austin3515

DEsign based safe harbor covers 401a4, not 410b.

What a dope... Forgot to metion that my plan is a 3% SHNEC, and I'm doing this because differing allocation conditions violates my design based safe harbor, and I am therefore restructing into two design based safe harbor plans.

I am restructuring into two component plans, as follows: 1) plan covering everyone getting profit sharing contriubtions, and 2) plan covering those not getting PS due to a last day rule Is Plan 1 barred from treating anyone in plan 2 as a "term with a break" because restructuring requires that plans pass coverage "as though they were a separate plan."

Got a situaiton where a client wants to take an in-service distribution of his 2010 profit sharing contribution (he's going to roll it to an IRA provider that does not allow 401k accounts). Would it be acceptable to have him deposit the check to PenChecks (which allocates the money to an account in the plan's name, or at least segregates it at that level) and then have Penchecks process the rollover? I'm sure there is not a separate account in the name of the plan, but since penchecks is acting as the agent of the Plan, then shouldn't this be OK?

401k/PS plan with older doctor (50's) and younger doctor (30;s) as owners. Would it be fair to say that component plan testing would only work better if the younger Doctor's "plan" would do better testing based on allocation rates (including disparity)? So if, for example, the younger doc is getting more under cross-testing all as one plan, then he would have received under an integrated allocation, then component plan testing would not help? It occurs to me that if cross testing would work for an HCE it should work whether or not you’re doing compoentn testing – you’ve either got enough people in your rate group, or you don’t. Component plans will not increase someone’s EBAR.

I believe what the OP is forgetting to mention is that you have to be employed on the last day of the quarter to get the contribution for that quarter (pure speculation!). I believe this does end up requiring a4 testing (unless there is some specific exemption related to interim allocation dates, which may very well exist). REason being, an individual is benefitting under the plan if they got the contribution in Q1 and then termed some time in q2, which mewans the amount of the contribution must be nondiscriminatory, and the term is receiving a lesser percentage of pay than the HCE who was there all year. In fact it might even be 1/4th percentage which could present some gateway problems if cross-testing is necessary. But certainly if it's a different contribtion each quarter, that would also require a4 testing.

OK, here's what you do: Write a letter to your client with arguments for and against immediate eligiblity, and then have them tell us how they want to proceed

Definition of Hour of Service, Part D. PS Many many thanks for this perfectly on point site!!!

If you have an on-line version, do a search for the word "gifting" - it is the only hit in the entire 10,000 page document!

http://frwebgate.access.gpo.gov/cgi-bin/us...48&TYPE=PDF Title 38, Section 4318, US Code Says the following: (B) Each period served by a person in the uniformed services shall, upon reemployment under this chapter, be deemed to constitute service with the employer or employers maintaining the plan for the purpose of determining the nonforfeitability of the person’s accrued benefits and for the purpose of determining the accrual of benefits under the plan. To me, that seems to clearly support that you would impute their service in some reasonable way.

I would like to re-open this SEVEN YEAR OLD discussion because I have the same question today... The IRS site provided by Katherine did not seem to be 100% on point. The crux of the question is this: What does 414(u)(8)(B) mean when it says: At least one reaosnable interpretation would be to follow jaemons advice. In fact, considering the subject matter (i.e., protecting the rights of military personnel) and considering the ambiguity, would not the only reasonalbe response be to do just that? i.e., impute some reasonable level of hours? You might even credit them 40 hours a week since they would have been working 40 a week in the military. I can find dozens of references that say "military service shall be treated as continuous service" but I cannot find defined anywhere what that means...

http://www.relius.net/news/technicalupdates.aspx?T=P Sungard has clarified on all of this...

Plan provides QNEC to Ee A of 2% to pass the ADP Test. The GWM ius 5% 1) When I run (a)(4) WITH QNEC's I find that I need to give A a 3% contribution to get him the GWM 2) When I run (a)(4) without QNEC's, A is no longer benefitting in the nonelective plan, and therefore, he does not need the gateway minimum. 3) HOWEVER, once I give profit sharing to A, I cannot run cross-testing without profit sharing (because that would be ridiculous . But when I go back and run testing without QNEC's, he's not getting the GWM!!!! So now I need to give A another 2% profit sahring. In summary, when I do QNEC's, I have to give the full THM in profit sharing. Someone please tell me I'm overhthinking this, and it is really not as I say...

We're on Corbel non-standfardized EGTRRA prototype, though I presume this is covered in the Basic Plan Document...

Much as I hate to say it, I agree with Kevin C (nothing personal, just not the answer I want). If you look at my OP, I wasn;t sure if the "entitled to payment" language could be exploited in our favor. But of course I also agree with ESOP guy - discrminiation is definitely going to be on the IRS' agenda if this became reviewed.

Does anhyone have that ASPPA Q&A handy?

It's not just the owner and the spouse, there are other employees. And I like what someone was posting about the Eligible Employee definition (we are on the same document) however, it does not seem to reference what you would do in the event that such a person is ever hired. How could this not be addressed somewher?? Am I the only who comes across this issue with some frequency?

That makes me very happy - but do you have anything that I can put in my file, in defense of that position?

Please elaborate... This sounds interesting even though I have no idea what you mean!

You mean Option 2, right?

Wife works for husband Docotor doing books for 10+ years, but never was on the payroll. Wife's involvement is clearly documented by workflow, emails, etc., so the existence of her service would be verifiable on audit. Well, now the plan is safe ahrbor, so the wife now wants to get paid so she can defer the max as well. Plan requires 1 Year of Service. Option 1: Wife is eligible from day of compensation because we can count all of her pre-pay check service. This is based on the fact that she was "entitled to compenation for services rendered" even though none was actually paid. Option 2: Because the wife never actually received any compensation, and most hours of service crediting rules reference "hour of service for which compensation was paid" or soemthing to that affect, wife must satisfy eligibliy treating day 1 as the first day of her paycheck, delaying her entry for at least a year. [ignore the fact that wife should have been on the payroll all along, and probably was not to avoid the social security tax by tacking it on to the Doctor's paycheck, whcih was above the wage base - that is someone else's BIG problem - not mine! The question presented to me is solely "can she participate from day 1"]. So which option is it? Option 1 or Option 2?

You;'ve just violated the unspoken code of a TPA. NEver EVER do a refund that you don't have to!! Even if you make 10 cents on the dollar when you add up all the tiome you spent

PArt of the confusion (indeed my original confusion) is that you referenced the need to pas a(4) with and withhout. The crux of it is, why are we testing a design based safe harbor under (a)(4) in the first place? And the answer is because (As Tom already pointed out) (a)(4) must be passed with and without QNEC's. In this little twist of events, (a)(4) is actually FAILED when QNECS are INCLUDED, because rate group testing is failed, and because the design based safe harbor is blown (i.e., two different contribution rates for HCE's and NHCE's). (a)(4) is actually PASSED if QNEC's are EXCLUDED, because the design based safe harbor is in tact. I think it usually would work the other way around, which is why I find this scenario more interesting. But regardles, the BOTH requirement is failed, and tehrefore, the QNEC's cannot be included in the ADP test. It makes no difference (in my situation) that the plan passes coverage, because I am not able to my QNEC's in the ADP test, which was an important part of the strategy.

Found the answer (EOB)... 2.c.1) Elective deferrals included under rule of parity for post-2005 plan years. Treas. Reg. §1.401(k)-1©(1), as amended on December 29, 2004, provides that elective deferrals are disregarded only for purposes of IRC §411(a)(2). IRC §411(a)(2) addresses only the application of vesting schedules. Thus, these regulations require that elective deferrals be taken into account in determining whether the employee is 0% vested for purposes of the rule of parity. The regulations are effective for plan years beginning on or after January 1, 2006, although the regulations may be applied, at the employer’s election, for earlier plan years ending after December 29, 2004. See Treas. Reg. §1.401(k)-1(g) (December 29, 2004).

True or False: Service can NEVER be disregarded under the rule of parity in a 401k plan, becuase the participant always has a nonforfeitable right to their 401k contributions (even if they never made 401k contributions, and even if they never had a balance in the plan). They always mentioned "Employer provided benefit" but my understanding from somewhereorother (very reliable source!) is that this is a TRUE statement.