BFree

I thought about mbozek's reply for awhile, and while I understand well the "fungibility" of money, the last couple responses were a bit theoretical for me. Perhaps we are talking past each other in not addressing the same question (and I think this may the case). Money you put into a 401k plan that is put in on a pre-tax basis lowers your current taxable income. Money you put into a plan on an after-tax basis does not lower your taxable income. All other things the same, it is better to put money into the plan on a pre-tax basis. Interest payments are not deducted on a pre-tax basis and a dollar amount paid in interest to a plan is not worth the same as that dollar amount paid in 401k deferrals. I don't think that qualifies as an urban legend, and I would submit that it addresses the original question (although perhaps not exhaustively) Now, a participant may not have unlimited funds and may be restricted in where he gets his money. But that goes back to fungibility...

The $10,000 in and out is a wash. You just bought something with your loan proceeds, and those proceeds had never been taxed. The interest on the loan is taxed before it is put in the plan and when it comes out of the plan. (As opposed to interest you would have earned if you left the $10,000 in the plan in the first place. That interest is taxed once - when it leaves the plan).

Let me expand upon my example and let you tell me where I am wrong. You take a loan for $1,000. You pay back $1,050 after one year (principal and interest). The $50 interest that is now in the plan: How did you originally come up with it? - It was after-tax money deducted from your paycheck. That same interest - how will it be taxed upon distribution from the plan when you retire or terminate employment? It will be taxed as regular income. Double-taxation?

You are double-taxed on the interest paid. You pay back the loan proceeds plus interest with after-tax dollars. Upon distribution from the plan, you are taxed again on the already-taxed interest from your loan.

The front page of the 5500 - "final return"

Our prototype allows you to apply them separately.

In trying to determine ownership interests in a partnership, I am under the impression that you may use "profit" or "capital" interests. Is that correct? Does that mean that you can choose to calculate ownership based on profits or based on capital? Or would you mix-and-match the two, say by taking the higher of profit or ownership for each partner? Thanks for any responses or directions to appropriate citations.

Given that JCatt's questions about loans may be appropriate in a commerical lending situation, I don't think the question is unreasonable when applied to a benefit plan. How do you know unless you ask?

The question about Pay is for Contribution purposes. I am aware that the document often gives clues as to how to proceed - let us assume that the 9/30 PYE has not arrived and the document may still be modified. Perhaps I wasn't clear in noting that the SIMPLE and 401k plan years do not coincide at any time (one ends 12/31/01 and one begins 1/1/02). Does that mollify your fears re: problems for the 401k or invalidation of the SIMPLE?

An Employer with a 9/30 Fiscal Year End establishes a 401k plan on 1/1/02 with a short first plan year of 1/1 to 9/30. There was a SIMPLE plan in effect the prior calendar year. For the initial 401k plan year, what pay period is used if the 401k plan specifies Fiscal Year Pay? Is it 1/1 to 9/30/02? Is it possible (or required) to use 10/1/01 to 9/30/02 pay? Thanks for any input.

Let me clarify what I did not say - I am not justifying paying the fees out of the plan; I am noting that the fee amount noted is not out in the stratosphere as some have suggested. (And after the client requests and given a detailed description of the DOLs position on settlor expenses, we will charge them for it) As far as getting into the nitty gritty of databases and automated processes - well, I don't know what exactly my lawyer or plumber does, but I pay their fees after agreeing to pay them. I wholeheartedly agree with the points made about it being the plan sponsor's responsibility to review fees on an ongoing basis. I don't know what ennemm was asking in that last post. A point we, as TPAs, like to emphasize to both participants and employers is that nothing is free. In fact, terminating a plan creates additional costs above and beyond regular annual administration.

$3,000 for a terminating plan adds up pretty fast... document updates, quarterly statements, 5500s, distribution packets to all those already paid, participant inquiries, uncooperative employer all add time many TPAs charge more than $100/hour

I believe it is the copy of the 5500 (no schedules).

info re: DFVC program sponsored by PWBA

There are already examples of the processing end of 401ks being done overseas. Saw it in an accounting mag last year.

what does ASP stand for?

QDROphile - please expand upon why it is a mistake and lacking in thought to have the employer named as fiduciary. Which fiduciary duties are saying should be allocated away from the employer, to whom, and what are the extra costs for performing these duties?

are there instructions regarding the IRS's desire to receive multiple determination letter requests together? The plans being submitted use the same basic plan doc and adoption agreement, but have different elective provisions w/in the adoption agreement. thanks for any guidance

Yeah - it's standard practice to reconcile accounts before switching recordkeepers. You still need to come to an agreement on who will do it, though. Taking business away from someone doesn't make them want to do any favors. And neither does making a federal case out of it, as the original post suggested.

Most people reserve the right to do the things they want to do and to not do the things they don't want to do. Contracts are used to enforce agreements - does the client have a contract with the old TPA saying that they will do this particular valuation or any old thing the client requests? If not, why do you pose your question? Turn the question around - you have a new client. Why don't you step up and offer to do the valuation?

vebaguru: I think you read a little much into the term "false participant" to conclude that there is "jingoistic bigotry" and the "concoct(ing) (of) lies." I like the rhetoric, though.

The former junior partners are now 100% owners of the company. If they pay your bills, lay out your case to them and let them make the call. Who takes these kinds of instructions from a "mere" participant?

I am completing multiple late 5500s. In the first year in question, 401k deposits were not remitted timely and the 5500 will note this. The 401k deposits have been remitted (they were remitted in the year they were due, just not on time). No deposit of imputed earnings on those late deposits has been deposited to the plan. Is this a non-exempt transaction for each subsequent year that must be reported on Schedule G each year until the plan is made whole?

If the instructions say use the 1099-R number in the abscence of a trust EIN, then use the 1099-R number. You can complete an SS-4 application for TIN in about 15 minutes.

I'd say the same thing I would if it was an accountant, a line operator or a marketing person: stay away from obnoxious people. I think you are right to want to take a stand, you just need to take it when the facts and situation is on your side.