austin3515

Two plans in one brokerage account is NOT a master trust. I can't site the exact definition of a master-trust, but this is not it.

So $30,000 total??? That seems a little ridiculous. $15K for both audits I think would be a little high but in the ball-park. I would definitely be inclined to get some more quotes if it was me!

I'm with Kim. There is nothing wrong with two plans in one brokerage account, but this would certainly complicate the audit process. I mean, I guess they would really need to audit ALL of the assets, because each plan gets a pro rata share of the assets (versus earmarking different investments for different plans). This is alluded to briefly in the instructions to Schedule H. Something to the affect of "for investments from multiple plans commingled in one brokerage account, report each plan's pro-rata share of the investments on Schedule H.

Yes. But that's only an ADP safe harbor, so you need to run ACP test. If my calculator is working, that means the NHCE must contribute at least 5% (5% plus 2% = 7%), assuming all of the HCE's do the full 7%, in order to pass ACP.

OK, what do you do before forfeiting them? I certainly like that, and I agree with you about the 411 regs. It was actually Corbel who told me the prudent fiduciary would likely choose NOT to forfeit.

We've done some research and in light of the DOL's FAB, no one seems to think forfeiting is a very good idea. And as you point out, we need to keep track of this forever. By the way, the locator services is the first thing we tried, but does not always work. And "Yes" we lowered the cash-out to $1,000 for all of our clients. So Kim, even though a) the Plan is not terminating, b) your Plan doesn't provide for automatic rollovers and c) the balance is more than $1,000 (but presumably less than $5,000), you would still force them to a missing participant IRA after trying all four of the items in the DOL FAB? This is exactly what I want to do. Does anything other than brilliant logic apply to support your conclusions? (knowing that logic doesn't go very far!).

Is anyone out there opening "Missing Particpant IRA's" for particpants whose paperwork comes back return to sender and for whom "efforts to locate them" have come up dry? We want to start doing this, but I'm concerned because none of our documents provide for automatic rollovers in the first place. What are others doing about lost participants? We want to relieve ourselves of the issue as easily possible!

I didn't read the post closely enough - all I saw as that he wanted to switch from pro-rata to per-capita!

Clearly, no one posting to this works with small employers. These things happen ALL THE TIME!!! Maybe not at Microsoft or IBM, but John Doe DMD often makes this mistake. Just fix it move on!!! If I spent this much time thinking about how to correct these things I would not get nothing done. If it was me, I would short future 401k deposits for the employee. If there are any employer contributions, I'll transfer from 401(k) source to profit sharing/match source for that employee. I agree the money shouldn't go back to the employer--remember, it's right in 401(a) that it should be "impossible for money to back to the employer." Why bother potentially running afoul of this requirement? It's important to remember that IRS agents work for the government, and not in the "real world."

Too late. Would need to be executed before year-end, and that's assuming they need to be employed on 12/31 to get an allocation! If everyone gets it, regardless of employment status and/or hours worked, then the amendment must be executed before the plan year even begins!! Essentially, if someone has accrued a right to an allocation, you can't amend the Plan to take it away.

The year of service definition almost certainly will apply only for vesting purposes and/or eligibility to receive an allocation of er contributions (based on what you've said). Sometimes if you know what the answer should be its easier to find that that is in fact what the document says!! Eligibility is not the only thing that needs a year of service definition. Give it shot!

I could easily argue that not using SS#'s would impede administration. There is no other identifier in the world unique to that individual as considered against every other American. What better way is there to make sure everyone gets THEIR money?

In the world of New Comparability, the only reason you would break groups down by age would be to provide the older workers with more than the younger workers because it's the younger workers that louse up the testing. In other words putting people above 35 in one category and those below in another would "never" be done to give more to the younger employees than to the older ones. Though I guess one should never say never, so perhaps the point is well taken...

Fender5150: Your dabbling in the most complicated area of DC administration, and it is clear from you posts that you are at a very early stage in your retirement plan career. Note that I am not judging your intelligence but your experience, so I hope you won't be insulted. Hopefully, you are working with someone more familiar with these rules because it is very easy to "crash and burn." And you won't know you crashed and burned until your client gets audited. But at any rate: 1) Cross-testing an allocation in no way shape or form affects the exemption from the ADP test provided by the 3% SHNEC. If you provide the SHNEC, no ADP test (you mentioned ACP test which, wit no matching or after-tax contributions never comes into play). 2) A plan that provides the 3% SHNEC is only exempt from the top-heavy rules IF the only employer contributions under the plan are the 3% SHNEC itself. So if there are profit sharing contributions or reallocated forfeitures, then the top-heavy exemption is blown. As Tom already mentioned, this point is moo (like a cow's opinion!) if the Plan uses full year pay in a participant's initial year of participation.

I'm not sure of the site, but I'm almost certain you could elect to have the limitation year be the calendar year. This is especially common when the employer has two plans, both with different year-ends. For 415 limits, you need to pick one because the test is at the employer level. But even without two plans, I still think you pick a limitation year that doesn't match the Plan Year.

Definitely no from the 401(k) source. Look to the distributionr restrictions of 401(k) contributions. 401(k)(10)(a). For all others, yes IF the plan is being terminated, no if it is being merged into A's Plan.

I think there is some precedent for making the plan effective 1/1/07! The advantage of this is not to have to prorate the 225K comp limit nor the 415 limit. According to the ERISA Outline Book, at the 1997 ASPPA Annual Conference this questions was posed to the IRS and the response was that effective date could predate the existence of the company. The EOB does recommend that if you do this, this should be specifically noted in the request for a determination letter.

http://www.dol.gov/dol/allcfr/Title_29/Par...2530.200b-1.htm "Such a plan, therefore, may provide that an individual who has been a participant in the plan, but who has separated from service before the date on which the employer's contributions to the plan or forfeitures are allocated among participant's accounts or before the last day of the vesting computation period, does not share in the allocation of such contributions or forfeitures even though the individual is credited with 1000 or more hours of service for the applicable vesting computation period. " Look at that - there was a site specifically to the contrary. Allocation conditions must be determined before last day of the Plan Year.

I'm not sure I agree. You can have the allocation conditions be whatever you want. The only statutory requirement is that the plan passes coverage. Unless there is something that I am not aware of, which is definitely possible. But in the absence of some sort of citation that is directly on point, I would say my answer is correct (so hard to answer questions based on what has never been answered in regs!).

i.e., each tier of match must pass the "nondiscriminatory classication" test as a "Benefit, Right or Feature." There's probably a little more to it then I have outlined here, so definitely do some research on that before blessing the design.

I would jump in and defend myself, but Mike did such an incredible job of that I feel totally vindicated.

I'm with Mike Preston. We've gone over this in detail for a client. What happened to my client was that they got the I-9, they had a valid ID (albeit fake , so the employer was not at fault when immigration (or whoever) arrested them. The question was, what happens to their retirement plan balance? The answer we obtained was that they are indeed entitled to keep it, because nothing excludes illegal immigrants from a plan (the absence of a specific site to the contrary is the only "evidence" you'll find--check 410(b) for the list of permissible exclusions). Regarding compensation, assuming the plan uses W-2 as the definition I doubt the IRS would agree that an illegal immigrant working illegally in the US should not receive a W-2 and pay the applicable taxes!! I should point out that I am a CPA with retirement plan experience, though I should also point out that my CPA background is far from on point! This answer is from the QPA in me

We have a client that I am desperately trying to convince to go daily val. Presently all money is one master brokerage account and we (the TPA) are responsible for doing quarterly valuations and coordinating with the broker regarding investment trades needed (such as recurring deposits, and account rebalances). I'm sure others are familiar with this nightmare! My question is, I seem to recall that once upon a time there was an article regarding what a fiduciary nightmare this was. Does anyone remember seeing this article? Sounds like a stretch, but I've had fruitful results with similar obscure questions!!

I read about 1/3 of your post and realized I was only 1/3 through and stopped immediately. So hopefully this helps: Many documents have a provision that states upon divorce, the designation of spouse as beneficiary is null and void (obviously unless there was a QDRO). Hopefully your brother's document has such a provision. The only way to know is to get a copy of the document.

Insurance companies must give scheduel a data, I agree. However, what they give is contract value, not fair value. Forgive me, but perhaps you're reporting contract value but which you think is fair value? For example, are you reporting the value of insurance included in people's accounts? I mean, does the amount you're reporting match the total of participant accounts as reported (within that investment)? If it does, then you are reporting contract value.