Blinky the 3-eyed Fish

Yes, that was the premise of my answer that you are taking the deduction for the plan year beginning in the tax year.

This situation doesn't come up in my world too often, but this is how I think it should be done. When the fiscal year is different from the plan year, you must choose to either take the deduction in the plan year beginning it the tax year, ending in the tax year or a weighted average of the two. I assume by asking the question, you are looking for the highest deduction, which would be achieved taking the deduction for the plan year beginning in the tax year. You then need to prorate the results. Here is an example. 1/1/02 - 11/30/02 contribution - 50,000 12/1/02 - 11/30/03 contribution - 70,000 Deduction = (50,000 + 70,000) * 12/23 = 62,609 12 represents the number of months in the tax year. 23 represents the number of months in the plan years.

Easy Kirk, it is semantics.

A top heavy minimum absolutely cannot serve as a QNEC. Logically, this is because the TH minimum does not have to be 100% vested nor subject to the distribution restrictions.

Although my mom told me not to do this, I will answer your question with a question. Is the distribution eligible to be rolled over?

You are correct Merlin, although in Tom's defense he didn't elaborate on the procedures.

For the rule of parity to apply a person has to be a participant when the BIS begins, so it does not apply to this circumstance.

There is no "if" as to whether you can exclude eligibility prior to the effective date of the plan. You CANNOT do it.

Don't forget the top paid election refers to last year's census information, not the current year's.

Mbozek, it is never mentioned that this client is covered by the PBGC, otherwise, you are correct that amounts to shore up benefits are deductible.

Thank you KJohnson for interjecting some sanity to this discussion. You are absolutely correct you cannot exclude YOS for eligibility prior to the effective date of the plan.

As The Fonz would say, "Correct amundo".

And don't forget that unless he is part of the unless group Andy describes, he must receive the gateway minimum contribution and the document must also have language that allows him to get it.

I don't see a problem with it. Of course to make this type of plan design work you need to have very lax eligibility and accrual requirements and will have many people in the plan you otherwise wouldn't have had.

You are OK if you still pass nondiscrimination testing. Seems to me the advisor is saying that giving a contribution to the people who terminated with less than 500 hours is less costly than having to give an increased amount to the other NHCE's to pass testing. That being said, of course you would have to amend the plan to allow for this to occur and could do so within 9 1/2 months after the plan year under 1.401(a)(4)-11(g). The advisor is either saying that or is a raving fool.

I don't believe you can deduct the unfunded current liability because your plan was terminated before 2002.

The plan would cover substantial owners (more than 10% ownership) which is one of the situations in which a DB plan is exempt from PBGC coverage.

Actually, with $50,000 of compensation, the maximum profit sharing contribution that could be made is $9,293.52 since the $50,000 would have to be reduced for the contribution. Gross comp = 50,000.00 1/2 SE taxes = 3,532.39 Contribution = 9,293.52 Compensation = 37,174.09 37,174.09 * .25 = 9,293.52

Agreed. I had posted the ASPA ASAP for 2 minutes until I realized that I probably shouldn't do that.

In other words, you are correct that you cannot take the deminimus benefit as a lump sum without the necessary compensation to support a 415 limit that is greater.

First, required minimum distributions for qualified plans must be satisfied by taking a distribution from that plan. It cannot be satisfied through an IRA or another qualified plan. Second, whether or not the person can roll his assets into an IRA while employed is a plan specific provision. Check the document. Also, he may or may not have to take minimum distributions from this 401(k) plan. Again check the document.

No.

There is a DB plan that was terminated 12/31/2000. Because of illiquid assets and administrative delay, the assets of the plan have not yet been paid out. Now the corporation is having a fine year in 2002. Can the DB plan be unterminated? I realize certain document updates may be needed, but what other issues are there? How would the funding standard account be resurrected?

You learn something new every day. After consulting the ERISA Outline Book, I agree with Katherine. See page 11.263 of the 2002 Edition on CD-ROM.

Katherine, may I ask why you think that?