John A. Weeks III wrote:

- quote -

SIMPLE-IRAs were enacted to replace SARSEPs, so now only
SARSEPs that were in place before SIMPLEs were available are
allowed--if you don't already have one, you can't establish one.

As a practical matter, due to some rather draconian
disqualification issues if you didn't get adequate
participation, there weren't a whole lot of SARSEPs and I
suspect most have now been replaced by SIMPLE-IRAs.

--
Ed Zollars, CPA
Phoenix, Arizona

In article <jtVMb.458$ii6.215[at]okepread05> , Brent D. Gardner, ChFC
<bgardner20[at]cox.net> wrote:

- quote -

I was once a member of a professional organization where everyone
was considered highly compenstated. We had a SAR-SEP plan that
was handled by Vanguard. The funds themselves were anything that
Vanguard offered, including thier low fee no-load funds. The plan
cost the business very little (either in direct fees or in admin
time to run it).

Do SAR-SEP plans still exist, or have they my eliminated or
replaced by something else?

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

TC wrote:

- quote -

The safe harbor provisions allow the highly compensated to
"ignore" the testing rules, but at a cost to the employer,
either in a mandated match level for those that defer *OR* a
3% across the board profit sharing contribution. Both are
nonforfeitable (standard matches or discretionary
contributions can be subject to vesting rules that allow the
employer to use forfeitures against future matching or
discretionary contributions).

There are other options, but if you are not an owner or
someone the owners *choose* to favor, they may not help you
personally <grin> . If are in the favored group, a
cross-tested profit sharing plan might be very useful in
employee funding costs are the big issue.

If you aren't in the favored group (you are a highly paid
person who has no ownership interest and the owners don't
feel they want to benefit you), then such a plan might work
against you, since in those plans highly paid individuals
who aren't going to be favored can be *very* useful--but
primarily so we can use them for funding (the 25% of covered
compensation limit) but then allocate away from them using
another testing mechanism.

- quote -

The SIMPLE-IRA probably won't work if a safe harbor plan was
rejected, unless administrative costs were the major reason
for dumping the plan. But since the 401(k) existed before,
I presume that employee funding costs were the big
problem--and the SIMPLE IRA does almost nothing to help
there, and the minor help it would provide comes at a cost
of a significantly lower deferral and lack of flexibility
(can't use cross-testing).

Now, that said, if the exact reason for why the plan was
considered not economically viable could be determined, as
well as the decision makers letting me know exactly what
they *would* like to accomplish, there may be options. But
right now there's not enough information here to know for
sure.

And, I would note, if you aren't a decision maker it's just
possible the decision makers won't be fully forthcoming with
their ideas in this area <grin> . And that's not totally
unfair--employees might not inform the owner if they are
considering leaving employment for another offer, especially
if that offer isn't yet a sure thing <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

"TC" <tc_nntp2000[at]yahoo.com> wrote in message
news:372178dd.0401121702.deea980[at]posting.google.com...
- quote -

A SIMPLE IRA would be a very low cost solution, if not for the mandatory
wealth redistribution required by Congress. Even with the mandatory
matching/contribution, the cost of the plan itself is negligible.

Do yourself a favor and call your Congress Critters and DEMAND they quit
trying to force business owners to redistribute their wealth, via the
retirement planning system.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

Without knowing exactly what the costs where, the answer might be to have
independent planner look at the different vendors and to look at different
types of plans such as aged based 401k.


"TC" <tc_nntp2000[at]yahoo.com> wrote in message
news:372178dd.0401121702.deea980[at]posting.google.com...
- quote -

My employer killed our 401k at the end of 2002 because the cost of it
was too high. We are less than 20 people. I think it had to do with
many of us falling into the "highly-compensated" category and the
safe-harbor provisions...dunno. In taking a preliminary look at my
2003 income tax situation, I really miss that 401k...

Besides the traditional/Roth IRA's that each one of us can
individually set up, are there any alternatives for a small
(cost-conscious) company to investigate?