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Yes.

Here is the only flaw I can think of. Is that what you truly believe? If so, then I think you could argue that you made a good faith attempt. However, if you do not truly believe that is the interpretation then you have not made a good faith attempt and now I could also conclude that you have a possible ethics dilemma. I am not trying to say that you are unethical but I just wanted to throw that out there because I do believe it is important to consider in these types of situations.

I wouldn't say you weren't making a good faith estimate but I do think it is required. The PPA states "...shall include an explanation of any permitted disparity under section 401(l) of the Internal Revenue Code...". 401(l) defines permitted disparity for both DB and DC plans.

Same for me as well.

Accudraft is a decent document and their service is decent as well. I do prefer the Accudraft interface over Corbel. I like Corbel's document but I absolutely hate their interface. Accudraft and others will usually let you demo their document and interface. I suggest you look at a few and see what best fits your needs.

Tom, the original poster said that this a corporation so that won't apply in this situation. Since it is a 1-31 year end, this must be a C corp. which makes the owner's wages W-2 income.

That is correct.

I have tried using it but Relius doesn't currently put together a promissory note of any kind based on the loan requested. It will do the Fed Z disclosure but that is about it. Until they can come up with a way to do the promissory note, I don't use it.

Yes, I agree.

You mean that is not crystal clear? They are wanting to give a one time contribution to an employee in his final year of employment. Basically a non-retiring employee would be one that is not age 65 and not retiring.

Yes. That was my thought as well.

I have an employer that would like to establish a profit sharing plan and exclude all non-retiring employees. Basically they would like to only give contributions to employees that are retiring and have reached NRA. My initial thought is that this probably wouldn't be permitted as it may be seen to skirt the maximum age requirement of age 21. Any thoughts or other opinions?

I have seen some providers charge $1,000 if you want their electronic package. Typically though I have not seen fees that high.

Two points: 1. Participants in a given group cannot generally cannot get different allocations. So no, you cannot integrate within a given group. 2. Do you have a last day rule? If so, amend the plan to an integrated formula.

From reading Rev Proc 97-9 I get the impression that you could not convert a regular 401(k) plan to a SIMPLE 401(k) mid-year. Would you agree that it can only be done for the beginning of the next calendar year?

I would think so.

You can't have a SIMPLE and a qualified plan in the same year. Your client cannot do a 401(k) plan until 1-1-2008.

Yes, I agree with your conclusion.

I would agree that if your document says such, then you need to follow it. I have seen many, many documents that do not say as much. There are ones that give you the choice of what to use, one's that you designate whether you use 3% or the current year amount, or the designated 3%. It does depend on what the document says but if the document does not state that you must use 3% then I stick by my original post as well as some of the others.

I do agree with Jim but if I remember correctly, some IRS reps at various conferences have stated opposing opinions.

See Treas. Reg 1.401(k)-2(a)1(ii). If the plan use the prior year testing method and the only eligible employees that were eligible in the prior year are HCEs, the plan is deemed to pass ADP.

I would agree. You could start a new plan for one company and it be safe harbor but the other one is stuck for the rest of the year. I think you would have to wait until 1-1-2008 to make one whole safe harbor plan.

Another common correction method is to forfeit the contributions and have the employer correct on their payroll outside of the plan.

Can't have an allocation requirement on the additional match so everyone gets it that deferred.

I only have two answers that you aren't going to like: 1. Turn off the printer. 2. Take out the paper.