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Sure she could do that. However, this person would have to weigh in the costs of drafting a plan doc, annual 5500, and any other expenses with maintaining a plan. Doesn't seem to be worth it to me if the main purpose is to just get a loan.

I may be wrong but I think the grant of a stock option is includible in compensation under any of the safe harbor definitions of compensation if it is includible in gross income for tax purposes. I believe the exclusion under the 415 definition comes from the actual exercise of a stock option.

I do think it is possible that this is a B-org affiliated service group. You have to meet three tests: 1. Significant portions test -- if Corp X receives at least 10% of its revenue from the law firm then it passes this test. 2. Historically performed test -- it sounds like this secretarial work is the type of work that would historicall be performed by employees. 3. Common ownership test -- This is met since one of the partners owns at least 10% of Corp. X The two employees could be included in the document depending on how your document is drafted. If you have a standardized prototype then yes they must be included. If you have a different kind of document then it really depends on if it includes language that would include all members of a controlled group and/or affiliated service group.

Since this is an ERISA 403(b), you are required to file a 5500 on a limited reporting basis.

In your particular situation I would just put down the value of the assets before they were liquidated.

You are right. I have no idea why I wrote that part. I edited my post accordingly.

I have never interpreted the "gross up for taxes" as being for the long run. I always thought this rule dealt more with the fact that you used to have to withhold 20% from hardships. However, I can see how you could it interpret it that way. Just wanted to bring that up for discussion. Any comments?

I have misunderstood your post/topic. You are correct in saying that partners of a business are self-employed. The contribution on their behalf is listed on line 30 of Form 1040. A self-employed individual does not get to deduct their own contribution for purposes of calculating SE tax.

The deduction for the profit sharing contribution is going to be taken from business income. Deferrals are not a business deduction.

You got it.

The person can contribute a maximum of $13,000 between the 401k and 403b (example - 7000 to the 401k and 6000 to the 403b). The participant can also contribute an additional $13,000 to the 457.

What makes you think it is not? I believe this is listed in Code Sec. 164(f)

Anyone know of where I can get a list of states that have mandatory withholding on retirement plan distributions?

The document language will probably say something like ...provided a notice is timely given... this is referring to the safe harbor notice that is required. If this is not given to participants, then the safe harbor language is null and void.

Sorry, I forgot you said you were setting up a DB plan. My comment earlier was in regards to a DC plan.

Yes, he would be included. Is he an HCE? If so, you could write your document to exclude HCE with less than XX% ownership.

I would agree that since he is the only partner actually performing services then no other partners would be considered in the plan.

Yes, you will have to look at the ownership structure for all partners involved.

I believe the correct way to report them on the 5500 is to report the corrective distributions in the year they are paid. As I noted before this is different for preparation of the financial statements and this is why auditors think this. There is no requirement that the Sch H match the financial statements. However, this usually will spark a lively conversation with the auditor.

Does it matter at all which participant gets the additional contribution under the 11(g) amendment?

I will also note that the AICPA Audit and Accounting Guide says that refunds of excess contributions should be reported as a liability on the Statement of Net Assets Available for Benefits.

When I said 100% vested I meant the participant was already 100% vested. I was trying to alleviate 5 or 6 posts that would go into great detail about the additional contribution having to be a meaningful benefit. Unfortunately, I failed to do so.

This is due to careless data collection by the client.

I have a plan that just gave me the correct birthday for a participant after everything has been done for the 2003 plan year including the tax return. Now the 401(a)(4) test fails. Am I correct that I can do a 11(g) amendment to give a contribution to one participant (100% vested) in order to pass the test?

I think I follow the post a little differently. It sounds like there is an additional profit sharing contribution other than the 3% SHNEC. If this is the case then you don't get a free ride on the top heavy minimum. However, since everyone is getting a 3% contribution anyway you probably won't have any problems. The only problem you may have is for someone that entered the plan after the beginning of the plan year. You would then have to make sure they received a 3% contribution for their full year's comp.