austin3515

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.

How do you get the information? Are the insurance companies providing this on request? Is it in the standard reports you are getting? I've just never seen fair value reported.

That was a nice write up of fair vs. contract value, but did not indicate which one should be reported on 5500 (at least not that I could see)?

On schedule H, is the value of "benefits responsive" insurance contracts reported at fair market value or contract value? The instructions to Schedule H say use the same basis as line 3 or line 6 on schedule a, but the instructions in those line items don't tell you what basis to use? Is anyone inquiring regarding Fair Market value? Is there anything published which explicity states contract vs. fair value?

-Put on the enrollment form in bold lettering. -Circulate a memo to the participants at the beginning of every year. -Warn people who are at risk for the issue (i.e., high income high percentage)

Please, call me Austin

You are not wrong. One might also say, "you are right" Yeah, I think the wink is my favorite...

The fact that the definition of comp implies annual should not be a "rub." The plan should explicitly provide that the match is calculated based on pay-period deferrals and pay-period compensation. The fact that somehwere else in the document, comp. is defined as annual, should not render another part of the document null and void. Tell your co-workers not to think so hard

If match is pay-as you go, calculatated every pay-period (or month or quarter) then you do NOT need a true-up as long as the plan document provides for the calculation each pay period (or month or quarter). Note that the the contriubtions need to be deposited (I believe) by the quarter folowing the quarter to which they relate (ONLY if they are calculated based on pay-period method). If the doucment is not specific, then generally you need the true-up (i.e., annual is assumed if nothing else is excplicitly stated).

One day?? You get a gold star by any measure, Miss Mary Mac Mac Mac (I just couldn't resist .

In-Service distribs are the 5 years. All others are one year.

I think a plan that covers only a sole owner, or only a >50% owner and his/her spouse would be exempt from ERISA. Actually, the isntructions to the 5500 do get into this (under Who should File), because plan's not subject to ERISA need not file a 5500 (though they might need the EZ form). Interestingly, if they were all partners unincorpoated, I believe the answer is different.

Yes for the ADP test - only 401k contributions can be recharacterized as catch-ups.

LSULLIVAN - The HCE's should have received a check personally - it is their personal money. The BUSINESS should be depositing the funds.