Sully

This might be helpful: http://www.psca.org/PRESS/P2007/Sept24.html

You are not required to submit a non-standardized plan to the IRS for a determination letter. It may be prudent, but it is not required. Also, you will need to test the compensation each year to make sure the definition you are using is nondiscriminatory, see 414(s). Be careful, if you have a year where the owners/HCE's do not get bonuses then you will have problems.

I’ll assume it is a loan offset and not a deemed distribution. If the participant elects a taxable distribution then the withholding is calculated on the entire taxable amount, including the loan offset. If the participant elects a rollover of the non-loan portion of the distribution then there is no withholding.

An owner (>5%) who is over age 70.5 had been taking RMD’s from his 401(k) Plan. During 2006 the owner took his RMD, the plan terminated, he rolled over his remaining balance to an IRA and everybody else took their money out of the plan. Everybody showed a $0 balance in the plan as of 12/31/06. Lo and behold, during 2007 the plan received some litigation proceeds from one of the plan investments and the broker transferred the >5% owner’s share of the proceeds to his IRA. The question is whether this participant should have had a portion of that rollover distributed as an RMD for 2007? If so, how would you calculate it since he did not have a balance in the plan as of 12/31/06? Anybody ever run across this situation before? Since 401(a)(9) is a qualification requirement I am concerned about jeopardizing all of the plan distributions.

Yes, the contribution was actually made no later than 30 days after the end of the 404(a)(6) period. Follow up question: Which year should the contribution show up on the 5500? The allocation shows up on the 2005 administration report and the deduction was taken on the 2006 corporate tax return.

Employer has a 401(k) plan with 3% safe harbor and discretionary profit sharing contributions. Plan year and corporate year are 12/31. On the 12/31/05 plan year administration we allocated the employer safe harbor and profit sharing contributions. The contributions were made by the due date of the 2005 corporate filing, but the employer took the deduction on the 2006 corporate return. The employer does not want to amend their 2005 corporate return. Several questions: Is it okay to handle it like this? It seems the safe harbor contribution could be handled in this manner but what about the discretionary profit sharing piece? Can you take the deduction in 2006 but allocate it in 2005? Assuming it is okay: Would the safe harbor contribution be considered an annual addition for 2005 or 2006? Would the discretionary profit sharing contribution be considered an annual additions for 2005 or 2006? Thanks in advance for any responses.

I have a client that tried to do this last year but the big mutual fund company refused to reclassify the contributions.

If an individual is under age 50 and participates in 2 separate SIMPLE's of unrelated employers, could the employee contribute $10,500 to one SIMPLE and $5,000 to the other SIMPLE? Total employee contributions for the year come to $15,500, but that is within the 402(g) limit so it seems to be okay. Agree?

Could set up a new Safe Harbor Plan effective 10/1/07 and then merge the 2 plans after the end of the year?

I have my clients mail the payment and coupon to the St. Louis address. To date, it has worked fine.

Not sure if it is a requirement of a prototype document, but it seems all of the prototype documents I have worked with have allowed for the participants to cease their contributions at any time.

Has the IRS changed their mailing address for Form 5310 filings? The instructions to the form say to use P. O. Box 192, Covington, KY 41012-0192. I use the United States Postal Service website for my mailing and mailing labels. When I enter the above address it keeps telling me the address is invalid. Anybody have a different address?

Here's a list from Datair's website: http://www.datair.com/PDF/Required%20Amendments.pdf

ACP test for the whole year, too.

Plan year end 12/31/06. ADP test failed and a refund of $1,500 is required for the only HCE in the plan. There are a number NHCE’s in the plan. The HCE is under age 50 and he contributed $15,000 for the year. The desire is to get the HCE to a total allocation of $44,000 after any refunds. The thought is that this could this be accomplished by making a cross-tested profit sharing contribution of $30,500 for the HCE. This would put his total contributions at $45,500 (15,000 + 30,500), which would create a 415 excess of $1,500. The plan says to correct a 415 excess by refunding employee 401(k) contributions. So, the $1,500 gets refunded as a 415 excess, which is excluded from the ADP testing. The ADP test now passes and the total contribution to the employee ends up being $44,000 (after the $1,500 refund). We have in essence changed the excess from an ADP failure to a 415 failure. Anybody agree, or disagree, with this thought pattern? TIA

And don't forget to check the Top Heavy status of the Plan, which could trigger required contributions by the employer.

Has the 5500 been filed for 2005? If so, and it does not reflect these deposits as being part of the plan then you will have to amend the return. I would show the assets as part of the plan and a corresponding liability.

You are correct. (Assumes no contributions and no forfeitures reallocated to the key employees for 2006.)

Won't the plan document dictate how contributions (CDSC payments) are allocated? For example, if you have a non-integrated profit sharing plan, then the payment of the CDSC charges (contributions) would have to be allocated comp/total comp. Agreed?

Let's look at an example: I own 100% of my corporation. Therefore, my spouse, my children, my parents and my grandparents are also treated as owning 100% of the corporation. Agreed?

If it is a daily valuation plan you should use the balance as of 12/31/05. If it is a balance forward plan you should use the balance as of 6/30/05 plus add in (k) and (m) contributions from 6/30/05 - 12/31/05. Or, run a special valuation at 12/31/05.

Correct me if I am wrong, but I think the attribution goes 2 up and 1 down. Here's 318: ============== Section 318. Constructive Ownership of Stock (a) General rule For purposes of those provisions of this subchapter to which the rules contained in this section are expressly made applicable-- (1) Members of family (A) In general An individual shall be considered as owning the stock owned, directly or indirectly, by or for-- (i) his spouse (other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance), and (ii) his children, grandchildren, and parents. ============== Per the above, you are deemed to own the stock of your spouse, children, grandchildren and parents. No mention of grandparents.

I agree with all of those except the grandchildren. A grandparent's ownership is not attributed to a grandchild. However, a grandchild's ownership is attributed to a grandparent.

Taking the above situation a step further, what if you have a calendar year plan with last day language and it is terminated on 4/30/06. Could the plan be amended after the termination date, but before the plan year end, to remove the last day requirement?

I agree, they are not eligible to file a 5500-EZ. I would recommend a DFVC submission for the 2003 and 2004 plan years. Penalty would be $1,500.