Defined Benefit Calculation Specialist/Actuary The Angell Pension Group, Inc.
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Retirement Plan Legal Specialist Pentegra
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Nicholas Pension Consultants
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Retirement, LLC
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United 401(k) Plans, Inc.
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Carpenter Morse Group
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Prime Pensions, Inc.
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Central Pension Fund of the IUOE
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Central Pension Fund of the IUOE
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Compass Retirement Consulting Group, Inc.
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Bates & Company
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Trucker Huss, A Professional Corporation
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Nova 401(k) Associates
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Question 214: My client has a professional practice as a sole proprietorship, with a defined benefit plan. He also has several domestic employees: gardener, housekeeper, nanny, etc. He is concerned about the domestic employees and wants to do something for their retirement, but he doesn't want to include them in the defined benefit plan. I'm concerned about whether I need to count them in the plan regardless. What can we do? | |
Answer: Fortunately, this is an issue which became somewhat more clear after EGTRRA, especially since it added an important tool for these situations.
The bottom line is that your client should be able to continue his defined benefit plan covering only his business employees. The household employees do not need to be counted in determining whether than plan satisifies the coverage and participation requirements of the law. In addition, your client should be able to establish a SIMPLE IRA or a SIMPLE 401(k) covering only the household employees, ignoring the business workers. Obviously, the client himself would only participate in the defined benefit plan. This is discussed with additional examples in the forthcoming third edition of my book, Who's the Employer. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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