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I have recently set up a Bacon plan and have been making…

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I have recently set up...
I have recently set up a Davis Bacon plan and have been making contributions since the beginning of the year. I am now told by Pennsylvania Labor and Industry that I am not allowed to put the fringe dollars into the plan because the job is a state job and not federal. I have asked dozens of people in the retirement plan business and nobody has ever heard about this. Can you tell me if this is indeed the case? If so, how do I correct the situation?
Submitted: 2 years ago.Category: Finance
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Answered in 2 hours by:
3/9/2016
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 14,191
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi, so sorry, but that's correct.

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

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The CRPS designation there is Chartered Retirement Plans Specialist.

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But yes, Davis Bacon qualified plans can only be used by those working under a federal contract ... If you look at the Davis Bacon act itself, you'll see that the work has several requirements (construction or repair, public work or public building), but the piece that applies here is that either the Federal government OR the District of Columbia must be a party to the contract.

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In terms of correction, you should contact the plan administrator. They can do what's called a "corrective distribution," which (if funds were withheld pre-tax) will be taxable but there is no age 59 and 1/2 penalty tax for corrective distributions.

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Please let me know if you have questions from here

..

Lane

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Financial Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Did you see my answer?

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I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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