fender5150
PPA 2006 has been amended to include more logical treatment of excess distributions in the event of an ADP test failure.
Basically: distributions are on the cash basis. If you get a distribution in 2009 for a test failure in 2008; the distribution is taxable in 2009!
Visit this link for more details:
http://www.401ktest.com/pages/announcements.asp
Why is this exciting?
Directors and Officers don't have to wait till late March or April to get their taxes done any more.
No more need to amend prior year 1040's due to a 401k plan failure.
It just makes more sense. Most taxpayers are on the cash basis, so 401k rules should also allow cash-basis reporting as well.
Basically: distributions are on the cash basis. If you get a distribution in 2009 for a test failure in 2008; the distribution is taxable in 2009!
Visit this link for more details:
http://www.401ktest.com/pages/announcements.asp
Why is this exciting?
Directors and Officers don't have to wait till late March or April to get their taxes done any more.
No more need to amend prior year 1040's due to a 401k plan failure.
It just makes more sense. Most taxpayers are on the cash basis, so 401k rules should also allow cash-basis reporting as well.