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My answer would be different if it was one day ago. Since it is the last day of the plan year, my answer is no, you cannot change the groupings now.

Your new plan would fail coverage.

For the match formula stated in the document, there is no dollar limit. You could do a 300% match on the first 6% if you wanted. You can't match on deferral rates above 6%. The discretionary match is different. You do have a cap of 4% of compensation with the discretionary match.

No, because now you have matching contributions on the first 9% deferred. You are limited to the first 6%.

Now you have my curiosity peaked. What is the question and what was the answer? You can't just leave us hanging like that!

Maybe try Form 8821. This won't give you authority to advocate for the client but it may give you some help.

If that suggestion didn't work, post exactly how you entered and posted the takeover balances and I may have some suggestions.

The general procedure I use is amend the 5500 for major material changes and net it out through gain/loss if it is minor/immaterial.

I thought of some other issues that may come up. What about participants that have less than $75 in their account? How will you collect those fees? I would also raise the issue that a fee of $75 per participant could be seen by the IRS as unreasonable, especially to a participant that defers a minimal amount on an annual basis.

Agreed.

In my experience the IRS sometimes will apply late penalties and sometimes they won't, but we usually don't hear from them on late penalties. It is my practice to not pay the late penalties up front. I tell the client that the IRS may come back and charge late penalties so they are aware of this possibility. For the most part the late penalty calculation usually results in a very low dollar amount anyway. With that said I recommend waiting to see if the IRS even assesses the late penalties.

Are there any instances where IRAs are allowed to make loans?

However, I would disagree that the discretionary match would have to be tested. As long as the notice mentions the possibility of a discretionary match, no additional testing is required.

I agree. I haven't seen the benefit. I always recommend to clients to just pay the excise tax. The fees charged for a VFCP submission would be higher than the excise tax. I guess it would have to be a very high late deposit. However, even in a situation with a large amount like that, it is still hard to have an excise tax on earnings over the course of six months.

Yes, you still answer yes on the 5500. In order to be exempt from filing the 5330 and the excise tax you must follow the steps in PTE 2002-51. They basically are: 1. Complete VFCP 2. Notify DOL in VFCP that the client is using PTE 2002-51 3. Receive "no action" letter 4. Have late deferrals deposited no more than 6 months after the failure 5. Give affected participants notice no more than 60 days after your VFCP application submission If you don't meet all of these exceptions, then you still have to file the 5330 and pay the excise tax.

Check out the 2005 5500 instructions. They tried to clear this up but I don't think they did a very good job. I get the impression that they want you to include only the employees that have actually met the eligibility conditions of the plan. However, it is not definite in my opinion and I could understand the argument from WDIK's point of view.

An employee that dresses in t-shirts and jeans.

Correct. You have to remember that comp is based on services performed in a given plan year. A loss from a prior year has nothing to do with the services performed in the current plan year so they would never be recognized.

There is more to it than that. If there are section 179 deductions and/or unreimbursed partner expense then you would reduce for those amounts. You would also add in any guaranteed payments for services. In your case I would add back the W-2 wages to NESE.

See if this helps http://benefitslink.com/boards/index.php?showtopic=26411&hl=

I believe a plan year cannot be terminated mid-year for a SIMPLE IRA. I think you are stuck and will have to start the new 401(k) on 1-1-06.

I think this will answer your question from Treas Reg 415-6(b)(7)(ii) -- "For purposes of this subparagraph, employer contributions shall not be deemed credited to a participant’s account for a particular limitation year, unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) applicable to the taxable year with or within which the particular limitation year ends. If, however, contributions are made by an employer exempt from Federal income tax under section 501(a), the contributions must be made to the plan no later than the 15th day of the sixth calendar month following the close of the taxable year (or fiscal year, if no taxable year) with or within which the particular limitation year ends."

lakepointe, that is not correct. You can add the 401(k) and safe harbor provisions as long as they are enacted for a minimum of three months. You have until the date they are first eligible for the safe harbor contributions for the notice. I am assuming this plan in question does not currently have any 401(k) provisions.

I think it would be safe to use the correction method under Rev Proc 2003-44 and allocate a QNEC equal to the ADP and ACP of the plan.

As long as they get the notice, I can't think of anything either.