austin3515

My recollection is that the reg says "received directlly from a regulated financial institution..." But it's been a long time since I looked into it.

Did your old document include the 20 hour a week exclusion? Perhaps you could argue that it was always your intention to have the exclusion, that's the way it was always communicated to the employees, etc. Some attorney might conclude that it was a scrivener's error and do a retroactive amendment. I've seen others "work around the issue." If someone could conclude that you sure could save yourself a lot of dough - money which could be spent on whatevver good works your organization does... But let's say you can't work around it: 1) These people should not affect your ACP test because you generally exclude people who never worked 1,000 hours a year from the ACP Test. 2) Your bigger problem is the fact that you told these people they could not deefer, when in fact they could defer. For that you're supposed to contribute 50% of the average contributions of all the employees, plus 100% of the match. P.S. Merge the plans before 12/31 (assuming calendar year)!!

REally just a disclosure that says who is holding the money (i.e., John Hancock) and how much that company is holding.

Sure you can send them to the sponsor to hand out. But then you need to satisfy the small plan audit waivers differently by providing additional disclosures in the SAR. The only way to get out of the additional disclosures is if the registered investment company is sending statements directly to the participants. So that is where you compliance department is coming from.

"How is this not a simply a discretionary match? It sucks the same as any other discretionary match." Typo? I agree though, if the match is discretionary you can base it on anything you want. All the IRS cares about is that the amount is allocated in accordance with the terms of the plan.

Are there any amendments due before year-end for Corbel prototypes? I think I would have known, but I can't recall a year without any amendments...

Hopefully ASPPA can get this onto a bill somewhere to make this ridiculous rule DOA.

LEt's hope the same thing happens to this that happened to gap-period income... And in my opinion, the ability to use the forfeitures for the discretioinary matches is of little consolation, although it helps. There will be plans that do not include the option for any additional matches, and there will be plans that do not allow forfeitures to be used for expenses. For those plans to be forced into a top-heavy minimum just because they had a bad TPA is absolutely unfathomable. But that is absolutely going to happen at least often. And I just dread telling a cash strapped client that they can't use forfeitures to reduce their already generous contribution. That will go over real well...

The issue is that QNEC's must satisfy THIS requirement included in 401(k)(2)© © which provides that an employee's right to his accrued benefit derived from employer contributions made to the trust pursuant to his election is nonforfeitable, and I think the latter part of this sentence is irreconcilable with a QNEC, since a QNEC is NOT made pursuant to "his election." What's more, it is found in the 401k section of the code. to me, the clear and obvious point of referencing 401(k)(2)© was to make the QNEC 100% vested. Any other extrapolation is just nonsensical. Worst policy decision I've ever seen, and I'm taking gap income into account!

I think that's a beautful description, but it won't exactly fit I went with "IR 2011-87 (Hurricane Irene)" based on the assumption that anyone "checking into this" will know what I meant.

SO does that mean we all agree to report it as unrealized appreciation for real estate? Would be odd since the value of real estate won't be any different... And there is no "other expense" - only "other Administrative Expense."

And where would I report on the 5500?? If I call it expense, it's going to look like I need a schedule C. But real estate only has "unrealized gains/losses". I suppose other expense?

Plan owns a building that sustained damages related to snow, and much of the expense was not covered by insurance. I assume this would not go on the schedule C, becaus they were not providing a service to the plan, but wondered if anyone had some authority they could provide. I can't see how replacing a roof could be a service, but if there was something I could point to... Also, I don't see a service code for construction, I suppose I could pouint to that!

2. Mistaken and obsolete carry over concept from taxable employer deduction limit. This was my guess too... I suppose the 415 limit issue would be an obsolete carryover to from back in the days of the 25% limit. So long ago now, I can't even remember if 401k counted towards that limit? I was wee senior associate at an acconting firm back in those days!

Why in the heck would a plan impose such a limit?? I agree that it's legal (I looked in a few other places), but I need to know why!! IT's gonna drive me nuts until I get an answer!!

Someone just told me there 403b plan limits their contributions to 20% of pay. Corbel's 403b does mention that the "salary reduction agreement may reference minimum and maximum deferral limits." I was surprised by this because of universal aviailibility. Is it OK to limit contributions? Someone making $20,000 will be limited to $4,000 of deferrals. Does that cause a problem?

I thgink that was my recollection too. Next question - can I still use 11g to amend to correct? Client is in hurricane irene zone... Plan ye is 12/31/2010.

That would be a fabulous answer... I will check it out thanks!

Facts Owner owns Company A and Company B. Company A employs 5 employees. Company B employs those same 5 employees. Company A sponsors a safe harbor 401k Plan which excludes HCE's from the 3% SHNEC. Owner has earnined income from ONLY Company A (Company B is an S-Corp and he did not take a w-2) Plan Year Ended 12/31/2010, and therefore it is too late to make a -11(g) amendment. Question: Is there anyway I can do contributions for Owner in Company A's plan? Or is my best course of action to have Owner not benefitting in the Company A's plan. I note that Plan A passes coverage since all employees of the controlled group are benefitting. But I'm wondering if I have a definition of compensation issue (since half of the employees comp is excluded, and NONE of Owner's comp is) that would require general testing on the SHNEC.

It makes no sense to you because you are an intelligent person. The issue is that QNEC's must satisfy THIS requirement included in 401(k)(2)© © which provides that an employee's right to his accrued benefit derived from employer contributions made to the trust pursuant to his election is nonforfeitable, and It's just an insane interpretation in my opinion, especially when condiered that it is a cross-reference to 401k!! So whoever drafted this section was thinking about 401k contrbiutions, NOT QNEC's. Whatsmore, a literal interpretation of this section is ridiculous because a QNEC is irreconcilable with the end of the sentence. A QNEC is not made pursuant to an employee's election. So I'm left with no other conclusion other than the IRS wants to make life more difficult for small business owners. The clear intent of the cross-reference was the nonforfeitability requirement. A logical persopn of sound mind could reasonably intepret this to apply to a QNEC contribution at the time of allocation. Sure someone else could reach a different conclusion, but it is encumbent upon rulemakers to consider the impact of their actions. I see so little of that from the IRS (or the DOL... no wait, especially the DOL) when making decisions.

PS - Anyone who posts on this message board as though their clients are not going to be infuriated about this policy doesn't have the same kind of cost-focused clients that I do. When I tell my client that they have a $30,000 safe harbor deposit, oh and by the way, they need to allocate an extra $7,500 in forfeitures as a matching contribution, they are going to go ballistic.

OF course I would never let my example happen in the real world. But the point is the forfeitures should be able to be used to offset the only contrbution that is intended. I mean really, what is the policy agenda being fulfilled here? Are the employees really being disenfranchised by using forfeitures to reduce the deposit required to fund an already generous benefit? I believe some version of my example is going to play out somewhere in this country, perhaps several times a year. And the outcome will be plan termination. So I ask you, who does this serve? You know, you hear about all of these unfriendly business policies. This is such a perfect example of that. And unfortunately, it only imacts small businesses who don't donate enough to political campaigns to make a difference.

I'm comfortable trusting Corbel. If they find out they're wrong, they'll let me know. Practical question regarding their ridiculous provision: -Plan is intended to be a SH Match plan, taking advantage of the TH Exemption. -Plan has forfeitrues of old regular mach money of $1,500. -Plan expense do not exceed $1,200 for the entire year. -So now, there is $300 of forfeitures which must be allocated -Plan document does NOT inlcude any additional discretionary match. -There are 100 eligible employees not deferring. In this situation, the $300 needs to be allocated out as profit sharing, and a top-heavy minium of 3% must be provided to the 100 non-deferring employees, right?

This is Corbel's position, which I like much better "The IRS has reviewed and approved these documents. Employers who properly adopt these documents are entitled to rely on those approvals. In part, this means that while the IRS could require prospective changes, it cannot retroactively disqualify the plan for failure to follow the law. That reliance should be valid until the employer restates for PPA on a prototype or volume submitter document that does not include the offset language. For prototype and volume submitter plans, the likely restatement time period will be between April 1, 2014 and April 30, 2016, but the IRS will announce the actual period closer to the time. "

There would but, the question is, is it an prohibition on using forfeitures for Safe Harbor? Or just tha tif you do CHOOSE to use them you need to do a THM. My point is just that the SHNEC will take care of most the THM anyway. And Sieve, Corbel is saying that because we all have our opinion letters, that we can continue to use our documents as written. The new LRM's are really the first authoritative guidance released and will only affect the PPA docments in 2014.