Ed Zollars, CPA
June 30th 03, 09:58 PM
FranksPlace2 wrote:
>I don't think
> a profit sharing plan would work as I may not make much profit.
Every 401(k) plan established since 1974 has been a profit sharing plan.
There is no other vehicle on which you are allowed to graft the
special provisions of Section 401(k).
Since you don't need the 401(k) provisions, though, it is likely going
to simpler setting up a profit sharing plan. *However* (major however)
there are a number of issues involved with operating the plan and
keeping it qualified that, right now, the plan administrator and your
IRA custodian are handling. If you establish your own plan, *you* are
responsible (as the sponsor) for complying with those requirements,
including filing of annual 5500s, adopting plan amendments as necessary
(and they become necessary basically every time Congress changes the
law), handling any paperwork for distributions and assuring you operate
the plan in accordance with its terms.
The fact you don't right now know that a 401(k) plan is a profit sharing
plan isn't a real good start for the "do it yourself" approach <grin>.
However, it is very likely that the cost of hiring an outside
administrator would be difficult to cost justify.
In essence, if you were my client I'd likely tell you not to do it *or*
to be prepared to pay a significant amount (either directly or
indirectly via fees imposed on your investment) for the services and
advice you are going to need.
--
Ed Zollars, CPA
Phoenix, Arizona
>I don't think
> a profit sharing plan would work as I may not make much profit.
Every 401(k) plan established since 1974 has been a profit sharing plan.
There is no other vehicle on which you are allowed to graft the
special provisions of Section 401(k).
Since you don't need the 401(k) provisions, though, it is likely going
to simpler setting up a profit sharing plan. *However* (major however)
there are a number of issues involved with operating the plan and
keeping it qualified that, right now, the plan administrator and your
IRA custodian are handling. If you establish your own plan, *you* are
responsible (as the sponsor) for complying with those requirements,
including filing of annual 5500s, adopting plan amendments as necessary
(and they become necessary basically every time Congress changes the
law), handling any paperwork for distributions and assuring you operate
the plan in accordance with its terms.
The fact you don't right now know that a 401(k) plan is a profit sharing
plan isn't a real good start for the "do it yourself" approach <grin>.
However, it is very likely that the cost of hiring an outside
administrator would be difficult to cost justify.
In essence, if you were my client I'd likely tell you not to do it *or*
to be prepared to pay a significant amount (either directly or
indirectly via fees imposed on your investment) for the services and
advice you are going to need.
--
Ed Zollars, CPA
Phoenix, Arizona