austin3515

PArticipants will be notified if the Employer decides to MAKE the Safe Harbor Contribution. There is no requirement to tell them the decision has been made NOT to make it. That doesn't mean you might give the notice for other reasons, but there is no requirement to do so. From § 1.401(k)-3 Safe harbor requirements. (2) Contingent notice provided. A plan satisfies the requirement to provide the contingent notice under this paragraph (f)(2) if it provides a notice that would satisfy the requirements of paragraph (d) of this section, except that, in lieu of setting forth the safe harbor contributions used under the plan as set forth in paragraph (d)(2)(ii)(A) of this section, the notice specifies that the plan may be amended during the plan year to include the safe harbor nonelective contribution and that, if the plan is amended, a follow-up notice will be provided.

That is interesitng... The first sentence of 3.6 of my BPD says: "An Employee is not permitted to elect not to Participate in the Plan." It then goes on to talk about people who made elections before the effective date of this restatement. Are you looking at the prototype or the Volume Submitter, or maybe the IDP? I'm looking at the prototype. Are you sure yours doesn't say that? Seems very odd that we would have two different versions of this paragraph. I submitted an incident corbel last night to see what was up with this new provision.

The other thing that bothers me is that, as a condition of employment, you are forcing someone to waive out a plan. Maybe it is legal, I don't know, but it just doesn't sound right... Almost like coercion...

Since the election is IRREVOCABLE, I can't see how it can be revoked (ha ha ha)... Interesting not so side note. I went to our new Corbel EGTRRA document which states "An Employee is not permitted to elect not to participate in this Plan." It goes on to discuss how to handle employees who had previously elected out of the Plan before this restatement. Probably one too many plans failing coverage due to someone refusing free money!

And that's why I love these boards...

Most documents used to indciate that if there is a 415 excess, it 401k gets refunded, so someone doesn't lose out on employer provided benefits. I would assume that is still available under EPCRS?

Company A has union and nonunion employees and is owned by Mr. A. Company B is established by Mr. A's wife (Mrs.A) however, Mr. A runs Company B (so spousal exception does not apply, and its one controlled group). Company B was established solely to get non-union work (I'm not 100% sure of the business purpose, but it was something like this). So some of the union employees are also doing non-union work under Company B. Enough of them are doing this so that I am concerned that I will not be able to pass coverage treating those employees as not benefitting following the end of my 410b6c grace period (fortunately, not until 1/1/2011). Is there any issue with treating people both as union and nonunion on the same test?

The sense is that under a failed ACP test, the participant accured the match based on the terms of the Plan. If match is accidentally given on comp over 245, the participant is not entitled to that match.,

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.