Basically

I received a call today, a participant has a loan in a plan and is leaving his employer. He wants to roll the loan balance into the new plan at his new employer. Can this be done... if the distributing plan and receiving plan both allow? (I guess it first depends on the distributing plan)

Ok.. so .. Im guessing an ERISA attorney should be asked if the income can be used. No one would move forward on this plan without the blessing of an attorney for fear that a few years down the line Uncle Sam came in and disallowed the income and the plan. So.. that is the next step. I appreciate everyone chiming in. Last question... anyone know an attorney who may be good for this situation?

so... are you saying that he can use his AA money to establish a plan? because he is paid for "appearances" and "promotions" rather than coaching? What if this was true... what if he established a Sub S corp and the AA money was paid to the S corp? Is that a layer that might work? or is that just a layer. I learned that the U pays all his benefits... Insurance, workmans comp... everything. The AA doesnt pay anything. Straight 1099. I dont know what would happen to the income stream from the AA if he was fired. Ill find out. Thanks for ell the help

ahhh.. he does sound like a statutory employee. BUT.. can I still hang in there with a slim hope if it is determined that the compensation paid by the outside source is not under the control of the university?

Interesting....I admit that I am not knowledgeable with regards to what you are saying. Do I have it right.... The coach is paid by the university... $250K W-2 The coach is paid by the alumni association $750K 1099 And if the University has control of the alumni association then in essence he is considered to being paid by one entity? This all hinges on who controls the alumni association If they work independent from the university then looks good... if not.. then there is a problem.

That is great... but do you see any issue with him doing the same job and earning income from 2 separate sources for that same job? I want to make sure I am perfectly clear... - He is a coach for a university - The university pays him to be a coach ... $250K.. and issues him a W-2 - He is also paid $750K over and above the university's paycheck for the exact same position by an outside source... and the outside source issues him a 1099 which he declares on a Schedule C. Does that send up any flags? Im going to look at Pub 560 Thanks

Potential new DB plan. Client is a coach for a college team and earns $250K W-2 from the university. He also earns 3x that from an alumni foundation to make up his 1M annual salary. The $750K is paid to him on a 1099 and he files a Schedule C. Can a DB plan be setup under his Schedule C using that compensation? Thanks

QDRO... would you be willing to share with me the favorable response the DOL had provided?

Ahhh yes.. I need to consider them one company.

What if Company B had a Simple? Does that have any bearing on this situation?

Gotta be a slam dunk... 2 businesses, A and B Wife owns 100% of each Totally unrelated businesses... (nothing to do with each other at all ) Wife only works A, she is the only employee Husband works B, 4 employees - Husband and 3 workers Wife technically makes no $$ from B Doesnt matter does it... If wife wants to open a solo plan using A she has to include B... correct? thanks

There is no operational even happening. The plan is a one participant plan and the one participant is 64 year old. He is not required to take a distribution nor calculate anyone else's account balance for administrative purposes... because there is no one else. We have been faithfully consistent valuing all his LPs the same way from the beginning of time. In the agent's letter to my client he refers to Revenue Ruling 80-155 which states: In a defined contribution plan, Rev. Rul. 80–155, 1980–1 C.B. 84, provides that since amounts allocated or distributed to a participant must be ascertainable, the plans must value their trust investments— • at least once a year, • on a specified date, • in accordance with a method consistently followed and uniformly applied. He provided the quote above but neglected to include the 3rd option.... "• in accordance with a method consistently followed and uniformly applied" We technically have complied with all 3 above! Im beginning to think Uncle Sam is trying to generate some revenue on the back of this one man plan.

This plan has been in existence for many many years and it has always filed en EZ. Not shirking that requirement. The agent closes his letter with "I have proposed several options and there could be other options which I did not think of" which leaves the onus on me to find a more favorable resolution.

This client is not devaluing the investments to reduce any RMD.... there are no loans... its a very vanilla PS plan. We have valued them based on the K-1s capital account analysis or at cost if that info is not available.... consistently. There are NO employees besides the owner. I feel the IRS is making a mountain out of a molehill. Thanks for chiming in.

A client who has a PS plan and is the only participant has been investing in LPs for years. He has substantial value in his plan and most of the investments are LPs. He just recently was audited and the IRS agent has come down hard on how my client has valued the LPs over the years. My understanding of valuing a LP is that it is not definitive. Each year the investment issues a K-1 which shows the "Limited Partner's" "Ending Capital Account" value. It is my understanding that at any time a LP can hit it big... can fail miserably... or just continue to be. Of course everyone wants their LP to hit it big and pay out huge dividends... "yea". But until that happens the limited partner crosses their fingers and hopes they dont lose everything. For years I have been consistent with how these assets have been valued. I am looking for any help arguing my case that the way I have accounted for these assets is ok. Any help is greatly appreciated.

That is exactly right! But if SheilaD's idea works then maybe they would go for a DC plan after all. Thanks for all your help!

Can you expand a little? I am a DC man... my CPA is asking me this question and I want to explain why no. What I stated is all I know. Thanks

Simple question... here is the situation: The business is a partnership and there are 2 partners Partner A is a 60% partner Partner B is a 40% partner No other employees Partner A wants to make a contribution Partner B does not Can this happen?

I have received these letters... responded to the first letter only to have the client forward to me the $15k penalty letter. I have responded to that letter to receive an abatement letter. Anyone remember back in 1994 (or around then) when there were a ton of letters being sent out just like these? The reason for the letters was that a truck had crashed in NY when they were moving an office to Brooklyn. I suspected that these letters this time was a way to replace lost records. Who knows.

If none of the NHC employees defer does that mean that none of the HC employees can defer? Are they up the creak? 2 x 0% is 0% Background... Small plan of just HCE participants (no other employees at all). Times are tight.. may only make deferral contribution for 2009. One new employee (bookkeeper) who will be eligible. What is she doesnt defer? Suggested options? Doing 2009 planning.

EXCELLENT!! Thanks! Great news ... eluding a very expensive task... so I am told.

So as long as I fluctuate between 80 and 120 participants.... dont exceed 120 then I am good to go with only filihg a schedule I... right? There is not catch like I have to drop down below 100 participants every 3 years of so... just dont exceed 120. AND, I can exceed 100 but less than 120 for many years in a row... Right? Sorry, want to simply have it spelled out. Thanks

If I have a new plan.. for 2007 they filed a schedule I. For 2008 they break the threshhold of 100 participants makeing them eligible to file Schedule H. But reading about how to count participants and the IQPA audit requirement I came across this rule.. the 80-120 rule exception. It states: Exceptions to the Audit Requirement 80 to 120 Participant Rule If the number of participants reported in Part II, line 6, of Form 5500 is between 80 and 120 and a Form 5500 was filed in the prior year, the filer may elect to complete the current year’s Form 5500 in the same category (large or small Plan) as was filed in the previous year. For example, if the number of participants at the beginning of the Plan year is 110, and a Form 5500 was filed in the previous year as a small Plan (Schedule I was filed instead of Schedule H), the filer may elect to continue to file Schedule I and forego the audit requirement. However, if the participant count is 121, then regardless of what category of Plan was filed in the previous year, the current year’s form 5500 must include Schedule H and the Plan must be audited. Since the audit requirement is solely dependent on the number of participants, an accurate participant count is critical. A Plan sponsor has the option of distributing participant account balances for inactive participants providing their vested account balance is $5,000 or less. Accordingly, if your participant count is such that you may be required to have the Plan audited, you may consider distributing inactive account balances under $5,000 to the participants prior to the end of the Plan year. Does this work? Can I file a schedule I continuously as long as I dont exceed the 120 participant number each year?

It was my understaning that the pension trust is its own animal... by obtaining an EIN for it you have protected any other entity that the sponsoring entity may have from being mixed up with the plan. Also, when a participant terminates or retires and is paid out, you dont want the 1099R to be associated with the plan sponsor.... it is not the plan sponsor who is distributing funds to the terminated participant, it is the plan which is identified by the EIN on the 1099R. I have to admit that many of my plans are so small that I maybe generate a handful of 1099s a year (lucky me). Small closely held businesses with little turnover in their workforce. Im afraid that if EINs were frozen due to inactivity then when a 1099 is generated it may not be, um... recognized??? I have not seen any fallout as of today with that issue... hopefully I never will. As for the sole prop. who uses a SS# on their schedule C and who sponsors a plan, I tell them they need an EIN once the form 5500EZ is needed and that maybe now is a good a time as any to get an EIN and switch over... unfortunately, I am often out-ranked by the CPA and it is not done.

so... If I apply for an EIN for a plan and when the plan opens an investment account at some brokerage house and uses that EIN when opening the account, will that keep the EIN alive? If the plan doesnt have it's own EIN the businesses EIN is used? What if the plan sponsor is a sole proprietor... and doesnt have an EIN but uses their SS#. The form 5500EZ (usually a solo plan) does not allow a SS#... what then?