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No you can not assume 3% prior year for 2015, the 3% rate applies to 2014 testing. edit - you could have used 3% for 2015 if you made the plan a profit sharing plan for 2014 and added the 401(k) component with an effective date in 2015 since 2015 would have been the 1st year of the 401(k) component. But because folks were eligible to defer in 2014 (but didn't for whatever reason) you can't 3% as the prior year percentage at this point.

one of the possible changes: Under the current regulations a cross-tested plan can pass nondiscrimination testing using either the ratio percentage test or the average benefit test without requiring that each rate group be considered a “reasonable classification”. Under the proposed regulations, this will still apply to the ratio percentage test. However, in order to use the average benefit test, the rate groups will need to satisfy the reasonable classification test. Of greatest concern are plans where one or more of their rate groups are set by naming the individuals as traditionally this has not been considered a reasonable classification. If these proposed regulations become final, new comparability or cross tested DB/DC plans will need to review their plans to determine if (1) they can pass testing using the ratio percentage test or (2) their rate groups meet the requirements to be a reasonable classification so that the average benefit test can be used. Plans that cannot would need t o be amended to ensure that nondiscrimination testing could be passed. .............. so while the reasonable classification test used to only apply to coverage, it would now apply to nondiscrim testing as well if the proposed regs go through. I did submit a comment for clarification if 'one group per participant' is considered reasonable or interpreted as being 'by name' proposed reg.doc

They would be taking back from her as the participant's heir, from the estate or her inheritance. They should not be taking back from her the benefits she is entitled to under the plan as the beneficiary of a deceased participant. The amounts overpaid to the participant should not be considered to have been paid to her. Would it be necessary for the plan to establish that the estate proceeds were directly from the overpayment? Didn't the Supreme Court just rule (by not taking a lower court case?) that health insurance plans can only collect in a subrogation situation from proceeds directly received from a judgement or settlement, not from the individual's general assets? Wouldn't that apply in this kind of situation?

Was he a 5% owner of the business on April 1st of the year after he attained age 70 1/2? If not, then he's not one now and can defer distribution until retirement. Otherwise, it's arguably a bit of a grey area. My personal opinion is to do the first distribution ASAP and be absolutely certain that this year's is taken before Dec 31st. From the plan's perspective, I'd want to do the first distribution ASAP to be on the safe side. The plan's duty is to get the money out of the plan if so required. From the perspective of his personal tax return, the reality is that his minimum distribution on $2000 is about $100 which likely wouldn't even reach the threshold for an audit adjustment if his personal tax return was audited (this is a statement of personal opinion and should not be taken as tax advice!!!).

Wouldn't it be great if participants watched over their accounts and promptly reported irregularities? Time for the Plan Administrator to review enrollment and election procedures to add a way to document what they think the participant has elected, for everyone's reference 8 years later. When participants are first enrolled, send them a notice of what the plan thinks their deferral election is, and send another notice whenever participants change their election. Let participants know that they should expect to receive from the Plan a confirmation of any election changes they make. One could even send fresher notices to the participants each year: "Our Plan records show that you are currently electing to defer n%, which is reflected in the deductions on your paycheck "stubs." If you believe that this is incorrect, please promptly notify us in writing. If we do not receive your written notice within 30 days, this deferral rate will be deemed to be correct." Kind of a PIA, but serves as a CYA, too.

In fact I am seeing more and more documents that say in these cases the old beneficiary form is not valid. Just had a situation recently where a guy died. He never changed his beneficiary form when he divorced his wife. The client was saying we need to pay a payment to her as she is the beneficiary on record. I pointed out to them their plan document is very clear upon divorce a beneficiary form to the former spouse is no longer valid. We had to treat the situation as if they had no form. In this care it turned out the plan pointed to the children which the ex-spouse had custody of them. They were minors so she had control of the money. She was fine with her kids getting the money and her watching over it until they were 18. I got the impression she never asked (or had any expectation) for the money the client simply looked to the form and was saying the ex-spouse is the beneficiary.

ASPPA will no doubt take credit for fixing this "problem" that wasn't really a problem.

even the IRS says you can't defer on 'prior' comp. since it was impossible to defer on those amounts, I'd hold you could ignore those amounts of comp. this is different than a situation in which someone could have deferred, but simply started deferring later in the year.

clarification when you run coverage testing you pass if ratio % > than the safe harbor and whatever else (e.g avg ben pct test) if that fails, you can get by if ratio > unsafe harbor and you have a note from your mom that says it is ok, you sacrifice a goat and a bunch of other stuff (or something like that) when you run nondiscrim you need to pass at least the midpoint. the unsafe % is only used to determine what the midpoint is when performing this nondiscrim test.