Blinky the 3-eyed Fish

The life expectancy used for the minimum distributions is used JUST for that purpose. It has no bearing on what form of annuity a participant can or cannot receive. Why would it? Assuming the plan allows for a joint and 100% annuity distribution option and allows for in-service distributions, then the annuity would be based on current ages and life expectancies.

Merlin, I would find it more difficult to incorporate the provisions of two plans within one restatement than to restate two documents. In fact, with my volume submitter document provider, I would be practically rewriting the document with all the special language I would need.

Anytime the rate of future accruals will be reduced in a plan subject to 412 you will need to provide a 204(h) notice. So, no matter what the allocation formula, integrated or not, you will need to provide the notice in accordance with the rules prior to the merger.

Mbozek, I know you are a lawyer, but enough with the counsel. In the small plan market, which consists of a majority of the plans, it would be more expensive to "retain counsel" at every whim, than it would otherwise if audited, barring a plan disqualification. Jpetra, you say the employer is not concerned with the vesting issue. So, just go forth with the plan termination and provide for distributions as such, including the option to roll over monies into the profit sharing plan.

First, the 50k must first be reduced for 1/2 of the self-employment taxes. The net figure is what the sole proprietor can deduct. This is exactly why final average pay plans with sole proprietors are either a bad idea or must be monitored closely. Next, this situation will be like any other non-deductible contribution. It will reduce the 404 assets for future valuations until it is no longer there. You may never be able to get it removed, as often times the maximum deductible contribution is not greater than the minimum contribution, but if it is, then you are in business. For example if next year's numbers look like this: Minimum contribution: 20,000 Maximum deductible contribution: 40,000 You can fund the 20,000, deduct the 40,000 and reduce your non-deductible in the plan. Good news is there is no excise tax for this situation where the contribution is nondeductible simply because the sole proprietor does not have enough income.

You cannot cutback a benefit that has already been accrued, but future a benefit is open to be eliminated. Perhaps you can provide some specifics to your situation to see if your benefit was indeed cutback. Although it would be gross incompetence if it was.

It means that as the assets rise the bond is guaranteed by the insurance company to meet the requirements of ERISA. Therefore, I would put an amount that meets those requirements on the Sch I (i.e. 10% of the assets). Caution though, with the new small plan audit requirements, it may not meet that need.

Rule 1: Always check the link you post.

This topic was just addressed in this post. http://benefitslink.com/boards/index.php?showtopic=15056

My vote is ASPA.

See here. Go to page 6 and read regarding missed payments. http://www.pbgc.gov/forms/10_inst.pdf

Your boss is right that in order to be safe harbor plans the allocation formula can be integrated in only one of plans. But as for needing to maintain the integrated formula in the future, that is another story. Although, I imagine you would want to maintain the integrated formula to provide a higher level of benefits to the higher paid employees, so this discussion is probably moot.

You can change the allocation formula at will as long as no one has satisfied the conditions to receive an allocation. For example, if there is a last day requirement to receive the allocation and this is a calendar year plan, you can do what you like to the formula. Is there something more to this situation? Because your question reads almost like your boss is saying once you have the integrated allocation, you can't get rid of it.

Richard: My answer is the change from 2000 to 2001.

See a prior discussion on this topic. http://benefitslink.com/boards/index.php?showtopic=14153

Well, now that I looked up a cite, I am not so sure of my answer. I had thought that "includible contributions" would apply to non-412 plans, but from my search, that doesn't appear to be the case. Too many DB plans I guess. Anyway, see Announcement 98-1 1.2.1.1(2).

Mike, actually, I had switched to doing squat thrusts at my desk, so it was a nice change to merely walk to the file room. It turns out I was incorrect. The bond was for $1,500,000 and obtained through State Farm Insurance. Like a good neighbor, State Farm is there. (This slogan is a registered trademark of State Farm Insurance and their subsidiaries. Any use of this slogan is prohibited).

See a prior discussion on this topic. http://benefitslink.com/boards/index.php?showtopic=14791

Making or not making a contribution by the due date of the tax return is always a deduction issue for the employer and nothing else. So, there is no need to add earnings. The $6,500 can be deducted on next year's return. Even if the plan has otherwise reached its deduction limit, it can be classified as an "includible contribution" and deducted anyway. An includible contribution is one that was not deducted merely because it was not made prior to the tax return being filed.

No. (That was a Spanish response in case anyone was wondering).

We had a client obtain their own bond for about $650,000. If anyone's interested, I can see where they got it from. Of course, I need to have that interest shown before I actually get up and get the file.

You can permissively aggregate the plans if they have the same plan year. But one of your previous questions asked about another plan without a CODA. Thus, permissively aggregating a 401(k) plan with a plan without a CODA arrangement is not going to change your ADP test in this case. All permissive aggregation is going to do is effectively treat the two plans as one for nondiscrimination and coverage. The participants in the non-CODA plan would still not be able to benefit in the 401(k) feature and would thus not be in the ADP test.

If the class is not excluded, but just can't defer because of 415, then they would count as zeroes in the test rather than not being in the test. I suspect that is what you were hoping for.

MGD, eye sea what ewe our saying.

I just wanted to post something, since it's only been over a year since someone has. Go DB!