Mike Preston

All of this boils down to one thing: compensation. Does this individual get any? If the answer is "no", then that person doesn't count in the ADP test. Does that clarify things?

I think it is correct to ignore them. Hardly seems fair to provide somebody with a 1099 when they haven't received the money.

Correct.

Yes, if they aren't already included. That is, you don't pick the top 2 other than the owner. By the way, I don't think officer status means anything to the determination of HCE's. You may be confusing it with the determination of key employees.

I'm not sure I understand exactly what is going on, but it is very possible that the answer is "none." See 1.415-7(e)-Example 4, paragraph (iii) and note the crossreference to 1.415-3.

The OP's situation was specifically NOT a multiemployer plan.

In the vast majority of cases, the alternate payee merely has the plan participant (or the alternate payee's attorney communicates to the participant's attorney and the participan't attorney) communicates to the plan that the plan may provide information that is requested. If the participant doesn't so authorize in some way shape or form, then the DOL rule would seem to apply. But it almost never gets to that. At least not in my experience.

If the PBGC is paying it out, I doubt that they would reach any other conclusions than it does, indeed, count against the maximum. How are benefits partially funded with employee contributions treated? I haven't looked it up, but I don't think there is an exception for employee contributions, and that is precisely what this effectively is. Just part of the decision making process before one take's advantage of the employer's "offer."

I think you end up with a plan that is what you end up with. Sounds strange, doesn't it? Basically, if you amend the plan (retroactively) by adopting an individually designed plan you end up with an individually designed plan. If you amend the plan (retroactively) by adopting a non-standardized prototype, you end up with a prototype - non-standardized variety. There shouldn't be any other issues. At least no other issues that you wouldn't have had in the absence of the retroactive amendment.

Depends on what your definition of "is" is. The excise tax amount remains 20%. Of course, it is applied against nothing, so the result is $0.

Remember to hand check the numbers to make sure they work.

See if this works for you. Enter the information in the shaded cells (some won't need to change, because they are properly set for the 2003 year). Then look at Cell D2. If it is blank, you entered the right numbers. If it isn't, you can either follow the instruction to increase or decrease the number in Cell C2 until the message goes away (or gets within 0.01 of the "right" number and starts repeating), or, if your system allows macros, hit cntl-shift-I (that runs the macro I put in there that does nothing more than copy the information from Cell C23 into Cell C2) a few times until the message goes away (or gets within 0.01 of the "right" number and starts repeating). Let me know if you think it works or not! Note that there are very few edit checks in the spreadsheet, so I have no idea what will happen if you put in "illogical" numbers, like negative deferrals or deferrals in excess of compensation. Net_Earned_Income_Determination.xls

Neither is an accurate statement, unless the TPA involved is incompetent.

Nobody really knows, because the IRS has steadfastly refused to give us guidance on this point. Shameful. Unless they come out with something to the contrary, good faith would seem to be satisfied if changes made in the document up through the end of the plan year. Why it wouldn't be allowed through the RAP is beyond me. Personally, I think it should be consistent with the -11g amendment period, at least. The really agressive say it should be within the 2 year APRSC window. So, Earl, take your pick!

Ah, yes. The cloud is lifed. Sometimes I understand Wolverine. Sometimes I don't. ;-)

I think maybe my brain is on the fritz. I admit to not understanding where your numbers are coming from!

You have a plan where the only eligible employees are HCE's. Hence, there is no need to pass the ratio percentage test. If forced to state a specific percentage, though, I'd use 100% rather than 0%. While "n/a" might be more appropriate, sometimes we don't have that option.

The way I read the section you cited, the words themselves talk about what percentage of each participant's elective deferrals will be matched, they don't say anything about what percentage of each participant's compensation will be matched.

"Generally, we believe an assumed discount rate between 5.50% and 6.25% is appropriate for a December 31, 2003 measurement date, accompanied by a 50 basis point decrease in the discount rate from the previous year-end measurement date." Seems to be the conclusion of the article.

I agree that there doesn't seem to be an advantage to setting this up in a separate corporation because of the attribution issue. But I think the net impact is the transfer of wealth from one generation to the next, which might (especially in light of the estate tax elimination sunset) be more valuable than the FICA taxes paid.

LOL. This is a pretty hot topic, that's for sure. I have nothing to add to the discussion, though, that hasn't already been said. If I bump into more, I'll post.

Although you would not impute permitted disparity on the SHNEC when performing the general test.

Unless X and Y are being paid legitimately, you are not paranoid. Are they stars in the television ad campaign for A? I would refer this to ERISA counsel.

There is nothing in that language that talks about a maximum. It is addressing the percentage match (typically 50% or 100%). I think you would need to look elsewhere to see the maximum.

No. No. Yes. No.