Jim Chad

Corbel gives me the option to put Lettinga & Associates in the footnote of every page of the adoption agreement. I have never done this, but I am wondering. Are there advantages to doing this? What are all of you doing?

I would love some clear answers on this...but have never found any. FWIW I use monthly equivalence and I put it in my documents to do so. I treat the commission on a cash basis....strictly when they are paid. There is one exception. When employment is terminated and they do not work any hours that month, I do not count commissions. I am going to be interested to hear how if others handle it the same way.

I see so many firms do it, that I have to beleive it is legal ....at least for some of them. Here is what I am thinking. If a firm the size and quality of Wachovia is doing it, I would think that they have had their legal department research something so obvious. Maybe it is a class exemption or maybe they filed for an exemption. If it is not a class exemption, some of the very small firms might be on shaky ground if they have not filed.

Since paying zero W-2 comp is not legal, should this be corrected? If Everything is corrected for last year to Pay him reasonable comp as required by law: Give him a w-2 Amend the W-3 Consider it all a year end bonus and amend the last quarter 94? (is it 941?) including paying penalties. The above should be done, even without the profit sharing.....but then you can allocate the profit sharing and give him some of it. This is my opinion for what it is worth.

I work for a CPA firm and 10 years ago we had a balance forward plan and 2 of the Participants wanted to know if I was doing things right. So they tried to figure this out for their own account. Here are a few suggestions. Ask the recordkeeper what exact formula is being used. This may simplify your job. Ask what time frame is being used. For example: many plans are quarterly. Compared to annual, this will make a difference for some people. Maybe pick 5 people and if they all come out the same within a half percent, call it good. IMNTBHO

WesleyT Also watch out for 415 limits. I think that they have to be contributed by 30 days after 3-15-09 to count in 2008 415 limits. If someone has no comp in 2009 and you can't allocate anything to them, I think.

Let's see if I can start a discussion. I think your plan of steps 1 and 2 would work. But I don't think that is your only choice. If you use a 414 def of comp when doing the ACP test, and the test fails, you could simply make refunds to correct according to the current rules. Does anyone see anything I am missing?

In my experience a model SEP usually refers to a SEP set up using the IRS form. (5305-SEP, I think). When you say "plain SEP Plan" are you referring to using the document provided by an investment provider?

MB Carey: Note that all of the above refer to Non key employees.

I see no one responded. Causes I have used. change of accountant or miscommunication between accountant and investment adviser. have both been accepted by the IRS. I'm in Michigan and I am a third party administrator, but maybe I can help. My email is Jchad@lettinga.com

If no extension was filed, here is what I think IMNTBHO 1. Deductible in 09 if paid in 09 2. counts toward 09 415 limits 3. EPCRRS 2008-50 tells how to turn yourself in and get a no action letter. What do others think?

I cannot imagine a way to write the amendment that could not be interpreted as a cut back for some of the people in that group. On the other hand, if you take people out of that group, the contribution for the remaining people in that group, would be allocated to fewer people, so you might argue that it is an increase. But I would not want to argue with an IRS auditor on this. FWIW I think you are stuck giving everyone in that group the higher percentage the DB Actuary said.....unless he is increasing it to pass the average benefits percentage test. In which case the needed increase may be a smaller percentage if it is going to more than 2 NHCE's.

If it is an employee deferral of $500 in excess of the $15,500 limit, you should try to get it out TODAY. If it is in excess of the deductible limit, don't report it on your tax return...just don't deduct it. I believe you will have a 6% penalty tax due by July 31, 5009 on form 5330. You are short of time so if you want to call me Jim Chad 616-284-5285

You can stop the 3% SHNEC by terminating the Plan. But I am not sure about the 4/30 date. I think you have to give a new notice 30 days before termination telling the Participants that the Plan is being frozen and there will be no benefit accruals after the date in the notice.

It sounds like 4/30 is the sale or term date. Lots of questions. Let's take a few: Is 4/30 the sale date? Is it a sale of the company or the sale of the assets?

Sorry about not replying enda80. I just got your personal message. There were 5 new messages I did not know I had. The upper right said "0new messages"I have got to learn how that works! Does anyone know of an instruction book? To answer your question: I think you can self correct under VCP. I think it should work this way. The MPP Plan should forfeit his excess and apply it to the next years contribution. If the 10% is fixed in the PS doc, that should be corrected the same way. If the PS has a discretionary contribution, it should be reallocated to all Participants, including the owner. This is what I would do FWIW.

Makes sense to me. FWIW

My first thought would be no. But I can't tell you why except for there is nothing authorizing you to do it. Also once you did, would your discretionary pass coverage and nondiscrimination testing?

If he is still working, I think it counts the year social security tax is due on it......but, right now, I can't think of why I think this to be true.

Hi enda80 I'm interested. my email is jchad@lettinga.com

Need a few more details......What kind of Plan? MPP? or PS or 401(k)? Are you saying he got more than the law or Plan allows or more than employees received?

The deferrals are deductible the year paid. I understand that, I think. The excise tax is not deductible: Correct? How about if an amount equal to the excise tax is paid into the plan as a gain instead of paying the excise tax: Deductible? The lost earnings put into the Plan: Deductible? The fee for my time filing VFCP application: Deductible? Can anyone think of any other costs?

The deferrals are deductible the year paid. I understand that, I think. The excise tax is not deductible: Correct? How about if an amount equal to the excise tax is paid into the plan as a gain instead of paying the excise tax: Deductible? The lost earnings put into the Plan: Deductible? The fee for my time filing VFCP application: Deductible? Can anyone think of any other costs?

FWIW I might use the IRS underpayment rate.

I do not know a cite. But I would put in the full contributions and maybe include money market earnings. I should say that is what I would recommend to the Plan Sponsor.