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He cannot deduct it for the 2004 tax year. He has to make the contribution by the annual addition deadline. This is the 30 days after 404(a)(6) deadline for making 2004 deductible contributions. In your example, let's say the corporate tax return did not have an extension and was due on March 15, 2005. The employer can only deduct contributions for the 2004 plan year that are deposited by March 15. However, he has until April 14th to contribute all annual additiona for 2004. Anything contributed during the 30 day period would be deductible in the 2005 tax year but it will count towards the 25% of eligible comp limitation.

That was my line of thought as well but I am not comfortable with it.

A participant has gotten behind on loan payments and will go in default on 6-30. The participant cannot come up with all of the loan payments right now to keep the loan from going into default. Is it okay to refinance the loan with the missed payments and the "ghost" interest as long as the amortization period remains the same?

You don't have to require a participant to take a loan if it will cause further hardship. It sounds like this is the case for your participant. For hardship from the deferral source, you can only take out the amount you have actually deferred. This participant does not have any gains on his deferrals so he can withdraw the entire amount of $4,000. If the participant wants more then he would have to take a loan for the difference assuming the plan only allows hardships from the deferral source. However, he technically will have to argue to the plan administrator that any amount over the loan amount will cause him an undue hardship. You also said that he will likely not be able to pay the loan. Since the plan administrator already knows this (I assume), they should not allow the loan since they know it will probably not be paid.

Added note: to be deductible for the given plan year, must be deposited by the due date of the corporate tax return.

That is fine for going forward but you cannot put them in their own group retroactively.

I have a cross-tested plan with two groups, physicians and all others. It passes testing with the minimum gateway amount. I have a few HCEs in the "all others" group. Do you think it is possible to give the HCEs in this group the minimum of 3%? I am thinking the contribution to the group could be worded something like "3% plus any amount needed to meet the gateway minimum". Is this acceptable? I was thinking that it would be acceptable but then I started thinking, the plan doc says the formula for the group allocations for the group is pro rata based on comp. Your thoughts?

Can you provide a link for the calculator. I have looked at the DOL website and I am having trouble finding it.

I have been in your situation before a few years ago. At the time we looked at a few software packages and decided to go with Relius since it was a good price and we had people that knew how to use it. Make sure you do factor in the cost of training and mistakes made by people not knowing how to use the system. Relius may not be the cheapest but you know how to use it and that can save a lot of time and expense.

You may have seen it and you can literally draft one but it will become an individually designed plan and you would need to submit for a determination letter. From Rev. Proc 2000-20: SECTION 8. OPINION LETTERS - SCOPE .01 General Limits on Opinion Letters--Opinion letters will be issued only to sponsors or mass submitters and do not constitute rulings or determinations as to either the qualification of the plans as adopted by particular employers, or, in the case of prototype plans, the exempt status of related trusts or custodial accounts. .03 Areas Not Covered by Opinion Letters--Opinion letters will not be issued for: 1 Multiemployer plans or multiple employer plans, within the meaning of §413(b) and §413© respectively;

Obviously you can use the existing data you have since they converted to you. Ask the client if they can provide W-2 records for this participant for the last few years. This should get you started.

Technically you probably should treat this as a nonelective contribution. However, I would just take these amounts away from the participants and use it to reduce your next payroll funding. Under the final regs, I am not sure if my answer would change. I haven't looked at them closely enough to have formulated an opinion in regards to issue. If I had to give an answer right now, I think I would do the same as I mentioned above. The intent of the regs seems to be to keep HCES from pre-funding their deferrals before their compensation is earned, which most NHCEs are not able to do.

No compensation ratio test is needed since your 414 definition of comp is a safe harbor definition. Both reimbursements for auto and payments of excess insurance premiums are both included as W-2 income.

What do you mean by overages?

You would include the total amount of deferrals that were deposited late.

There is none that I am aware of.

Maybe you are referring to the Sch. T? The total number of nonexcludable EEs should be the same on each.

See my post from your other duplicated post.

I have suppressed certain pages in the main report but never really made any sustantive changes to the report itself. What kind of changes are you talking about?

That is a good question. I would think it would be an automatic rollover in this case. My answer is based on the actual account balance before any expenses. What if his balance is $5,010? You can't force him to do anything at that point. I would use the same logic in this situation as well.

Yes, that is my question and my point. An administrative cap would give a definite determinable amount. However, if another HCE decides to defer nothing then the the HCE I am dealing with has not put the most he can do to the cap. While a cap may make communication easier and amounts determinable, it does not reach the goal of maximizing deferrals for the HCE. (In my case anyway).

I know the answer to this but I am hoping there might be something out there I am missing. I just found out that the broker for a plan is the spouse of the owner of the company sponsoring the plan. The broker is receiving commissions for the plan. As far as I know this is a prohibited transaction. Is there anything I am missing here? Any PTEs I am not aware of?

It sounds like you have a lot of experience and so you probably have a good knowledge base. I took the DC-1 and DC-2 last year with a 6+ year experience/knowledge base in the same exam window and I had no problems. I read through the study guides twice and went through the sample exams once. I did not touch the ERISA Outline Book. I thought the exams were very easy. However, this is only my personal experience so take it for what it is worth. It may not be the same for you.

There is one problem with your example. You never know what the other HCEs will defer. Some defer nothing and some do not decide until the last minute. That will change the amount of your catchup.

I am curious as how others of you have handled the situation of notifying HCEs they can only defer x% on average but if you want to take advantage of the catchup contribution you need to contribute x% plus the catchup limit for the given year.