katieinny

Certainly, there are situations where the Alternate Payee's benefits must remain in the Participant's plan until the "later of" date is reached, but if this plan allows for immediate distributions, can the QDRO specify that the assets shall remain in the plan until requested by the AP at some later date?

We already know that their elective deferrals can vary, but when it comes to the profit sharing contribution their expectations are all over the map. We're considering the following arrangment, although we realize that it's probably more work than it's worth. Extra work aside, I'm wondering if it will work for plan purposes. The doctors have set up separate S-Corps for themselves. Then they set up a management entity for the staff and other overhead expenses. The management entity has a 401(k) plan and the S-Corp doctors will be participating employers in that plan. Then the doctors will decide on a profit sharing contribution, let's say 10% of comp. Then, each doctor will adjust his/her own W-2 compensation so that he/she will get 10% of a lot, or 10% of a little. Is there anything about this type of arrangement that the IRS would find fault with?

An employer has an existing SH plan. The company will be hiring a new group of employees that will be in its own class, e.g., trainers. The company doesn't have any trainers now. The employer wants to exclude this classification of employees from the plan. Excluding the trainers won't cause the plan to fail coverage, but I'm wondering about the Safe Harbor aspect of the plan. I'm thinking that this group must get a Safe Harbor contribution once the age and service requirements are met, even though they might be excluded from getting any additional discretionary contribution. Am I right?

According to EPCRS, Section 13.04, "If the Service and the Plan Sponsor cannot reach an agreement with respect to the correction of the failure(s) or the amount of the sanction, the plan will be disqualified........" Is there an appeals process that can be initiated at that point?

So, you're saying that if the employee is already eligible for an employer contribution, it's too late to waive. If he hasn't met the eligibility requirements, there's still time. Are you thinking that the employer might object to allowing a waiver because it could start a trend among new hires, or because of testing -- or both?

A newly hired employee would like to opt out of the ER's 403(b) plan. Not only does he choose not to defer, but he'd rather receive more compensation than an ER contribution to the plan. I know that under a regular DC plan, the ER would have to adopt a volume submitter or individually designed plan to allow this, but 403(b)s aren't available as prototypes and don't have the same submission process -- at least not yet. I tried the 403(b) Answer Book, but couldn't find anything.

That's good news. So if they adopt an amendment allowing for in-service distributions at age 62, the MP assets can be distributed? Or, is it something that automatically went into effect and therefore doesn't need a plan amendment?

Okay, but once the participant reaches NRA, the distribution can be processed if he or she is still working?

A money purchase plan was merged into a PS/401(k) plan several years ago. The MP plan did not allow for in-service distributions. The PS/401(k) plan was recently amended to permit in-service distributions after age 59 1/2. Will the participant be permitted to take an in-service distribution from the entire vested balance?

This prototype (not Corbel's) put the 4 step formula in the basic plan document -- it's no longer a choice in the adoption agreement.

Okay, thanks. Unfortunately, the language is in a prototype basic plan document, so not likely to get changed. At least I know that it's the plan that's at fault and not me.

Bird: You're right, I was counting the SH contribution as the first step, but I'm wondering why it isn't the first step. As long as that first 3% contribution meets all the safe harbor and top heavy requirements (e.g., no allocation conditions, based on full year's comp.) why doesn't the next step get into the integrated calculation? Instead, the next step (which is really step one) is another 3% contribution across the board, then the step after that gets integrated, just as you said. It boils down to everybody getting 6% up front before integration kicks in. I follow your logic -- 2 contributions and 2 formulas (SH and PS). So, is it a faulty plan design -- or do I need to adjust to the fact that everyone gets 6% in an integrated, top heavy, safe harbor plan?

Yes, there is an additional PS contribution -- that's the part that's integrated. I agree that the top heavy rules apply when additional contributions are made, but that doesn't mean that the safe harbor contribution doesn't satisfy the top heavy contribution requirement. I agree that you have to be careful about including a full year's compensation. I'm just trying to figure out why the extra 3% step is in there, which gives everybody 6% instead of 3%.

A TPA is trying to use a document's 4 step excess integrated allocation formula, but is confused about why a 3% contribution is allocated twice (steps 1 and 2) instead of just once before getting to the integrated part of the formula. If the 3% non-elective safe harbor contribution satisfies top heavy, why are these participants getting 6%? I've looked at Notice 98-52. Section VIII,B says that "safe harbor non-elective contributions may not be taken into account under any plan for purposes of section 401(l) (including the umputation of permitted disparity under section 1.401(a)(4)-7)." I think that's saying that the 3% non-elective contribution must be allocated without being integrated, which is fine. But that doesn't mean that it can't be used to satisfy the top heavy contribution requirement. Am I interpreting that section incorrectly, or is there another section in 98-52 that I'm missing? Section VIII,C specifically says that "if a plan allocates to all eligible employees a 3-percent safe harbor nonelective contribution, the plan generally would also satisfy the top-heavy minimum contribution requirement." There's no exception mentioned for integrated plans.

Gary: Thank you for confirming my thoughts. I tried the link, but I don't think it went to the right place.

The individual has sole proprietorship income from a consulting business. He also has 23% ownership in another business and gets a K-1. The CPA tells me that the tax program is including income from both sources when calculating the SEP contribution. I don't think the K-1 income should be included. That business does not have a retirement plan and no one else is getting a contribution. Does anyone disagree?

In the case of non-electing church plans, I wonder if the same restriction on transfers from a qualified plan to a 403(b) applies?

I've asked for the plan documents, but until I see them I can't be sure if there's simply an account, or if a second plan really exists. I was told that a plan document was completed with the second vendor.

I'm still gathering information (such as copies of the plan documents), but I think the HCE that set up the second plan is the person authorized to sign the plan document(s). The reason this came up is because the big insurance company said the HCE can't do that. I can see why they wouldn't want him to do that, but "can't?" The only thing I can think of is that maybe the company is limiting the employee investments to the big insurance company, in which case the HCE couldn't go elsewhere. But I thought employees could move their 403(b) accounts around, but now must have an information sharing agreement.

A not-for-profit company has their 403(b) plan with a large insurance company. One of the HCEs decided not to invest there, so he set up a 403(b) (including a plan document) with another investment firm and his assets are invested there. First, assuming the 2 documents have identical provisions, is that acceptable? If that's not acceptable, I recall that plan participants have the ability to invest anywhere that will accept 403(b) assets. However, would there have to be an information sharing agreement between the 2 investment providers?

We sponsor a prototype document and many clients have adopted our plan over the years. Now that we are gearing up for restatements, we have written letters to all the clients on our plan list, and we've requested a reply. Of course, there are a handful of clients who have ignored our first and second letters. Our third letter will tell them that we will no longer sponsor their plan in accordance with Rev. Proc. 2005-16, Section 10. The last sentence of that section says that we must also notify EP Rulings and Agreements. My boss thinks that requirement is no longer applicable. I wondered what other sponsors are doing in a similar situation.

I can see the value of Information Sharing Agreements for a plan with more than one participant, but I'm restating a plan for a one-man not-for-profit. Does he need to get one of these signed for each vendor he uses for his plan assets? He doesn't have a loan or hardship provision in his plan. By the way -- since our firm is restating his plan, do we need to have an Information Sharing Agreement with him, too?

Thank you. I was able to find reference to a person over age 70 1/2 being able to establish a SEP. I thought it might be safe to assume (is it ever safe to assume?) that a SIMPLE might work the same way.

I'm wondering if the under age 70 1/2 IRA rules apply to a person wanting to set up a SIMPLE IRA.

Are HSA accounts similar to retirement accounts in that they are protected from creditors? What about a tax levy? Can you point me to something in the regs?