austin3515

(4) Final plan year. A plan that terminates during a plan year will not fail to satisfy the requirements of paragraph (e)(1) of this section merely because the final plan year is less than 12 months, provided that the plan satisfies the requirement of this section through the date of termination and either— (i) The plan would satisfy the requirements of paragraph (g) of this section, treating the termination of the plan as a reduction or suspension of safe harbor matching contributions, other than the requirement that employees have a reasonable opportunity to change their cash or deferred elections and, if applicable, employee contribution elections; or (ii) The plan termination is in connection with a transaction described in section 410(b)(6)© or the employer incurs a substantial business hardship comparable to a substantial business hardship described in section 412(d). 410(b)(6)© relates to changes in the controlled group, like an acquisition. Therefore, the plan must either finish its 12 month year, or terminate IF THEY SOLD THE STOCK OF THE BUSINESS. If it was an asset sale, I recently learned that it would probalby be OK to simply terminate the plan effective 12/31/2011, since the plan year will still be 12 months, even though there are no employees for the remainder of the year. There is no such thing as a "de facto" termination. But the regs clearly leave no room for reliance on safe harbor in a merger situation. If it's a stock sale, you might consider puttng of the merger until 1/1.

I think I'll do everyone on the SSA, because I can't thionk of good way to keep track of who to D and who not to D every year. Therefore, I think life would be easier if I reported everyhone, so I could just D anyone who took a distribution. Now, if I'm excluding participants from 5500 reporting altogether, I would feel differently. But most of my audited plans chose to include everyone because it was just easier, and they clearly needed an audit anyway.

Am I the only one annoyed that they haven't clarified in simple plain english that you should not check an extension box? I mean I don't think I'm being foolosh for asking if I should check the "Automatic Extension" box for the AUTOMATIC EXTENSION that was granted And by the way I'm not asking if I should use the special extension box, because they DID come out and say not to use that in their FAQ's. It's just surprising that what I think is an obvious question was not answered. But it's not the first time, and I doubt it will be the last...

mbozek - Those were the good old days. ERISA 403b's (of which I have several as clients) are now required to file full 5500's, and also must file the 8955-SSA.

Where did Sungard say that? I can't find it anywhere...

Which extension is everyone checking? Automatic or nothing? At first I thoguht Automatic, but that seems to relate to piggy backing off a corporate tax extension. The 8955-SSA FAQ's indicate that the special box should not be used, except for disasters, etc.

Since when is logic a prerequisite for this stuff?? Ha ha... In spite of your unquestionable logic, TIAA itself has created an "SSA Report" - only problem is they need termination dates updated for everyone (including removing those rehires) which is just too complicated to expect accuracy (at least for the smaller institutions)... But I agree that these are IRA's and all of this stuff is over-kill.

For those of you using the FIRE system to batch file (FT Williams, etc), are you having the client signing the SSA, or just sending thenm a copy. FGT Williams is sayiong that this is a "best practice" but if it's not a requirement, I would like to know that as well.

This organziation is treating them as eligible. I'm the one questioning whether that is appropriate. It seemed to me most of your post was supporting NOT counting the service, but then your last comment suggested countign it. Would you mind clarifying for me what your conclusion is? I am actually more inclined NOT to count the service. Think about a ski-resort, as opposed to a school. The lift operator, or even the ski-lodge manager, is scheduled to come back in the fall once the winter ends. I can't imagine anyone would suggest counting the summer as service. Another mind-boggler for me. I can't believe this is not addressed somewhere.

So you're suggesting I count the hours then, as though they worked for 12 months? If someone was eligible for health insurance, I'm certain the health insurance would continue for the entire 12 months (I can't imagine telling employees they don't have insurance over the summer). This just seems different then 8 weeks of paid vacation, especially if they could opt to be paid over a month period instead. Does this latter point change your conclusion? It seems hard to believe that this is not addressed somewhere...

They stick to their scheduled hours pretty well, especially the non-full-timers who are the issue. But when I spoke with Sungard they told me NOT to credit hours over the summer because their job is based on a 10 month year. What are your thoughts on that?

Faculty at a school are only working September to May, 20 hours a week. They are paid over a 12 month period. May the employer treat the the summer months as paidt time off, creditign them ith 20 hours a week as paid time off for the summer months when they are not teaching? So for example, if we credit the summer months as hours of service, then they will exceed 1,000 hours (vesting years, etc). If we do not count the summer months, they are below 1,000 hours. Does the answer change if they elect to be paid over teh school year, as opposed to the calendar year? Seems like a gray area...

Becauise of the top-heavy exemption issue, this conclusion is siomply unworkable. The outcome is absolutely preposterous.

Also no word on the fact that they may forcing plans to blow their top-heavy exemption (especially SH Match plans) because they are required to allocate the forfeitures (and now the plan does not consist solely of SH and 401k). Especially plans that do not allow the payment of expenses from forfeitures. Stupid Stupid Stupid. And that is how I really feel. They're going to have to wait until the PPA documents before I pay any attention.

Has anyone addressed this collossal issue yet? Some of these 403b's who have nver reproted before could have hundreds of people to report. Any relief expected? Is anyone talking about this stuff? Allso, has anyone had success getting full socials from TIAA for this purpose?

Does batch filing extensions work for SSA's as a means of avoiuding the signature?

Hey Tom, did you see the ASPPA's ASAP on signing 5558's? I'm still confused... Can I sign for my clients or not? I'm an ERPA... Do I need to get their permission first? Another classic case of the IRS not saying what they mean in English...

If he's making a couple hundred thousand a year and wants to put away $49,000 a year, and tehre are no employees, etc. I think most CPA's are more than capable of such a cookie-cutter endeavor. When you takle non-discrimination and ERISA out of the picutre entirely, a TPA's added value starts to evaporate pretty quickly.

Partial term rules would cover that.

Dpeendng on just how simple your situaiton is, and just how high your incomr is, Schwab, Fidelity and the like have super-simple documents to fill out (I mean like 2 pagers), which they will keep up to date with the rules for you. I'm sure ther are other examples. No TPA, No ERISA Attorney - just your CPA doing an EZ for you, for which he/she should not charge much.

Company A has one purpose: To provide servies to Big Customer. Company A makes a LOT of money servicing Big Customer, but Big Customer has told Company A that the contract will not be renewed effective 4/1/2012. At this point, Company A will be closing its doors. 1) May Company A continue to rely on its safe harbor status through the date on which they close their doors? There will probably be wrap up stuff going on through June 30, 2012, but then nothing. It's hard to argue there is a financial hardship as large bonuses are being taklen. (1.401(k)(e)(4)(ii)). I don't the like "(g)" exception provided because I need to run the ADP test. 2) Even if everyone is terminated in June 2012, what's to stop me from terminating effecetive 12/31/2012? Everyone will be eligible for a distribution under the Plan due to employment status, so I can pay everyone out. I would just need to get resolutions signed terminating the plan effective 12/31/2012, which would allow me to file a final 5500 (only a few people have account balances). Is it that easy to get around this? What's more, couldn't they sign that resolution in June or July 2012 and be done with the Plan at that time (assuming everyone is paid out by then)??

(ii) Scope of consistency rule. Compensation will not fail to be defined consistently for a group of employees merely because some employees do not receive one or more of the types of compensation included in the definition. For example, a definition of compensation that includes salary, regular or scheduled pay, overtime, and specified types of bonuses will not fail to define compensation consistently merely because only salaried employees receive salary and these specified types of bonuses and only hourly employees receive regular or scheduled pay and overtime. This is the paragraph I was referring to. Maybe it doesn't provide the assurance I thought it did, sicne it seems only torelate to this consistency issue. But this paragrpah specifically lists the folloiwing items that may be excluded (of which over-time is one). Perhaps the issue is that commissions might not be considered irregular if they are part of someone's regular compensation package. (ii) Items that may be excluded. A reasonable definition of compensation is permitted to exclude, on a consistent basis, all or any portion of irregular or additional compensation, including (but not limited to) one or more of the following: Any type of additional compensation for employees working outside their regularly scheduled tour of duty (such as overtime pay, premiums for shift differential, and call-in premiums), bonuses, or any one or more of the types of compensation excluded under the safe harbor alternative definition in paragraph ©(3) of this section. Whether a type of compensation is irregular or additional is determined based on all the relevant facts and circumstances. A reasonable definition is also permitted to include, on a consistent basis, all or any portion of the types of elective contributions or deferred compensation described in paragraph ©(4) of this section and, thus, need not include all those types of elective contributions or deferred compensation as otherwise required under paragraph ©(4) of this section This has been an eye-opener for me, as I had previously been under the impression that basically any type of an exclusion is acceptable, provided it satisfied the ratio test. Apparently, that is not the case...

I have a hard time believing that excluding over-time which is only paid to NHCE's would be an issue if the ratio test was passed, Are you saying that is an issue? I thought it was purely a numerical test. edit OK, now I rememer tht it can't be desinged to favor HCE's, but the fact that HCE's do not receive the excluded comp does not make it discriminatory. There is something in the regs somewhere... So excluding ove-time isn;t discriminatory soelly because all HCE;s happen to be exempt from over-time.

The form was actually filed by the client on Friday at noon. I thought it was atl least an interesting question since we were not applying any credentials to the filing. I didn't think it was a good idea, but I always like concrete answers proving you can or can't do something - I think Circular 230 is a good one

They can defer 16,500 + 5500 + 3000, but their total additions can only be 49,000 + 5,500.