I have a client who made Match contributions to all employees who defer. The rate of match was 6% of salary - regardless of the rate of deferral. (Basically, a 6% Profit Sharing to only those who defer). 2003 was first year for the plan.

(These are segregated accounts, identified by money source. I would like to avoid moving money around and leave the money as a Match since they made monthly deposits - and the intent was for it to be a Match anyway.)

My first thought is that this is discriminatory - those who defer a higher percent received a lower of match. (example: 3% deferrees received a match of 200%, whereas 5% deferrees received a match of 120%.)

The ACP passes, therefore I believe that 401(a)4 is satisfied. As it turns out, the HCEs are receiving the lesser rate since they deferred a higher percentage.

There are posts of this nature on the Message Boards dated back in 2001, but no definite opinions on this matter.

What I would like to do is "back into" a match formula that will work for 2003 and 2004 - if I can come up with one. Document states match is discretionary.

Any one have an opinion on how to handle this situation? Do you agree that if ACP passes, no additional testing is needed and it can be left as a Match?

Thanks for your insight!

I have searched this board and found some discussion but no definitive answer. When MPPP is merged into 401k PSP are the MPPP amounts 100% vested?

Where can I get a copy of the 2005 pension plan limits?

Employer is a Sole Proprietor, with a Schedule C needed to calculate the annual SEP contribution. He would like to also have a 401(k) Safe Harbor Profit Sharing Plan....is that possible to have both plans active???

2 HCE's

2 NHCE's..

Help!!!!

What is the time frame which particpants must be notified when terminating a 401a plan. When terminating a plan what are the things to be careful about.

Terminating plan has small amount invested in limited partnership and gold coins. Trustee wants to offer all participants a chance to take part of their distribution "in kind". In other words he wants all participants to have a chance to receive some of the lp and coins and not look like they were distributed to HCE only. Does anyone have a letter to participants that gives this option?

Facts: U.S. company has Puerto Rican subsidiary. In the past, employees of P.R. sub participated in the U.S. DC plan. Recently, the P.R. sub established its own P.R. DC plan, and its employees no longer participate in the U.S. plan - but they still have account balances in the U.S. plan. The parent company would like to spin-off P.R. assets/liabilities that are in the U.S. plan and merge them into the P.R. plan.

Question: Are the issues here the same as if the merger were between two U.S. plans? If not, what are the differences?

If an employer is part of a contolled group, must ADP testing include employees of the contolled group?

We're doing an estimated Average Benefit Test for 2004 and will use a "snapshot" date of 12/31/2004. There is 1 DB and 2 DCs in the testing group.

In Section 3.04 of Rev. Proc. 93-42 there is mention of a needed adjustment to the ratio percentage and nondiscriminatory classification percentage to compensate for relative differences in the turnover rates among eligible HCEs and NHCEs.

The Rev. Proc. doesn't seem to mention a similar adjustment to the Average Benefit Percentage ?

Could this be correct ??

I am looking at the 1.401(a)(4)-12 definition of Plan Year Compensation under Section 5 "Special rule for new employees".

Calendar Year Plan

Effective Date = 1/1/04

Comp = Plan Year

Testing Comp = 3 Yr Ave based on Service (rather than Participation)

Testing Date 12/31/04

An participant was hired 7/1/02, 1000 hrs each yr, so there is actually 2.5 years of comp history.

Question: To determine ave comp for testing, can I add the entire comp history and divide by 3 (as long as the method is applied uniformly)?

In calculating the reduction in the 100% of compensation limit for a DB plan under IRC 415, what are the requirements for a year of service. The plan requires 1000 hours of service for a year of vesting service but only 500 for a year of accrual service. The owners daughter worked 700 hours.

How long after termination of a defined contribution plan are you entitled benefits. I know someone who never received notice of termination due to moving to another city. Apparently this happened a few years ago, and she wants to track down her funds.

can someone explain how loans in DB plans operate? my main question is how do you account for it if there is no account balance?

We have a client that has been purchasing life insurance in it's DB plan. The client has been purchasing up to a face amount of 100 times the projected accrued benefit.

The client has decided that the principal has enough life insurance and wants to stop purchasing. What are the clients options? Obvisously the plan must be amended to eliminate the use of life insurance, but what can be done with the life insurance in the plan now? Any suggestions?

Plan is a PSP with annual valuation date (12/31). Distribution section re terminated participants states that upon particpant's election account balance will be payable upon the Anniversary Date that coincides with/ or is on/after the date of participant's termination of employment. SPD says the benefit will be distributed as described "as soon as administratively feasible". Given that the annual valuation takes some time to get together it is not unusual for a number of months to go by after year end before a participant's account balance can be determined. Regardless, participants want their $$$$ now and some even demand interest to be paid from 12/31. Plan typically denies such a request. Are there any recent rulings, cases, etc.... which address specifically the payment of interest issue? My gut is that the "administratively feasible" threshhold is determinable on a plan by plan basis and is probably like trying to define "reasonable"..... Thanks for any help.

Does anyone see a problem with a Plan Sponsor who amended his plan last year to remove loans (to allow one participant to take a hardship distribution) amending the plan this year to allow loans (because he wants one)?

The October Special Edition employee plan news talks about extension for tax filing and contributing to SEPs and SIMPLEs. http://www.irs.gov/pub/irs-tege/se_1004.pdf. But I can’t find anything that states whether the deadlines for establishing the plans were also extended. Are you aware of any such provisions?

the Consumer Price Index numbers for the last quarter are:

189.4 189.5 189.9 (Sept was released today)

so according to my notes next year's comp limit should be 210,000, 415 allocation is 42,000, db limit 170,000, key ee 135,000 and hce at 95,000.

of course, I could have something built into my spreadsheet which is wrong and things will stay as is.

I imagine they will announce the numbers at the ASPA conference next week.

If a plan has terminated, all participants have been paid out, and a very small balance (<$10) remains in the forfeiture account, can this be returned to the plan sponsor/employer instead of reallocating to participants?

It is my understanding that if a DC plan has QJSA as a distribution option, then the participant's spouse must consent to the distribution. The only exceptions to this that I've been told is if the participant's vested account balance is less than $5000, or if the spouse cannot be located. What if we had a situation where the spouse was incarcerated, and the participant states that they cannot obtain consent for the distribution? The participant knows where the spouse is located - would consent still be required? Thanks for your help!