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No, she would not unless her compensation is high enough.

I believe Tom answered your question in the prior post. Please be more specific about what you don't understand so we can answer your questions.

Yes, since he would have received this compensation no matter if he terminated or not.

I agree with your assessment.

Yes.

I have also wondered this myself and I have searched and asked this to many sources but I have never gotten a straight answer. I don't know if you can or not but to be safe I still use the old method until I can find some definite proof that it is okay.

How are distributions reported from NQDC Plans? I am not sure but I think if you are an employee it is reported on your W-2. If your a non-employee then it is reported on 1099-MISC. Is this correct?

I personally would recommend that the 932.01 be re-characterized as a 2005 contribution. The 2004 contribution is completely discretionary.

That is correct.

That is correct. It references you to the chapter to correct the failure to correct a failed ADP which the EPCRS gives you two choices, make QNECs or the one-2-one correction method. The plan I am dealing with will has no 415 limit issues.

Here is something I thought was interesting. A plan that uses prior year testing fails to correct by the end of the following year. Normally you can't use QNECs to correct for a plan that uses prior year testing. The EPCRS says you can use QNECs to correct the failure to correct the ADP failure. Am I missing anything?

I have two suggestions: 1. Put your terminees in one division and post a fee transaction just to this division. 2. You must have the fee module for this one. You can code a fee amount to the terminated categories as an admin fee.

That's right.

You don't fail coverage. You fail 401(a)(4) non-discrimination. Will need an -11(g) amendment.

Two quick ideas: 1. You are allowed to assume the NHCEs' ADP is 3% in the first year of the plan. This gives the HCEs the ability to defer an average of 5%. 2. You can still use bottom-up QNECs for 2005.

I guess my post was misleading. I meant to say you won't be able to use them the way you currently do. You can still use them for 2005 plan years.

You can't use them for plan years starting on or after 1-1-2006. The final 401(k) regs have placed restrictions on targeted QNECs.

This person has a 402(g) limit of $15,000 and another $5,000 if over age 50. I will assume this person is not over age 50. If they contribute the max to their 401(k), they cannot contribute to a SIMPLE. I would recommend doing a SEP. You are limited to contribute 25% of the income but it is better than nothing.

Yes. Unless the sunset provisions are repealed you cannot take this credit for years beginning after 2010.

Your confusing two different things. Here is the calculation for your first example: Step 1: 30,000 is highest loan balance (20,000) is current loan balance 10,000 is the difference Step 2: 50,000 is maximum amount that can be taken out (10,000) is the amount from step 1 that we use to reduce the maximum 40,000 is difference. Since 40,000 + 20,000 is more than the legal amount of $50,000 you have to reduce down to $30,000.

You need to reduce the $50,000 max by the $10,000 figure. Your example is missing a step. You must reduce the maximum loan amount ($50,000).

I am not sure where Janet came up with her calculations (33,000/50,000?) but her answer is right. I calculate it as follows: The highest outstanding loan balance is $30,000 reduced by the current loan balance of $20,000. This gives us $10,000 that we need to reduce the max of $50,000 by which is $40,000. You can't go over $50,000 outstanding so reduce the $40,000 to $30,000.

Notice 98-52 says that you have to have it in by 12-31 following the end of the plan year (for a calendar year plan). Your document may state that it has to be deposited by the due date of the employer's tax return.

Even thought this may be a viable solution, your plan document and/or loan policy may not allow this. I would treat the amount over the 50% threshold as a deemed distribution. I base this on the following: §1.72(p)-1. Loans treated as distributions Q-4: If a loan from a qualified employer plan to a participant or beneficiary fails to satisfy the requirements of Q&A-3 of this section, when does a deemed distribution occur? A-4: (a) Deemed distribution. For purposes of section 72, a deemed distribution occurs at the first time that the requirements of Q&A-3 of this section are not satisfied, in form or in operation. This may occur at the time the loan is made or at a later date. If the terms of the loan do not require repayments that satisfy the repayment term requirement of section 72(p)(2)(B) or the level amortization requirement of section 72(p)(2)©, or the loan is not evidenced by an enforceable agreement satisfying the requirements of paragraph (b) of Q&A-3 of this section, the entire amount of the loan is a deemed distribution under section 72(p) at the time the loan is made. If the loan satisfies the requirements of Q&A-3 of this section except that the amount loaned exceeds the limitations of section 72(p)(2)(A), the amount of the loan in excess of the applicable limitation is a deemed distribution under section 72(p) at the time the loan is made. If the loan initially satisfies the requirements of section 72(p)(2)(A), (B) and © and the enforceable agreement requirement of paragraph (b) of Q&A-3 of this section, but payments are not made in accordance with the terms applicable to the loan, a deemed distribution occurs as a result of the failure to make such payments. See Q&A-10 of this section regarding when such a deemed distribution occurs and the amount thereof and Q&A-11 of this section regarding the tax treatment of a deemed distribution. (b) Examples. The following examples illustrate the rules in paragraph (a) of this Q&A-4 and are based upon the assumptions described in the introductory text of this section: Example 1. (i) A participant has a nonforfeitable account balance of $200,000 and receives $70,000 as a loan repayable in level quarterly installments over five years. (ii) Under section 72(p), the participant has a deemed distribution of $20,000 (the excess of $70,000 over $50,000) at the time of the loan, because the loan exceeds the $50,000 limit in section 72(p)(2)(A)(i). The remaining $50,000 is not a deemed distribution. Example 2. (i) A participant with a nonforfeitable account balance of $30,000 borrows $20,000 as a loan repayable in level monthly installments over five years. In addition, you probably have a prohibited transaction under section 4975.

Off the top of my head I don't know of any SEP documents that will allow for those type of exclusions. You could do it with a regular qualifed plan document and exclude the other member.