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Showing results for tags 'partnership income'.
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Good morning to all, I have been asked to research the following: " Is it acceptable for salary deferrals to be funded well after the end of the plan year for self-employed individuals, i.e. sole proprietors. This is in the case of an ERISA plan, not a solo 401(k) plan. " Your thoughts, opinions, and explanations of your practices are appreciated, as always.
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I have a potential client what's to start a 401k plan. He is open to giving the employees the Safe Harbor 3% (discretionary) but is not sure he will be able to/want do it each year. He plans to only give SH 3% when he decides to participate since the plan will be Top-Heavy. The company is a partnership so I suggested he not contribute anything (including 401k) until after year end when he knows the income of the partnership. The obvious issue is he needs to decide if he will participate, thereby electing safe harbor for the year on Dec. 1, but really won't know his final income until March or so. He was adamant that he really wont be able to decide until after year end. Is it possible to have a plan year from 5/1/18 - 4/30/19 (giving him until 4/1/19 to elect safe harbor), with a limitation year of 1/1/18 - 12/31/18. This way the employees will still be based on W-2 and not some 2018 wages and some 2019 wages. I'm also not sure how deductions would work. Would he have to Pro-rate his deduction 5/12 and 7/12? Are there other solutions that I'm not thinking of?
