austin3515

You would just need to be extremely careful about cut-back issues, since the HCE WOULD have received the contribution (even if it couldn't stay in the plan...).

I assume the idea is that you would only give them less, i.e., if 50% of 6% OR the max that passes the ACP test. But that doesn't make any sense since failed ACP tests result in refunds to the affected HCE's (assuming vesting), so it seems it would be a needless cut-back. I'd be surprised if the Corbel documents actually had this buried in the basic plan documnent - do you have language you can share?

Employer pays the $1,000 deductible under the employees health insurance plan as a way of "Sefl insuring." The reimbursement runs through payroll. Has anyone seen this before? It seems to me this should be no different than an employer paid health insurance premium. Does that make sense?

Excellent, thanks for letting me know. Unfortunately, our VS doesn't have it But that seals the deal. FWIW, TAG and EOB both had the same answer, that it is allowable (just not for the SHMAC).

Forfeited. They never should have receied it in the first place.

Maybe my question wasn't clear enough, but the client does not want to match roth - they only want to match traditional 401k, and the question is, is that OK? They woudl amend their plan to specifcially state that Roth wouldn't be matched (there have not been any roth deferrals yet).

I've just been informed that I'm reading too much into the IRS FAQ. Doesn't necessarily ask the right question, which really is "if they match traditional 401k must they also match Roth 401(k)". FYI, Sal's book says it's not necessarily required to match Roth if you match traditional 401k.

NEver mind, I just found this on the IRS FAQ Page. Clearly, it is not required. Can an employer match an employee's designated Roth contributions? Must the employer allocate the matching contributions to a designated Roth account? Yes, the employer can make matching contributions on designated Roth contributions. However, the employer can only allocate an employee’s designated Roth contributions to designated Roth accounts. The employer must allocate any contributions to match designated Roth contributions into a pre-tax account, just like matching contributions on traditional, pre-tax elective contributions. http://www.irs.gov/retirement/article/0,,i...2956,00.html#10

Plan has a pay-period match and for wahtever reason does not want to be bothered with setting it up on payroll the right way to get the match to calculate including Roth. So they want to NOT match on Roth 401(k). I know, I know, it's ridiculous, but that's what they want to do. Note also that based on who is deferring Roth, benefits rights and features are passed with no problem at all. Is there any sort of rule that requires Roth and traditional 401k to be treated the same way under the Plan? From 402A (is this expansive enough to mean that Roth must always be treated just like elective deferrals?) (a) General rule If an applicable retirement plan includes a qualified Roth contribution program— (1) any designated Roth contribution made by an employee pursuant to the program shall be treated as an elective deferral for purposes of this chapter, except that such contribution shall not be excludable from gross income, and

Certainly.

1) Match calced based on entire deferral. 2) Any "orphan" match must be forfeited. So if after the refund his deferrals are 6% of pay, then the match on the refunded 1% of pay must be forfeited. If by chance you are also failing the ACP test, I believe some have suggested that you can run the ACP test first, refund the excess match to the participant (subject to regular vesting), and THEN determine if any related match must be forfeited. 3) With respect to the disposition of forfeitures, you need to look at the document to see what it says. It could say many different things.

Does a 30 day notice period apply to terminating safe harbor plans under mergers or business hardship (i.e., under bullet point ii below). The 30 day notice requirement arises from the reference in (i) that the requirements of paragrpah (g) are satsifed. So it seems to me that when temrinating a plan under mergers and/or business hardship, no 30 day notice is required (whether it's a SHMAC or a SHNEC). Does anyone agree/disagree? (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)

Sounds to melike they are still usign the pre-2008 rules, where no withholding was allowed b/c the distriubtions paid pre-3/15 were tazable in the prior plan year. My guess is that the person you're talking too wasn't aware of the change.

Believe it or not, my client is open BUT of course the banks are closed today. Nevertheless, the point of my question had more to do with whether or not I began counting on the right day. i.e., the day AFTER pay-day is day 1. Pay day does not count as day 1. Does everyone agree with that interpretation?

The reg says (2) Safe harbor. For purposes of paragraph (a)(1) of this section, in the case of a plan with fewer than 100 participants at the beginning of the plan year, any amount deposited with such plan not later than the 7th business day following the day on which such amount is received by the employer (in the case of amounts that a participant or beneficiary pays to an employer), or the 7th business day following the day on Pay-Day is 2/5/2010, which is a Friday. Don't count Saturday or Sunday (6th and 7th). Day 1 = 8th (Mon) (first business day following the date on which it was withheld) Day 2 = 9th (Tues) Day 3 = 10th (Wed) Day 4 = 11th (Thurs) Day 5 = 12th (Fri) Don't count Saturday or Sunday (13th and 14th). Day 6 = 15th (Mon) Day 7 = 16th (Tues) Is this correct? The reg say

Tom: Is this the reg they are referring to? IF so, it seems to me they made a mistake here. IT clearly says you can't deposit the match unless the 401k to which i relates is earned - it doesn't say "not until the match is earned." (iii) Employer contributions not on account of an employee contribution or elective deferral —(A) General rule. Employer contributions are not matching contributions made on account of elective deferrals if they are contributed before the cash or deferred election is made or before the employees' performance of services with respect to which the elective deferrals are made (or when the cash that is subject to the cash or deferred elections would be currently available, if earlier). In addition, an employer contribution is not a matching contribution made on account of an employee contribution if it is contributed before the employee contribution.

If I was a participant and you yanked $2,000 from my account on account of the fact that I terminated before the last day of the yea,r I think I would have a pretty legitimate gripe against you. Now it's only $2,000 so I probably wouldn't hire an attorney or anything. The implication of someone depositing money intot your account is that you've earned the right to an allocation. Forget all this legal mumbo jumbo - the regular particpant figures it's his!! And that's gotta count for something in this analysis.

Employer decides to deposit employer contributions every single pay-period. Document says last day rule / 1,000 hour requirement. Wouldn't it be a cut-back to then forfeit the contribution for those employees who ultimately do not meet the allocation requirements? To me, it seems that the employer clearly decided NOT to impose allocation conditions on the profit sharing contributions, or that should at least be what a reasonable participant's interpretation would be.

I'm saying if the owner makes $400,000 before bonuses, and the only bonuses left are the bonuses for your sales team which make up 20% of their pay, and they make up 25% of your workforce, and they are all NHCE's, then you're not going to pass 414(s) and you're safe harbor is not going to be valid.

You're not allowed to amend any SH provisions mid-year, unless you follow the regs for such changes (which you reference). Also, better make sure 414(s) is not an issue, as failure of that test will kill your SH for any future year (not just this one) Don't forget ADP testing applies in the year of the reduction, even if the new formula is a SH... (4) The plan is amended to provide that the ADP test will be satisfied for the entire plan year using the current year testing method. HEre's a good question though: LEt';s say your only amendment is to reduce the match, but it's still a safe harbor. So you switch from 100% of 4% down to basic match. Do you retain your top-heavy exemption even though the ADP test applies? Technically, the Plan still consists solely of 401k and safe harbor contributions. In fact the title of the section is "Reductions to the safe harbor match" which might imply that it continues to be safe harbor even though the ADP test applies... Very interesting!

My opinion: Jack up the fees so high that they have no choice but to go to a platform... No good can come from these arrangements. They are awful...

My opinion is that simply not mentioning them in the new EGTRRA Document would not be enough to kick them out of the Plan. It would take board resolutions specifically on point to do that. For example the document probably references "and any other Affiliated Employer who has adopted the Plan" in the definition of Employer. I wouldn't back-date anything, but just have them re-adopt today usint eh new EGTRRA format. Our adopting employer paperwork allows you to indicate the date the adoption was originally effective which would just help to memorialize that this is simply a re-affirmation and not a new election.

My question relates to when the employer DOES report it on their own W-2. The rules on this are extensive, regarding whether or not it's reported on the insurer's W-2's / payroll tax returns and when it is reported on the employers forms. My question is when it is reported on the employer's w-2's, etc., how is it handled for plan purposes?

monthly premiums paid for all employees. When ee gets sick, the insurance company pays insurance beefnits for up to 6 months. Amounts are then reported on the employees form W-2. Are these wages included for Plan purposes? Plan uses W-2 definition, but these are not wages paid by the employer. I've always been told that they should NOT be included but I've read all the guiadnace and my head is spinning. Is ther something that clearly states whether or not insruance benefits (i.e insurance premiums are paid, NOT paid on a cost + fee basis) are included in wages for plan purposes? There's a lot onw orkers comp but not this...

I would definitely treat 2009 as the first year of the plan. There's something about a "corpus" where for a trust to really be a trust there needs to be something in it. So you probably could have skipped the 2008 5500. Perhaps someone with more legal expertise could elaborate. I would be curious to know if I'm to something here, or just making stuff up as I go, ha ha ha...