austin3515

Forget that for a moment: Do you not agree that if someone can defer 20,000 despite failing the ADP test that the failing the test is of zero consequence? I would suggest that it is returnable under some combination of 402(g) and 414(v) because you used $8,000 of catch-ups in 2006 - $3,000 to exceed the ADP limit, and $5,000 to exceed 402(g). Does nobody else see it this way???

My well thought out response is this: I disagree. Would it sway you at all if I told you that I spoke to Derin Watson on this very issue, who affirmed my position (he would not conclude that the regs were in error, just that my intepretation of the regs was off a little). But without a doubt he indicated that letting someone defer the full $20,000 even after failing the ADP test was a double counting of catch-ups.

I should point out that in practice, I am only allowing one catch-up limit per calendar year for each participant. In other words, I'm limiting people to the full $15,000 PLUS $5,000 LESS Catch-ups consumed in ADP testing. So if $3,000 was consumed in ADP testing, calendar year deferrals are liminted to 17,000 (because only $2K of catch-ups remain).

I beg to differ. While I agree that that is what the regs say, I still think it is an error in the regs that leads to this conclusion. Applying this dictates that this lucky HCE received two catch-up limits. We all agree that the ADP test was failed, and he averted refunds to the tune of $5,000 by reclassifying them as catch-ups. Now, you are suggesting that he should be able to exceed 402(g) AS WELL AS the ADP limit by an additional $5,000. How is that two separate limits can be exceeded by the full $5,000 in one calendar year? The answer is simple: A math error in the regs.

Forget my example. Everyone (but me) seems to think that if you fail the ADP test for the 9/30/06 plan year, and reclass all of your refunds as catch-ups (to the tune of $5,000), that you should be limited to $15,000 of 401(k) for all of 2006 (i.e., $10,000 of regular 401(k), plus the $5,000 of catch-ups that were used up during the ADP test. But in Sal's example, the failing HCE still gets to contribute the full $20,000, which in my opinion is based on the math error in the regs that I set forth above. This is despite his failing the test and consuming catch-ups to avoid refunds. In what way is this particular HCE adversely affected? Unless my calculator is broken, he is completely indifferent to failing the test.

For anyone who has the 2006 EOB, turn to page 11.275 (paragraph (3)). Correct me if I'm wrong, but that participant contributed the full $20,000 in calendar 2006. So either Sal and I are both wrong, or y'all are

401k Max = Calendar year. The only reason plan year is relevant is to determine the amount of the refund reclassed as catch-ups. By the way, the formula I referenced from Kevin C is straight from the regs.

You say: 401(k) Max - (YTD 401(k) – **YTD 401(k) treated as catch-up**) + Catch-up Max – **YTD catch-ups used** But I say what you say could also be said as this: 401(k) Max - (YTD 401(k)) + Catch-up Max Why do I say this? Because (and I've said this before), the two terms enclosed in asterisks are certainly one and the same. Further, because the first parenthetical statement is begins SUBTRACTED, that means that the first **ed term is being added to the 401k max. Because you are later subtracting the exact same amount, the two terms cancel. I'm pretty sure I went through an example before, but who can keep track. You'll need to tell me where my math is flawed before I'll concede defeat.

After 37 posts, we couldn't agree on a plan that stays off-calendar! Hey Mike, care pick up where we left off on this one?

But if you're software program is using a blend, you have my permission to sleep at night

Tom, would -11(g) work to correct 414(s) issues?

There is no requirement that contributions be ALLOCATED based on a 414(s) definition of compensation. So if you're plan document excludes bonuses, then so be it. There IS a requirement that you use a 414(s) definition of compensation for NONDISCRIMINATION TESTING. So what you need to do is run your rate group testing, which presumably will fail based on allocation rates for the same reason your ratio test failed. So now you'll need to use cross-testing which MAY involve the Average Benefits Test (i.e., if each rate group doesn't pass the ratio percentage test). Also, make sure you pass the gateway contribution requirement. In other words, you basically have a New Comp. plan. If the allocation provisions as currently written preclude the plan from passing nondiscrimination, then a "-11(g)" amendment would be required to bring the plan back into compliance. For example, I would think an amendment to bring in bonus for compensation might be a solution. My 11(g) experience has related solely to fixing coverage/nondiscrimination issues, and not for a definition of comp, though I suppose the same logic would apply. Perhaps someone with more specific experience can chime in.

I've often wondered what is required of an attorney before he/she can refer to themselves as ERISA Attorneys. Surely their exists an attorney who spends 10% of their time on ERISA issues and bills themselves as an ERISA Attorney.

What the Treasury is saying is that if a person earns $115,000 a month, you can make 401k based on the comp from any two months you want. Or, you can say that your $230K is taken pro rata from each pay check. The only way you would have a problem is if the regs said you MUST apply 401(a)(17) based on the comp paid earliest in the year. And they explicity state otherwise. Tom is just the very capable messenger who has the insane ability to find these little gems

I am more than happy to wait but I'm troubled with your intepretation of iii simpy because it references beneficiaries exclusively, and not "participants and beneficiaries" as it does in clauses i & ii. So it appears the distinction is not in the defition of an "account" but rather who has a standing to make the request. It is fairly common of course for a beneficiary to NOT have an account. For example, a dead-beat husband has skipped town; the spouse, as the sole beneficiary, seems to be able to request a statement regarding the investment of the husband's account. To be more clear on my point, the spouse is a beneficiary not described in i or ii, because she does not have an account balance. And finally, a beneficiary could have an account balance in the plan if the individual inherits the balance of a deceased participant. So it seems to me that every provision seems to have a very reasonable appplication. I'm happy to join the bandwagon of those waiting for some information from our friends at the DOL. I'll certainly be blaming them for needing to provide information to participants 2x, instead of just once! But I will say this: I thought we had a much better case for leaving out information on social security integration on the quarterly statements - there was a big thread many months ago on these boards

Are people just ignoring this? I wanted to re-tickle this question. Can someone please just tell me I'm not crazy, that this is a requirement?

Just looked this up, and it applies only to DB plans. Alos, according to the EOB, former employee is anyone who did not work at all in the plan year. Apparently, DB plans must allow providing additional benefits to retirees? Not my forte...

IF he's benefitting he's not excludable. REad the fine print of the regs, and you'll see that the Term w/ less than 500 hours applies only to individuals NOT benefitting.

NEver come across a securities issue before. All the VS documents are clear that a mutiple employer plan could exist. I wonder if the fact that a single trust is maintained makes you feel any better?

1) Electing not to make 401(k) contributions does not equal waiving participation. Your question was worded as though they were opting to irrevocably waive participation (you had mentioned before eligiblity, etc., which is a requirement to irrevocably waive). Simply electing not to make 401(k) does not create a coverage problem. 2) As long as the two employers are unrelated, then there is no combination for 415. The limit is applied separately for each plan. An individual is limited (on their 1040, etc.) to $15,500 so they certainly need to ensure that a consolidated basis this limit is not exceeded. However, they do need to modify their elections in each plan accordinly. So unless they hate the idea of free money (which I have seen happen) then they should just elect to make no 401(k) contributions, and do not irrevocably opt out of the Plan. And this way, everyone is happy. Side Note: From a plan design perspective, the safe harbor match does appear to be an appealling alternative for the employer, but without knowing more about the goals, I couldn't say...

1) If waiver is obtained, then no 3%. HOWEVER, that person is not excludable for coverage, so hopefully you can still pass even without that individual. I've always wondered what would happen in an owner/one/two employee company when one employee opts out. I suppose that owner is basically barred from having a plan?? NEver run into it, fortunately, but I have come close. 2) Yes, she can exceed 100% of pay by up to 415© limit, HOWEVER, obviously, their total 401(k) contributions cannot exceed 100% of pay, since they are, after all, payroll deductions.

I know, I know, beggers can't be choosers, but your table doesn't include the Immediate Annuity Factor one, which Tom inidcated is the outside range table!!! Anyone??

THANKS!!

How are people handling PPA for pooled accounts? Are you just going to attach the relevant section of the pooled investment statement? Are you just going to give a listing of the funds and perhaps what percentage each security is of the total?

J4KBC, just give me what you got! When you add a reply, right after the main text box is a tool that lets you upload files. Whatever anyone gives me, actuary or not, will be proved against Relius, so not to worry about accuracy. I'm betting its perfectly fine.