If the match is deposited after the close of the year, is it reasonable for earnings for a failed ACP test to be 0? (pre-final regs)

I have been in the TPA business for a long time but I have always worked for someone else. Now I have started my own business and am looking to buy an existing TPA?

I am very experienced and am located in CA .....

Any Takers????

I have a client with numerous plans. 3 of them cover ONLY nonunion employees. Each plan covers a different union organization.

I know that when a single plan covers more than 1 union group, the employer has the option of ADP testing each union group separately or combining them in any way they choose.

Since this company has 3 separate plans, can I apply that same logic here? The company would like to run 1 ADP test for all 3 of the union plans. I know that normally you can't combine for ADP testing unless you are also combining for 410(b) but union are excluded from coverage anyway so that doesn't seem to be an issue. My concern, though, is that the employer would be combining the 3 union plans but keeping their other plans separate for testing purposes. Is this OK?

If a plan excludes bonuses, what issues arise in regards to 414(s)?

1. If the bonuses are for HCE's only, and we exclude them, the safe harbor definition of compensation remains intact, correct?

2. If the bonuses are for NHCE and we exclude them, are we subject to further testing?

3. If the bonuses are excluded for all, is this still considered a reasonable definition of compensation or are we still liable for futher testing based on facts and cirucmstances?

Thanks!!

I have a crosstested, SH Match plan. 2 HC, 4 NHC - must be employed last day and have 1000 hours to share in PS 2 HC meet this, only one NHC is employed at end of year with 1000 hours, 2 NHC are still employed and have less than 1000 hours, 1 NHC has 1000 hours and termed in November.

Ratio is 2HC share, 1NHC share. If this was a regular PS, I would have to bring in one of the ee's with less than 1000 hours in order to pass ratio and/or average benefits test. But it would have be a straight PS allocation.

If I bring in the the other ee with less than 1000 hours I can crosstest and get the HC a much bigger allocation.

My question, for a crosstested plan, can I bring in all the "active" employees even though the document calls for 1000 hrs. Do I need to amend the doc.

Can I even approach this like I would if I was failing 410B for a non-crosstested plan. thanks

A plan is put into place in October, 2005 with an effective date of 1-1-2005. An employee terminated in August, 2005 and would have entered the plan had they still been employed. A SHNEC is being made for 2005. Should this terminated employee be entitled to the contribution?

I have a multiple employer plan with a 7/1-6/30 plan year. Employer A is spinning off from the plan while Employer B is continuing. The spin off date is 6/30/06. I don't have much experience with spin-offs and was hopigng to get a little help. Must all contributions to the plan for the plan year ending 6/30/06 be allocated to each employer? If the assets are actually spun-off by say 12/31/06 and the contribution for the year ending 6/30/06 is made after 12/31/06, how is the contribution allocated to each employer or does the contribution have to be made prior to the actual asset spin-off? That's a good enough place to start. Thanks.

A 401k plan with 3 key employees (all family) is top heavy. The father turns age 60, which is also the plan's retirement age, and the plan allows for distribution upon attainment of NRA. If the father were to take all of his money out of the plan, but continue to work and accumulate additional benefits, the plan would no longer be top heavy (excluding his balance, which would be paid out). Can we exclude his pay out after 1 year, or do we have to maintain that as part of the t/h calculation, since he would still be working?

Thanks

Plan year was 8/1-7/31, but now has a short plan year 8/1-12/31/05 as it changes to calendar year plan. Document says you have to work 1000 hours in the plan year to get a share of PS. Employer wants to make a PS Contribution for the short plan year. Can we pro-rate the hours requirement for the short plan year?

I have a top heavy plan which has deferrals, 3% non-elective safe harbor and integrated profit sharing – entry dates for the safe harbor and deferrals are monthly after one month of service and the profit sharing monthly after twelve months of service.

The employer hired several new employees who were eligible to defer and receive the safe harbor non-elective, but not the profit sharing. Since the plan is top heavy the new employees required an additional contribution for the one month they were held out of the safe harbor contribution.

When I add the tiny additional top heavy minimum employer contribution Datair spits out a special top heavy report stating I am failing the 410(b) minimum coverage test – 401(a)(4) Top Heavy Safe Harbor.

The verbiage on the report is as follows -

Top heavy plans using a 401(a)(4) safe harbor formula (e.g. proportional to salary or integrated) with participants who are not eligible for the employer contribution effectively have two formulas and must pass a special ratio percentage test where those who benefit only form the top heavy minimum are treated as not benefiting.

Is anyone familiar with this report????

I'm wrestling with a question here. Suppose you have the following scenario:

Plan established 12/31/2006 with a beginning of year valuation date (prior to when the proposed regs become effective) The limitation year is calendar year, so 12-31-2006 valuation is based upon 2006 calendar limitation year. The compensation averaging is based on service. The individual has been in business since January 1, 2000 and their high three year average salary was earned in 2000, 2001 and 2002.

Now, the second year valuation comes up - 12/31/07 and the new regs are effective since we are dealing with the 2007 limitation year. When preparing the 12/31/2007 valuation - the compensation averaging would be based on participation rather than service. Do you:

1. Only use compensation for the limitation year 2007, or,

2. Since 364 days of participation from the first plan year were actually in 2007, do you take into account 2006 compensation as "participation comp" since that is the limitation year that applies to the plan year containing, essentially, a year of participation?

Or something else? Originally I was leaning towards #2, but after discussing with some colleagues and letting it percolate overnight, I'm not sure why I originally thought that, and # 1 makes more sense. But I thought I'd toss it out to see if you agree and to see what discussion it generates. Thanks.

I have a plan that is top-heavy, has a 401(k) feature and is cross-tested. The eligibility for 401(k) is entry on the first of the month following date of hire - for the PS portion, participants enter on the first day of the Plan year in which they complete one year of service. To receive a PS contribution, you need to be employed on the last day w/ 1,000 hours.

As it is now, I have about 45 employees - with 3 HCE's. Only 12 of these employees have met the PS requirements and are eligible for the PS portion of the Plan. The 3 HCE's are wanting to maximize their PS - they did not contribute 4k for the year. Do I have to give the 5% gateway minimum to the 33 other employees who are employed but have never worked 1,000 hours and never met PS requirements, regardless of their employment status on the last day of the year?

Any thoughts would be appreciated.

We have a firm that sponsors a 401K and is 100% owned by a husband and wife. The wife works for the company, and takes a salary. The wife also has a side business that is totally unrelated to the firm sponsoring the plan. She has no other employees in this side business. Our question is this: MUST we include her earned income from the side business for plan purposes even though her side company hasn't adopted the plan? If the answer is no, my next question is this: can we? Would it require plan amendment, and can that amendment be retroactive to last year?

A school district is considering allowing employees to act as their own investment advisor and invest their 403(b) deferrals in no-load funds, outside of the approved service provider listing. Does anyone have such a waiver that they would be willing to share?

Thanks!

I have always advised against including non-employees in any ERISA plan, including nonqualified plans. Yet I often see NQDC plans that include outside directors. Any opinions on this?

Thanks.

card

We are considering ASP as we are facing the purchase of a new server. If anyone is using R.A. thru ASP, I am interested in feedback. For example, one ASP user described the process of generating report writer reports as more lengthy. Has this been your experience? What other positive or negative aspects of ASP have you experienced? Thank you.

I know that if a plan has a 1000/LDR provision you can exclude these people from the ACP test because they are not eligible....but what if a nonstandard plan has only a 500 hr requirement (no LDR - don't ask me why they have a NS doc!)? Can you also exclude these people?

A code reference would be greatly appreciated with the answer, if you have it!!!

Vicki

Small company wants to start up a plan that has only 401(k) contributions and safe harbor match contributions. If this is the only money in the plan and it is top heavy, does the employer have to contribute 3% to everyone not receiving the safe harbor match (ie, they are not deferring)?

If the answer to above is "no", would that answer change if the owner rolls money into this new plan from another employer's plan or IRA, in which case there would now be money in the plan other than 401k and s/h match?

thanks

Can an attorney licensed only in State A review NQDC plan documents for clients in State B in connection with a 409A rewrite, if the review deals only with federal tax and ERISA issues, and anything state related (for example, a rabbi trust document) is provided on a specimen basis only?

(Assume the lawyer has not applied for admission to any federal courts.)

Under Rev Proc 2003-44, it states that " Under this correction

method, a plan may not be treated as two separate plans, one covering otherwise

excludable employees and the other covering all other employees (as permitted in

§ 1.410(b)-6(b)(3)) in order to reduce the amount of QNCs."

If your plan's coverage and adp tests were originally run using the permissive disaggregation, failed adp testing but corrections were never made, does the plan sponsor have to retest the plan without permissive disaggregation and allocate the corrective QNEC to all eligible nhce's? Or since the operational failure is based on original testing results, can the corrective QNEC be allocated to only those that were eligible for the "test" that failed? If the plan had corrected it originally with a QNEC, these would have been the only eligible employees, so I don't understand why the IRS would state that you'd have to include a group of employees who were not included in the original testing poplulation.