austin3515

Oh and I forgot about the recent Q&A where they indicated that prime + 2 is what loans should bear for interest. Because for the last 30 years, prime plus one has wreaked havoc all across the country. That extra 1% will really save the world...

In addition, except as provided in paragraph (g) of this section, a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of §1.401(k)-1(b) if it is amended to change such provisions for that plan year. Thank you for providing the reg citation. I think it underscores beautifully another wild interpretation of a simple rule that has wide spread and dire implications for the retirement plan community. I am of course adding this to the list that includes the fact that forfeitures cannot be used for Safe Harbor Contributions. I don't know who is to blame for all of this non-sense, but I'd like to have a word with that person!!

IRS response. Presently the only exceptions for changes during the year are those identified in Announcement 2007- 59. The IRS will discuss this issue further from the podium Am I crazy, or is this just a false statement. 2007-59 only says that a plan will not be deemed to have impermissibly amended the plan soley because they amend for Roth or hardships. They did not say "and anything else will be deemed to violate that rule." In fact, they lend credence to the interpretation that certain amendments are OK. For the eligiblity question in the cited Q&A, I think that there is a very clear argument that that amendment affects the safe harbor provisions because it changes who is eligible to receive the safe harbor. But by adding profit sharing, I'm not changing anything related to the safe harbor. And realistically, would a plan really be disqualified/penalized because an employer wanted to give their employees more money?

I know this has been done before, but I think it's good to keep talking about it Safe Harbor Plan has no profit sharing option. Am I barred from adding a profit sharing feature? I know the IRS has taken a hard-line interpreting the 401k regs regarding amending SH Plans, but is there anything beyond public statements from IRS officials supporting that strict of an interpretation? I'm aware of the notice that was released regarding the permissibility of adding hardships and Roth, but that notice left the door open for other changes as well. 　

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.