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Ok, here's the situation. My husband and I have a small S Corp and have initiated a Qualified Profit Sharing Plan. We also use a leasing company for employees (which has a 401). We are changing leasing companies and have funds for rollover.

I could a: roll to new 401; b: roll funds to Profit Sharing program which is allowed but not employee contributions and we are the trustees; or c. roll funds to traditional IRA which we could contribute to but probably would not be tax deferred because of AGI (nightmare bookkeeping). Roth is not an option right now our tax liability is too large and our cash is too small.

I think the P/S is best because we have control and the possibilty of additional contributions taxed deferred (by the company)are possible. I would much rather keep the money separate but I think this is the best solution.

This post is long and I apologize but any thoughts or suggestions would be appreciated. Cheryl

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Cheryl writes:

<<Ok, here's the situation. My husband and I have a small S Corp and have initiated a Qualified Profit Sharing Plan. We also use a leasing company for employees (which has a 401). We are changing leasing companies and have funds for rollover.

I could a: roll to new 401; b: roll funds to Profit Sharing program which is allowed but not employee contributions and we are the trustees; or c. roll funds to traditional IRA which we could contribute to but probably would not be tax deferred because of AGI (nightmare bookkeeping). Roth is not an option right now our tax liability is too large and our cash is too small.

I think the P/S is best because we have control and the possibilty of additional contributions taxed deferred (by the company)are possible. I would much rather keep the money separate but I think this is the best solution.>>


I'm afraid I can't track the source of the funds you have available for rollover based on your description. Is this money you and/or your husband have on deposit in an old 401k or other defined contribution plan? If so, and if the accounts are $5K or greater, you can leave the money in that plan. If so, and if the amounts are less than $5K, you can transfer them to their own conduit (or rollover) IRA or transfer them to your profit sharing plan. Either transfer would work, so the choice is up to you.

If I'm not understanding correctly here, please clarify what the problem is on which you wish us to comment.

Regards..Pixy
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The funds are from the previous leasing company's 401. We are moving to a new leasing co. which means we'll be able to roll the funds out.

There's not really a problem. Just too many options.
I appreciate the response. I didn't really think about leaving the funds in the current 401 but may consider doing so.

Thanks Cheryl
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<<The funds are from the previous leasing company's 401. We are moving to a new leasing co. which means we'll be able to roll the funds out.>>

???? !!!! ????

You own an S Corp with a Profit Sharing Plan, but are contributing to another company's (the leasing company's) 401(k)??????

Since 401(k) contributions are by definition deducted from salary (payroll) how would this be possible? Are you an employee or former employee of the leasing company????

Or am I confused as to who "we" is. I was thinking you and your spouse. Do you mean your leased employees are changing employers and will be able to roll their funds out?
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