austin3515

If I'm not mistaken, that package is sold separately from the document software.

If its the GUST document, see 12.4(j) that you can apply the provisions of Section 12.4 (which is just the plain vanialla ADP language) AND 12.5 (which has adjustmetns to the ADP test, including QNECs) separately to each "plan" (i.e., the otherwise excludable plan and the statutory employee plan). So that is your basis in the document for providing QNECs to the statutory participants only (or non-excludables, whatever you want to call them).

What a dolt... I screwed up a one word answer... Funny, I read your original question to me and was quite surprised by YOUR question! So I'll put you back up to your original lofty position on the respect scale... FYI, I'm now about 1/3 of the way through my morning coffee, which probably is why the question was more clear when I read it this time!

That said, insurance products, while sometimes costly to set up, usually have very low annual costs, and commissions drop dramatically after the first year for the broker. I should hope they would drop after the first year - they can be downright obnoxious in year 1... I've seen 6 figure commissions on big plans...

EVery document I've ever seen says "if the employer eleclts to test statutory exclusions separately, QNEC's can be allocated soley to the plan being tested" or somehting like that... Very standard...

OK, spoke too soon - better check the doc to make sure a competent attorney drafted the doc to give you permission to do this. If not, it's a bad document!!!

Yes. Been a long time since I gave one word answer

In general insurance products are a lot more expensive... Personally, I'm a fan of the Registered Investment Advisor approach because their fee is say 50 bps, and that's it. Their not allowed to take commissions, etc. so you know what your're paying. The same cannot be said for insurance products where there is high likelihood revenue sharing, and undisclosed commissions (OK, the savvy plan sponsor MIGHT look at the schedule A, but then again...)

Perhaps the other (better?) option, of course, is to stay far away from this type of plan design altogether!! Ain't that the truth...

It is not lost on me that not benefitting for 410(b) = excluded from ACP. So let's then go with including them in the ACP test, since that what a literal interpretation would require. What's more, the plan does pass coverage by treating them as not benefitting. So I'm now OK with leaving them out of the ACP test. I guess my position comes back to what it means to have a purely ministerial requirement in order to be eligible for the match. Since the reg offers the example of "simply handing in an enrollment form", my opinion is that mandating a minimum 4% contribution presents a coverage issue. And THIS is the crux of what I think about this. SO, you think mandating a minimum 4% contribution DOES fall into the "ministerial" requirement definition, which would allow them to be treated as benefitting. So I guess we won't agree... Oh well!!

Since every plan I've ever seen a document that didn't require whole percentages, apparantely everyone on the planet agrees that requiring a minimum deferral of at least 1% does not create something beyond a ministerial act. In fact the basis for limiting deferrals to whole percentages is perfectly reasonable in my opinion, since it improves the odds of accuracy and the difference between 3% and 3.5% is miniscule. LEave them out of the ACP test? Let's admit we're in bizaaro world witht his plan design in the first place. So if by some stroke of incredible coincidence, this plan was able to pass coverage, I dare not be so bold as exclude all those zeroes from the ACP test. So just out of curiousity, are you taking the position that these people WOULD be benefitting, and that deferring 4% is purely ministerial? Remember, the individuals deferring 2% DID complete an enrollment form, but are not getting the match... At a minimum, I would consider the 4% deferral requirement an additional allocation condition, which again would suggest a coverage problem. I too agree that there is a BRF issue, but I think the coverage issue is paramount.

Yes you can, you can only not do this in an ACP safe harbor - 401(k) (1.401(m)-3(d)(2). Since the rule stated above applies only to safe harbor plans, the implication is that you CAN have increasing rates for non-safe harbor plans. NOW, accoridng to the 410(b) regs an employee is treated as benefitting if they are treated as an eligible employee under 1.401(m)-5, which defines an eligible employee this way: Eligible employee means an employee who is directly or indirectly eligible to make an employee contribution or to receive an allocation of matching contributions (including matching contributions derived from forfeitures) under the plan for all or a portion of the plan year. For example, if an employee must perform purely ministerial or mechanical acts (e.g., formal application for participation or consent to payroll withholding) in order to be eligible to make an employee contribution for a plan year, the employee is an eligible employee for the plan year without regard to whether the employee performs these acts. Since deferring 4% is not a purely ministerial act, I'd say you have a coverage issue, and this a no go unless you can demonstrate it passes coverage. Of course, if at the end of the year you fail coverage, you can amend the plan to pass coverage, except that such an amendment needs to be the exception, and quite frankly, I just don't see how this is not going to present a problem since anyone not deferring at all would have to be treated as not benefitting.

Anyone have a good write-up on the stimulus bill as it affects 401ks? Just got a call from a client regarding the "penalty free withdrawal" provision that seems to have made its way into the bill.

If no one is over by much, I would either: a) Short an upcoming deposit b) Transfer the over-deposit to the forfeiture account. Assuming you're talking about "small dollars" (I don't dare define "small"), you have my permission to correct this way If the balances are larger, and your going with option b) I would still do the same thing, only adjust for gains/losses.

I think QDRO answered step 2 - step 1 is, does the plan have separate allocation groups for each partner? If the answer is no, then there is no way at all pull this off. If the answer is, yes, then go to step 2

Amounts refunded due to a failed ADP test are still counted as annual additions. So beause he already did $15,500 of 401k, he "only" gets $30,500 of PS.

I would never suggest you should put anyone in a 401(k) plan that doesn't want one. I'm suggesting that the benefit of the owner is not always the sole determining factor (nor should it be).

Shame! Many small employers (I dare note say most ) have these plans as a tool for recruitment and a desire to help employees save for retirement! Personnaly, I would never take a job with an employer that wouldn't do this for their employees.

Without a doubt, Safe Harbor Match calced each pay-period must be funded quarterly, but I believe it is limited to that specific type of a match.

Take a look at a similar post which as of right now is immediately below this one! Courtesy of BTG. http://www.irs.gov/retirement/article/0,,i...tml#termination I was having trouble with the link, so here it is: When can an employer terminate a SIMPLE IRA plan? Other than initial establishment, SIMPLE IRA plans are maintained, or not maintained, on a whole-calendar-year basis. Once started for a year, a SIMPLE IRA plan must continue for the entire calendar year, funding all contributions promised in the employee notice. An employer may terminate a SIMPLE IRA plan prospectively, beginning with the next calendar year, after the employer has informed employees that there will be no SIMPLE IRA plan for the upcoming year. Example: If in 2007 an employer decides to terminate its SIMPLE IRA plan as soon as possible, the employer must inform employees within a reasonable period of time before the 60-day election period ending on December 31, 2007, that there will be no SIMPLE IRA plan for 2008. For 2008 the employer may establish and maintain another kind of qualified plan for its employees and, if this other qualified plan is not operative in 2009, re-establish a SIMPLE IRA plan for 2009.

Let's say the employer is not dissolving but just in bad financial shape, and looking to cut costs. Can the SIMPLE IRA be terminated mid-year?

Absent something in the document that makes it due sooner, I would think (generally) the tax due date would be the only relevant date. So if you usually make your match a week after payroll, and one pay-period you make it two weeks later, you're still OK. Or if management decides to fund the match once a month, also OK. In EPCRS though, I believe that if you accidentally omit an eligible employee from getting the match, if the match would have been funded each pay-period that you need to give them lost earnings. Can anyone confirm? So I wouldn't go so far as to say lost earnings are NEVER needed.

OK Fine, so I'll amend the document to limit 401(k) for the owners to $.01. Are you happy with this plan design now? If so, we're literally debating over a penny.

But the reality is, a) this is an EXCELLENT plan design in certain situations b) There is an excellent case that it is legit. Also, Corbel's document (as an example) does not say "limit must be greater than 0%." which I think the IRS should have insisted on if this was going to be a problem...

Taken from EOB: Caution: example withdrawn from regulations. It should be noted that, when the catch-up regulations were in proposed form, there was an example exactly on point, where a plan set the plan-imposed deferral limit at 0%, but also included a catch-up provision. This example was absent from the final regulations issued under IRC §414(v). Treasury officials have not discussed the reasoning for removal of this example, or whether it represents a decision by the Treasury that a 0% deferral limit is improper, or that they simply didn't want to promote such a plan design by way of a regulatory example. Clearly, a plan could set $1 as the deferral limit and there would be no question it is acceptable, so setting a $0 limit shouldn't make a difference. Some would argue that with a $0 limit, the plan really doesn't have a 401(k) arrangement. But that argument fails to recognize that, even with a $0 limit, those employees who are catch-up eligible could make elective deferrals, so the 401(k) arrangement is still available, just not to all eligible employees. Personally, I'm comfortable with anything Sal is comfortable with. In addition, I am also comfortable withy any Tom Poje is comfortable with