If we complete the 401(k) and 401(m) Non-Discrimination tests by disaggregating the 1 year age 21 participants do we have to do the same for the 401(a)(4) test?

Does anyone have any creative ideas on what to do with the ERISA Outline Book (EOB) once the new edition arrives each year? We order new sets every year and have a nice backlog of older editions sitting around. They really take up too much room to hold onto "just in case", and yet it seems really wasteful to just toss them into the dumpster once January arrives. I guess this applies to all annually updated reference material, but the EOB is so big that space is the biggest problem with older editions. I was curious as to what everyone else does?

Both Code sections 403(b)(3) and 415©(3)(D)(ii) add back section 125, 132(f), and 457 deferrals into compensation. The language contained in the statutes is pretty broad. Section 415 says "The term 'participant's compensation' shall include... any amount which is contributed or deferred by the employer at the election of the employee and which is not includible in the gross income of the employee by reason of section 125, 132(f)(4), or 457."

Neither the statutes, nor the Committee Reports to SBJPA and TRA 97, distinguish between deferrals under Code sections 457(b) and (f), and I haven't been able to find any official guidance from the Service.

Does anyone know of any informal guidance on this?

Thanks.

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I have a pooled profit sharing plan that has > 50% of their plan assets in a Money Market Account (I'm not sure who the investment advisor is). Line 4i asks if more than 20% of the assets are in a single security, debt, mortgage, parcel of real estate, or joint/venture interest. We generally do not count Mutual Funds as a "single issue" since they are invested in many other stocks when answering this question but are unsure about Money Market accounts.

Can the employer change designated financial institutions during the year or must the employer wait until January 1st to make the change?

If we have a DB & DC plan that is aggregated for 410(b)/401(a)(4) and general tested together for (a)(4) discrimination, do the 401(k) deferrals get reflected in the DB's MVAR at all ? I believe the deferrals are included in the NAR for ABT (unless there some disaggregation option available ??) Thanks for any input.

A health FSA has 47 participants and the employer is the named plan administrator. Employer processes the payroll and the salary reductions, but the reimbursements are made by submitting the reimbursement form to an outside company who cuts the reimbursement checks. (This outside company is in the business of selling insurance and performing limited benefit services such as this.)

I know that the HIPPA privacy rules exempt health FSAs with less than 50 if they are self-administered. I hope this plan qualifies for the exemption--any thoughts???

I have just heard a contention that HIPAA does not allow an employer to destroy medical records and reports of an employee. The employer contends that, under HIPAA, the company is obligated to maintain such records and reports indefinitely. My reaction is that such employment records (as opposed to medical records) are not subject to HIPAA and the treatment of such records is an appropriate subject for bargaining between the employees and the company. I'd appreciate hearing another opinion.

I have a takeover plan which previously used a DATAIR Volume Submitter Document. There are no age or service requirements. The Entry Date is defined as "The first day of the Plan Year coincident with or next following the date the eligiblity requirements are satisfied, but in no event later than six (6) months after satisfying the eligibilty requirements." What does this mean? When would an employee hired between January 1st and July 1st enter the plan?

Thanks a ton to anyone who can help.

I've seen the thread on this message board regarding the ADP/ACP tests and HCEs with no comp and no hours What do you do if you have an HCE/Owner who took no comp for cash flow reasons but worked over 1,000 hours??? The owner of the company took no compensation for the year because of cash flow issues.

$0 comp/$0 deferrals isn't equal to 100% IMHO. The goal is to include the owner as a 0 deferral and sole member of the HCE group by invoking the top paid group. Can this be done? Anyone?

Here's the situation. A new profit sharing plan is established for 2003, the 100% owner's 90 year old grandmother is a participant. The only money in her profit sharing account as of 12/31/2003 is her share of the receivable employer contribution for the 2003 plan year (let's say it was $2,000) which was not deposited during 2003.

So for distribution calendar year 2004, is her adjusted account balance as of 12/31/2003 zero, or $2,000?

I am beginning to think zero.

Here's why.

ASPA ASAP No. 02-10 says that "Contributions allocable as of the valuation date but not deposited until the following year need not be included."

The 1987 proposed regulations were very clear on this matter. F-2 A(b) "The account balance is increased by the amount of any contributions and forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. Contributions include contributions made after the close of the valuation calendar year which are allocated as of dates in the valuation calendar year."

The final 401(a)(9) regulations say: A-3. (a) In the case of an individual account, the benefit used in determining the required minimum distribution for a distribution calendar year is the account balance as of the last valuation date in the calendar year immediately preceding that distribution calendar year (valuation calendar year) adjusted in accordance with paragraphs (b) and © of this A-3.

(b) The account balance is increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. For this purpose, contributions that are allocated to the account balance as of dates in the valuation calendar year after the valuation date, but that are not actually made during the valuation calendar year, are permitted to be excluded.

This really doesn't seem to apply to an employer contribution allocated as of December 31 but deposited in the next calendar year.

And finally, the preambles to the final regulations say under Calculation Simplification: Contributions and distributions made after December 31 of a calendar year are disregarded for purposes of determining the minimum distribution for the following year.

I have a question regarding the allocation of NCP contributions where 2 owners (#1 & 2) want to receive $40,000 and are in the same group but do not have the same salary.

Example: Owner 1 - $200,000/Owner 2 - $100,000/Owner 3 - $75,000/Owner 4 - $75,000

In order for owner 2 to receive $40,000 a contribution of 40% of salary would need to be made to the plan. This would cause Owner 1 to exceed the 415 limit. Can owner 1 just be capped at $40,000 or does the excess he would have received if there were no 415 limit have to be reallocated to the remaining participants in the group?

My thinking is they need to determine the total dollar amount that would be required to get Owners 1 & 2 to $40,000 after the reallocation of any excess of Owner 1.

The plan uses a Corbel Volume Submitter which indicates that any amount in excess of the 415 limit "may" be allocated to other participants. My concern is that it does not indicate that the excess "must" be allocated.

Any thoughts would be appreciated.

Plan is top heavy. Safe harbor nonelective contribution is 3% times compensation since mid-year entry. No other contributions are made and there are no forfeitures. Under Rev Proc 2004-13, is the plan deemed to satisfy top heavy?

A plan is amended to provide for an early retirement window in 2004 ; those who opt for the window can also take their benefit as a lump sum - everyone takes a lump sum and is cashed out in 2004.

Utilizing Rev. Ruling 77-2 you decide to reflect the window amendment on the 1/1/2005 valuation.

Question : Assuming an immediate gain funding method, how would the amendment base be defined on 1/1/2005.

If an employer establishes a SIMPLE IRA on October 1, must it match salary deferrals (up to the 3% limit) for the whole year? Seen any IRS guidance on this?

Is anyone familiar with such plans. I'v been asked what the deferral limits are. I read the statute and it sounds like a 401(k) plan, including reference to IRC 402(g). According, I assume under EGTRRA the limit is $13,000 in 2004. Is this correct? I assume the plans are maintained by not-for-profits, but would appreciate more information.

A safe harbor plan provides for a true-up of the match at the end of each year. The employer would like to true-up only for the employees who are employed on the last day of the year. Is this doable? Does this approach violate the requirement that an HCE's rate of match cannot be greater than a nonHCEs rate of match? Some HCEs will obviously get the true-up while some HCEs who terminated will not.

Put another way, does the plan comply with Code section 401(m)(1)(B)(iii) that provides that the matching contribution with respect to any highly compensated employee at any rate of elective deferrals can not be greater than that with respect to any employee who is not a highly compensated employee.

Company A and Company B both participate in the same MEP. Company A purchases Company B in Feb 04. Company A added the predecessor employment verbiage in the Adoption Agreement for YOS to count for eligibility.

1. Do we test Company B for nondiscrim and coverage (and file Schedule T) from 01/01 up to the sell date?

2. If yes to the above question, is a 'short plan year' indicated on the Schedule T for this client organization (CO)? If so, is this due 7 months after the merger date?

I know this has been answered before either in this site or the Gray Book but I can't get hold of the answer. And if I remember right, the IRS has flipped-flopped on the answer.

Here is the case: Husband and wife (Owners) participate in a DB; all others (including their kids) participate in a DC with a 401(k) feature. Can the owners contribute to the 401(k) without triggering the 25% 404 limit? Thanks.

The company I work for has over 100 employees. We have a 401(k) and use the prior year method. According to the ADP/ACP report for the year 2002, we failed the test and refunded money to the owners. As I understand it, the ADP for 2002(4%) will be used to determine whether we pass the ADP test for 2003.

Our TPA now says the ADP for the employees is 6% because the law allows us to exclude those employees who have not been with the company for at least 1 year.

Based on the 6% we would pass in 2003. It does not seem right to me. Our 2002 report says the ADP is 4% and now he says its 6%. I am confused.