Mike Preston

Then they can't waive, unless they constructively own 50% or more. The only way that happens is if one or more of them have options one or more of the other's stock. Might be worth a trip to the ERISA lawyer's proverbial office to see if such an arrangement, if already in place or not, might work.

Oopsies... missed the "no compensation in the new year" thingy. Maximum deduction is 25% of current year compensation. Don't have *any*? Can't deduct it.

BG, I'm confused. The methodology I described is straight from the regs. How is what you are describing different?

Got time for a quick example, Tom? Something tells me we agree, but we are just expressing it differently.

Yes.

Can be done. No difference.

It is in deed an unjust result. But it has been that way for ages.

Keep in mind that if everybody's current age is less than the testing age, the APR itself is irrelevant. That is, there is a constant multiplier/divisor based on the APR and if it is changed, it is changed for everybody. Hence, a shortcut you can use is to just assume that the APR is 100 for everybody. Again, as long as everybody's age is less than the testing age a test that would pass if the APR is 95.38 will also pass if the APR is 100.

As per usual, I agree with QDROphile.

No. The rate group test is only for employer contributions/allocations that are NOT matching contributions.

It is the due date of the tax return, on extensionl.

I think there may be some IRS guidance on this, somewhere. One can certainly report on the 1040 on a cash basis and report on the plan on an accrual basis. The pension deduction is the one accrual item that is allowed even if the taxpayer is cash. There is some controversy, as I recall, as to whether, once extended, a return can be filed recognizing a contribution made before the due date but after the filing date. That is, does the filing of an extended return guillotine any further extension? It think it does NOT. However, there is a ruling somewhere which says that once a return is filed, one may not THEN apply for an extension even if the filing would otherwise occur within the time frame when it was allowable. You may be confusing the two.

No both elective deferrals and catch ups are only for k plans.

Tom, an EBAR is a long way away from what you have described. The "EBAR" is the "Equivalent Benefit Accrual Rate" and most of the time it is calculated on a basis which includes permitted disparity. It makes the formula quite lengthy. However, if you want to determine the EBAR on the basis of "NO permitted disparity" it is simply: The Participant's Annual Additions times the factor determined as (1 plus the 401(a)(4) Pre-Retirement Testing Interest Rate raised to the Number of Years to Testing Age) divided by the Single Life Annuity Purchase Rate determined at the 401(a)(4) Testing Age using the 401(a)(4) Post-Retirement Testing Interest Rate and the 401(a)(4) Testing Mortality Table) and then divided by 401(a)(4) Testing Compensation * 12 Let's call the above the "Above Factor". However, if developing the EBAR on the basis of permitted disparity (almost always the right thing to do), the formula gets much more complicated. It is easier to break down the development of the EBAR into two potential formulas, only one of which is applied to any given individual: If the 401(a)(4) Testing Compensation is less than the 401(l) Covered Compensation (you have to look this up for each participant, based on their year of birth) for this individual applicable to this testing year then: Take the minimum of (the Above Factor times two) or (the Above Factor plus the Permitted Disparity Factor (0.65, 0.70 or .075 in most cases) applicable for this individual for this testing year) However, if 401(a)(4) Testing Compensation is greater than the 401(k) Covered Compensation for this individual applicable to this testing year then: Then take the minimum of: a) (The Above Factor times 401(a)(4) Testing Compensation divided by the quantity determined as (401(a)(4) Testing Compensation in excess of Covered Compensation) or b) (The Above Factor times 401(a)(4) Testing Compensation) plus (Covered Compensation times the Permitted Disparity Factor applicable for this individual for this testing year) and then divide the result it by 401(a)(4) Testing Compensation. All of this is quite simple compared to determining EBAR's and MVAR's for defined benefit plans. I'm presuming that you have no interest in a detailed description of how to do that.

Independent contractor?

I agree that the reg's primary purpose is to snare those CB plans that wanted to distribute as soon as possible. But I still think the reg is clear enough and that the entitled to deference clause will be adhered to by the IRS. What can I say, I'm an optimist.

What other consequences did you have in mind?

First, with the advent of 415 limits plateauing at 62, almost all of my plans have a 62 or higher NR. But those that are 55 or above are entitled to deference are they not? Probably not going to file them. Under 55? What's 9k to them?

Is it possible that the original post was started one day earlier and just wasn't actually posted until the next day?

GMK: Try this. Go look above at your post. In the upper right hand corner you should see an underlined "#3". Click it. A box will open up with the link. Copy that into the clipboard (highlight it and press cntl-C). Now, insert that which is now in your clipboard into a reply (or post) and it will be a link to your message.

Nobody knows, that I am aware of. Sure, folks have opinions. But there isn't a cite that one can point to that definitively says one way or the other. Of course, you could split into two separate plans and definitely be able to do what you describe. One nit: you can use the $50,000 in the max deductible calculation.

I'm confused (a normal circumstance these days). Who owns what?

All.

Silly me, and I always thought that it was intended to provide benefits only to those next of kin with a particular STD.

Good luck with that.