austin3515

So what you are saying is that in my example, we cannot shift deferrals to the ACP test for only the NHCE's to make the [edit: ADP]test fail by more, resulting in additional deferrals being reclassified as catch-ups, correct? Put another way, even though there are unused catch-ups, there is no way to recapture the catch-ups by shifting NHCE deferrals? Thanks Tom!!

The quesiton references that the shifting is being done AFTER recharacterizing excess deferrals as catch-ups. Do you want to read through one more time? I just think it veyr clearly states that this is the case. Also, the question that follows clearly suggests that a passing grade is not a requirement to use shifting.

You don;'t think the IRS Q&A gives the green light for shifting even a failed ADP test, provided you shift for both HCE's and NHCE's? I thought that was pretty plainly what they said. And yes there is only one HCE. Funny you should mention that because here in the office we had that same conversation about how this clearly backfires with more than on HCE.

ADP test fails and just $2,000 is reclassed as catch-ups (leaving $3,500 "available"). The IRS came out once before and said that if the test is failing you can still use shifting, but now you must shift for both HCE's and NHCE's, because the "plan is passing right at the passing percentage." See questions 15 and 16 of the attached. The question is, can we shift elective deferrals over to the ACP Test in order to increase the amount reclassified as catch-ups, thus avoiding the need to shift any HCE deferrals? Shifting___ADP_Test_Failed_IRS_Q_A.pdf

Let's say you pair a 403(b) Plan with a 401k covering just the HCE's. Let's say there are two HCE's, one of whom is an office making more than the officer threshhold, and is therefore a key-employee. Assume further that more than 60% of the assets in the 401k plan are allocated to the key employee. Is there any opportunity to aggregate the 401k and the 403b?

I mostly post in the 401k voard. Not sure if this is the right board but I'm trying to findout if there is a text book regarding the long term disability insurance claims process, such as information on important case law and regulations. In 401k world we have Erica outline book, which codifies almost everything you would want to know... Anything like that for lt disability?

Small overpayment in a 401k plan. I know I send a letter asking them to repay the overpayment, and tell them that the amount was not eligible for rollover. Do I need to issue a 1099 showing taxable income for the amount not eligible for rollover if I know they rolled it over?

Not to be fresh, but just going out on a limb here, I'm guessing he has no money.

Let's say hypothetically we amended the plan to allow for it. Would that be a permissible amendment?

100% Owner of the business wants the plan's admin for two quarters (around $1,000) paid from just his own 401(k) plan account. Does anyone see a problem with this? I think it should be treated as a taxcable distriubtion to the owner considering the circumstances. It just smells like an in-service distribution disguised as a fee.

Many agreements say $x.yz will be deducted each paycheck, and make no mention of what happens if there is no check. I agree, I would amend to allow payment by check.

Of course I'm sure my client would be more than happy to collect checks from these people. But that could give them more leverage to double up when they get back (i.e., because you never sent your payments in, now we have to get you caught up).

Have a client where they lay people off over the summer. The people are generally brought back in September (work load follows the school year). Many have loans. Has anyone come up with a good way to address this problem (i.e., they systematically end up behind on their loans). Doubling up payments when they get back is one that comes to mind, but that can be a tough sell for some employees. Reamortizing the loan every time they leave doesn't appear to be a great solution either seeing as how the recordkeepr chargers a new loan set up fee every time we do that. Anything?

I hope those big players are going to give an earful to their congressman on this train wreck!! I heard ING had a very similar outcome, though not on that scale.

"The final rule provides in this regard that participants and beneficiaries must be furnished the required information on or before the date on which they can first direct their investments" This seemed to be in response to an extreme situation. The preamble section I referenced, on the otherhand, would have to be interpreted to be the "winning" interpretation. They said, in no uncertain terms, everyone must get the notice.

Article from BL Newsletter today (headliner, actually): http://www.businessofbenefits.com/2012/08/...+of+Benefits%29 But the preamble to regs, found here, seems to directly contradict Toth's conclusion. Does anyone disagree? Don't get me wrong, I think he is reading the REGS correctly (I made the same case a month or so ago), but it's just not consistent with what the DOL has said in the preamble. http://www.thefederalregister.com/d.p/2010-10-20-2010-25725 Several commenters suggested that the Department clarify, and in some cases modify, the scope of the proposal as to the specific participants and beneficiaries of covered plans to which the rule applies. The proposed rule required disclosures to each participant and beneficiary of the plan that ``pursuant to the terms of the plan, has the right to direct the investment of assets held in, or contributed to his or her individual account.'' The question presented by the commenters was whether disclosures must be furnished to all eligible employees or only those who actually participate in the plan. Consistent with the definition of ``participant'' under section 3(7) of ERISA, disclosures must be made to all employees that are eligible to participate under the terms of the plan, without regard to whether the participant has actually become enrolled in the plan. One commenter recommended that the proposal be modified to require initial disclosures to all eligible employees, but limit annual disclosures only to those that actually enroll, make contributions, and direct their investments. The Department has not adopted this recommendation. The Department believes that, with regard to employees that have not enrolled in their plan, the annual notice will serve as an important reminder of their eligibility to participate in the plan. With regard to notification of beneficiaries, however, the obligation to disclose extends only to those beneficiaries that, in accordance with the terms of the plan, have the right to direct the investment of assets held in, or contributed to, their accounts. Such rights might arise as a result of the death of a participant or pursuant to a qualified domestic relations order. (edited font size and added federal register link)

To me, this logic equates to the same kind of tenuous logic used to conclude that forfeitures cannot be used to reduce Safe Harbor contributions and QNEC's. OK, I can see the basis for the conclusion (401© refers to 404, 404 to 414, 414 to 401a17), but that seems way too indirect to ignore commonly accepted understandings of the rules which have been consistently applied for the same 30 year period you reference, UNTIL the IRS issues formal guidance to the contrary (as they chose to do with QNEC's/forfeitures). In fact, Line 6 of the worksheet reads "Multiply $230,000 by your plan contribution rate (not the reduced rate)" which I believe supports our position that no reduction below the max comp limit is required. Wait a miniute, if you put $650,000 on Line one of the worksheet, won't you get the outcome we are suggesting?? Please let me know how the worksheet comes up with a different result here.

Are these effective yet? I'm not seeing it in any of the disclosures. I have to assume that it is just not effective... I love that the disclosures must include a graphical representation of the glide path. Very very realistic. The following is from the Sungard write-up of these proposed regs. They have not released anything on these yet. This is the tenth in a series of Technical Updates regarding the participant fee disclosure regulations published in October 2010, and generally effective for plan years beginning after October 31, 2011. This Technical Update explains the proposed regulations relating to target date funds (TDFs) and to qualified default investment alternatives (QDIAs) published in November 2010, and how these proposed regulations will impact the participant fee disclosure regulations. Q-1: What is the proposed effective date of the proposed regulations discussed in this Technical Update? The DOL has proposed that the regulations will be effective 90 days after publication in final form.

I would like to point out that no one does it any other way, at least that I have ever met (I can say that having never met mbozek).

mbozek - Are you suggesting that the allocation rate is not ~13% (32.5/245)? The starting point is 650K, so all the match you mentioned brings it down to $600K (I didn;t do the math), but it's then that you would apply the max comp limit. I seem to recall some discussion of some obscure literal interpretation of the rules that might suggest your approach, but I have never heard of anyone actually applying the limit as you suggest.

I think perhaps AJM missed the comment above.

09 IRA distributions made for purchase of a first home, up to $10,000 I just had this conversation with an employee in the office

I'm not a personal financial planner, and as such it is none of my business, but if for example the extra money would make the difference between losing your home today or maybe losing your home in 6 or 8 months, I would think a rational person might conclude that getting around the withholding would serve their interests quite well. Or perhaps it means you can get the medical treatment you need versus not getting the medical treatment you need. Long-term financial planning is a luxury only available to those with positive cash flow.

Should I feel guilty about telling participants that they can get out of the 20% withholding requirenment by rolling to an IRA first and then closing their account. I don't advertise the option, but, as an example, I'm currently dealign with a Totally and Permanently disabled participant who is in what you might call dire straights. And that IS what the rules say.

I'm proposing creating an allcoation period from 1/1/2012 - 8/31/2012, and then another period from 9/1/2012-12/31/2012. You're answer is of course correct - it's just not what the client wants to do. Am I being too cavalier with this?