contribution.

The effective date really depends on your document. For example, our documents date reference those retroactive GUST provisions appropriately and allow the restatement effective date to be 1/1/03 for a calendar year plan. I have seen some that require the effective date be back to the first plan year beginning in 1997.

There are varying opinions, although it seems most lean to the conservative side of not including this person in the test. One strong reason is that mathematically you have no percentage to use. It's not 0% and it's not 100%. Tell him to take some compensation next time.

Don't forget the unfunded current liability deduction. That could give you a range.

Ah, so they are getting the equivalent of 7.5%, just some in the DC and some in the DB. That is more typical of what I have seen. We have many plans similar to this. Ever considered offsetting the DB benefits by the DC accruals and just providing 7.5% in the DC plan? It alleviates those little DB benefits everyone will have.

Tom, while you are correct the those types of plans will preclude the need to meet gateway requirements, most of these types of plan designs do not meet those criteria. Andy, I have many DB/DC plans tested together and have found that none of them are able to provide any less than 7.5%. I am curious as to your situation where 7% could pass. Care to share some details of the plan designs?

I am not sure I understand your question. You must give the minimum gateway to even begin to test for nondiscrimination, so when you ask if anyone has tested where the minimum was not given doesn't jive.