Jim Chad

I was going on Section 404 being the earliest deadline. Most clients want the deduction as soon as possible and usually the accountant puts it on the tax return for the earliest year. But RLB64 is correct. section 415 is the end of the year. Question: Can anyone remember a deadline that is 30 days after the 404 limit? I think I remember some rule from many years ago. Is it gone or am I just wrong?

Perhaps I can be more helpful if I knew where you were coming from. Are you an accountant, human resources, investments, third party adminstration, other?

If it is truly a discretionary match the document igves them the option to decide on the amount right up until the tax return is filed. It sounds like they have a smaller match for 2006 than they would like to have. If the document says that the match is on a payroll or monthly basis, you might be all right as is. If the document says that match is calculated on annual compensation and annual deferrals, than you need to do what is often called a true-up calculation. This is where you compare the match calculated on an anual basis to what has been paid and make what ever additional match contributions are required.

I just found in the 2006 ERISA Outline on page 15.647: IRS generally recommends that the employer make up the deferral and any related match, though the employee will have more take home pay than he otherwise would have. See IRS Q&A 38 of the ASPPA 2005 annual, conference in Washington DC The book than goes on to say that if the employee shares responsibility, either because of the length of time or becasue there is evidence he knew, a case could be made to not put in the deferrals. The employer would only put in the match or ask the employee to put it in this year after tax. There are several more paragraphs of discussion about how this could be fixed under VCP or SCP.

See thread on Jan 3, 2007 called missed deferrals. I don't know how to link it to here. Can someone tell me how to do that?

I want to make sure we are on the same page. So let me paraphrase your situation and you tell me if I am wrong anywhere. Calendar year plan The Top heavy percentage calulated for 12-31-06 is over 60%, so you are top heavy for 2007. This requires a contribution of 3% to all non key employees unless no key employee recieved 3%. In this case the TH miinimum contribution is equal to the highest % any key received. Now as for timing: it is a contribution for the 2007 plan year and should meet the usual rules for deductibility. This means it is due by the due date fo the company 2007 tax return, counting extensions. If this is a Corp., it is due March 15, 2008 plus extensions.

What is required is a top heavy contribution which may be less than the safe Harbor contribution. But as you see so often here. What does the document say? You have to do what the document says right now. Are you asking for advice on amending the Plan for next year?

The match is one of the contributions due by the due date of their company tax return, including extensions. If they have filed an extension, or do so by tomorrow, the answer is yes. They have plenty of time to fund it.....Provided they have not already filed their tax return.

I think we have covered all of the bases and there are no controlled groups. Bruc can never be a bad guess. But I was thinking of Derrin Watson in his book "Who's the Employer"

Next question : Does anyone own any options in the other companies? To quote a famous American, "Attribution rules are always a sword; never a shield". (Does anyone know who the famous American is?

I agree with BXO that the easiest way to do the 5500 is on a cash basis. But his other questions are very important. If you have to do the ADP and ACP test, you will need to use the payroll reports so that you are only using contributions in the correct year. Is it part of your "job" to double check the match calculation to make sure it is correct?

Lame Duck brought up a good point and raises an important question. Does each sibling in, a group owning 1/3, own the same percentage?

2 questions: 1. When you say plan has payroll based match, are you saying that the document says to calculate match on a per pay basis? 2. Use for what purpose? Testing? 5500? Employer tax return? Other?

I think you are right. If all the kids are over 21, section 1563 would not attribute stock up to the parents. And I cannot see where 5 or fewer of the kids would be attributed more than 66 2/3% of A. This is less than 80% so no controlled group there.

Would you put it in as a QNEC?

Sibling 1 is deemed to own one third of B and C Sibling 2 is deemed to own one third of B and C Sibling 3 is deemed to own one third of B and C Since these 3 siblings own all of A, it means that A, B and C are in one controlled group. Anyone see anything I am missing?

From a Corbel seminar in 2004, the book says you cannot exit SHNEC midyear and keep the Plan. I don't remember anything in the Final 401(k) regs that changed this.

If this is a calendar year Plan, it is too late to make the Plan Safe Harbor for 2007. But you could do it for 2008. Now let's see if I have this right. 12-31-05 Key percentage is over 60% so the Plan is TH for the 2006 year. Yes, you do need to put in the Top Heavy Minimum contribution for every Participant employed on the last day. If the document allows, you can skip anyone not employed on last day. If TH percentage for 12-31-06 is also over 60% than the Plan is TH for 2007 and at the end of the year a TH contrib will need to be made. Hope this helps.

This is a longshot, but you may want to double check the prototype. A lot of them have language about doing various tasks including all members of the controlled group. But usually, at least in my experience, the affiliated companies have to sign on to be a Participating employer. If you pass testing without the employees of the companies with all of the temps, you would not need to make any corrections. Who's prototype?

I am confused by the question. If a Plan's only Employer contributions for a Plan Year is the Safe Harbor contributions (either SHNEC or SHMAC) and not forfeitures The Plan is deemed not Top Heavy that year no matter what the percentage was as of the previous 12-31. If this doesn't help you, Please clarify. Perhaps you could tell me TH percentage for 12-31-04, 12-31-05?

The only thing I can remember hearing is that Profit sharing money has to be in the Plan for 2 years before in sevrice withdrawel.

Can a US citizen that will be back in the US some day, with no US Earned Income in 2006 or 2007 Put money in a Roth IRA for 2006 or 2007?

Owner is wrapping up a businiss and is the only one left, so there is no payroll department. He took out a $50,000 loan in April and only made 2 payments last year. The payments from 3rd quarter were not put in by the end of the 4th quarter so it should be "deemed" Questions: Is there any option to correct in EPCRS or any other voluntary correction program? Is it taxable in 2006 or 2007?

FWIW When Craig Hoffman and ASPPA talked to the IRS about this, they did stop the practice. But I'm afraid we will have to deal with these for a while yet.

A copy of that 1099 has probably been sent to the IRS by now. So they will be looking for that on the 05 return. The company's controller is telling you that whoever prepared the 1099 did it wrong. I would not take his word for it. I would ask him to call the Plan administrator for a corrected 1099. FWIW My experience has been that the administrator is probably the one that is right. But it is worth double checking.