austin3515

Corbel 403b prototype document says profit sharing contriubtions will be discretionary, but ALSO has an option for a "One time Irrevocable Election. An amount elecrted by the Participant pursuant to a one time irrevocable eellection upon initial eligiblity. The elected amount will be allocated to the Particpants Nonelective account." What in the world is this? How often does the participant make this contribution? Is it "one time" as might be gathered from the name, or is it on going deferral type of thing (I get the irrevocable makes it not be a CODA). And then I assume it is subject to a4 testing, which could be problematic say if the only person doing it is the executive director making $200K?

So you are going to allocate a contriubtion that is not included in the document? I just don;t feel right about it. You need something more than a notice to get it not to be profit sharing, subject to profit sharing alloation rules. At least that's what I think...

We're not suggesting that there is anything discretionary about a SHNEC- are we? So for exampole, the client couldn't arbitrartily decide in March following the end of the plan year that this year the SHNEC will be 5%, right? For starters, I think all those people who were employed on the last day of the plan year would have a cut-back in profit sharing contributions since terms are excluded (hypotehtically); i.e., if the extra money was allocated as SHNEC and not PS.

Owner defers $21,000, and ADP test fails. About $400 of the 16,500 included in the test is reclassed as catch-ups before I try anything fancy. Can I still make it all the way to 54,500? I can allocate my employer contributions of $33,500 first Then, I can do my 401k of 15,500 which puts me at the 49,000. So now, I have a full $5,500 of catch-up contributions ($21,000 less $15,500 included in the "sub-415" contributions), which means that only $15,500 is in the ADP test, which would be passing. Does everyone agree with that?

If 10 people come to a meeting, the way we do it now perhaps 2 return the forms. If we can get that up 3 or 4, then it was worth it. I'm not shooting for the stars here, just a notable improvement...

Jim, are you saying that you are using language like this: "Subject to changes that I may make to my investment elections, I hereby elect to invest my Plan account in the Wonderful Balanced Fund."

Amen.

I'm not throwing my clients under the bus by any means. Most of them are quite brilliant at what they do. It's just that what they do is not administering 401k plans. It's ubuilding homes, installing windows, treating patients, and on and on.

Bill - I LOVE IT!!! Thanks,

Nope, we do that. They need to go home and think about which investment to choose, and then we never hear from them again. I want them to be comfortable signing the form before they walk out the door. And GMK, I'm not sure the fact that you have "a small plan" (i.e., one) who can handle it, doesn't really discredit my conclusion. What about your other small plans?

They have financial advisros for that. Believe me, I thought about the default percentage too, 3%, something easy to commit to, just to get them in the door.

I see a major difference between handing someone a form and waiting for them return it, as opposed to handing someone a form, waiting a few weeks, and then setting up a payroll deduction for them if they don't respond. I know it doesn't sound like much, but if you worked with small employers you would know that this is totally unrealistic.

I am strongly opposed to auto enrollment. Most of my clients will totally louse that up and wind up with lots of liability. I have a handful who have a sophisticated HR DEPARTMENT where they do this and can handle it. The rest are small (or even relatively large) employers who just don't have the resources to implement such a complicated endeavor.

I have this "theory" that people who WANT to defer take their forms home and never get around to filling it out because it is a lot of information to stew, particularly with respect to selecting an investment. So my theory is this: Send out enrollment forms, pre-filled with names and all other indicative information. The deferral election section will indicate that unless "I have decided to make alternate elections to invest in one of the other investment options in section 2, I have affirmatively elected to be invested in the Balanced Model" or soemthing to that affect. I just think that this one little thing (i.e., all I need to do is say how much I want to contribute, and sign) would be enough to break the resistance enough to increase participation. Any thoughts on whether this constitutes an investment election eligible for 404© (i.e., and avoid the QDIA rules)?

Nassau - You referenced the exact paragraph of the internal revenue code that creates this requirement in your subject - 402(f). See paragrpah (f) http://www.law.cornell.edu/uscode/html/usc...02----000-.html

No - it was ineligible for rollover.

I'm partial to this thread http://benefitslink.com/boards/index.php?s...ic=47730&hl=

Plan allows in-service distriubtions in the form of installments, following age 59 1/2. I know the timing of an in-service distriubtion is a protected benefit - is the installment form of payment protected? I don't think so, but thought I would check.

Let's say two TPA firms merge together and the resulting company is a new entity entirely, with a new name. Does that affect either firms favorable opinion letter? Would the merged company still be considered the prototype sponsor of the legacy documents?

It does help, thank you! I also found in the EOB that "restorative payments" resulting from fiduciary breaches would also be subkect to those same rules (which is slightly more on point).

Do you think I would call myself Austin Powers if this was a "sophisticated" arena

CPA is asking if the lost interest on late deposit of 401k contributions is deductible. Any citations I can point him too?

Here it is: 1) Contributions (other than elective contributions described in section 402(e)(3), section 408(k)(6), section 408(p)(2)(A)(i), or section 457(b)) made by the employer to a plan of deferred compensation (including a simplified employee pension described in section 408(k) or a simple retirement account described in section 408(p), and whether or not qualified) to the extent that the contributions are not includible in the gross income of the employee for the taxable year in which contributed. In addition, any distributions from a plan of deferred compensation (whether or not qualified) are not considered as compensation for section 415 purposes, regardless of whether such amounts are includible in the gross income of the employee when distributed. However, if the plan so provides, any amounts received by an employee pursuant to a nonqualified unfunded deferred compensation plan are permitted to be considered as compensation for section 415 purposes in the year the amounts are actually received, but only to the extent such amounts are includible in the employee's gross income. So I think it would be in then, correct? I still think the only way it would be out is if fringe benefits were excluded. The 414s safe harboe exclusion for fringe benefits lists "deferred compensation.

I also thought the 415 regs regarding deferred comp related to post termination. BUT, deferred compensation is a fringe benefit, so if you're document exlcudes fringe bnefits (based on the 414s safe harbor) then it is out.

Here's my advice: Don;t study. They won't tell you the grade anyway. I was a sucker, and studied a lot. I like to think I got an A, but may have gotten a C- for all I know...