Guest saotampa Posted July 13, 2007 Posted July 13, 2007 We are a TPA that has a client, structured as an LLC that has a 401(k) plan. One of the member sent me this e-mail yesterday "I am not sure that ** understands that we are members of the LLC. The payments made to us by ** are considered guaranteed payments and each of us pay self employment taxes on the gross amounts. I file my taxes off a K1 I receive from **. My understanding is that we did not change the plan documents from those with PayChex. Under that plan doc I was able to make my contribution anytime prior to April 15th of the following year for the prior plan year. " I have not been able to find anything that extends the deferral date to the next year for members of the LLC to show it credited in the previous year. I am drawing a plan. Thanks for any responses.
Guest saotampa Posted July 13, 2007 Posted July 13, 2007 Mike - the ** were not derogatory remarks by the client...I thought about that after I posted it....I just removed the names to protect the innocent! I haven't been able to find anything in the ERISA outline giving LLC members an extension to fund deferrals to a 401(k) Plan nor have any of the other administrators in my office. Thanks.
John Feldt ERPA CPC QPA Posted July 13, 2007 Posted July 13, 2007 Sounds like the LLC is taxed like a partnership. If that's the case, then when is the true "earned income" known for the year from which a deferral may be made? If a written election to defer for the partner is on file on December 31, such as an election to defer $15,500 and the true earned income is calculated for the partner and finally known by the end of March, now what would you think?
Guest saotampa Posted July 13, 2007 Posted July 13, 2007 John - I would agree with that, if that is the case with this client. I'm still waiting to hear from them how they are taxed..sounds like partnership to me...No election has been completed for 2007, they want to make deferrals periodically when they receive guaranteed payments, though the plan document only allows deferral changes 1/1 and 7/1. Should we amend the document to allow them to change % at any time? They aren't on our document currently so we'd have to amend Paychex doc.
Mike Preston Posted July 13, 2007 Posted July 13, 2007 Mike - the ** were not derogatory remarks by the client...They weren't?
Guest saotampa Posted July 13, 2007 Posted July 13, 2007 no - I just removed names and the name of their company. I looked at it after I sent it and thought it could be misconstrued as nastiness by the client, but it really wasn't.
John Feldt ERPA CPC QPA Posted July 13, 2007 Posted July 13, 2007 http://benefitslink.com/boards/index.php?a...st&p=106181
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now