austin3515

In the interest of full disclosure: We just checked with our ERISA attorney and he vetoed my idea :angry:

Well I think it's owner discrimination. For example, imagine if this was an employee. Would the IRS really make you refund 69% of pay to the employee? I think not.

There is some debate, but it is commonly accepted that you can test on either basis (OE's or not) regardless of what the document says. Similarly you can aggregate two plans (in the same controlled group) or regardless of what the document says. This conclusion is based on the fact that ADP testing must be run using the same method as coverage testing, and plan documents do NOT need to describe how they will pass coverage.

Thankfully, that ridiculous schedule T is no longer required

I should point out that I have been generalizing my comments, and big does not necessarily mean bad. Some of the big providers are actually excellent at this. What's more, the plans with huge asset bases generally are provided very expert advice/resources. It's the middle market plans (0 - $5,000,000ish) that should be very cautious.

I think it's got more to do with providers over-selling their services, and Johnny not knowing the right questions to ask. For example, the salesman says "oh yeah, we'll run ALL nondiscrimination testing for you!" So John Doe assumes this means that actual thought will go into the process, and this of course is where he has made his mistake...

How can I resist... Permissive Disaggregation refers to testing "otherwise excludables" separately (i.e., people who've worked less than a year, and who are under 21--also know as people who rarely contribute). Since the employer can elect which method of testing to use, and because the method used was acceptable, I just can't see this being an operational defect. So I think the HCE's are basically stuck. This is a classic example of the importance of a TPA. The "Data PRocessor" type recordkeepers expect the plan administrator to request testing on otherwise excludables! Like John Doe business owner has any idea what that means...

But really, are you going to take the advice of a 3 eyed fish that exhibits poor grammar?

Believe it or not there are plans that allow for participant direction that have all investments in one brokerage/trust account and hire a TPA to perform allocations quarterly using a separate software program. Then in addition to allocating the money to each participant, and to each source, they neeed to determine which invesments (and the related income) are allocated to each participant (at the source level). This is often done for smaller plans that wish to minimize investment expenses incurred by the plan (through economies of scale), while still allowing participants to choose their own investments. It's a nightmare though, and I do not recommend it. We beg and plead with our sole client that does this to change to a more sophisticated platform.

I can assure all that I am VERY ethical (often to the chagrin of my clients), and I do indeed believe that the interpretation I have set forth is reasonable. What's more, I have already discussed with the owners here obtaining the opinion of an ERISA attorney before moving forward. I was hoping someone would say this!! So by that rationale, if the Plan was integrated at ANY TIME IN ITS HISTORY, then the Plan needs to include the integration disclosures, right?

Man, I really think I got the analysis right on this one. It really doesn't seem to be that aggressive of a position, especially considering the "good faith" requirement. Can anyone point me to some sort of a flaw in the argument I've presented (one that doesn't include general opinion) that discredits it as good faith? Have I said anything that is clearly incorrect? So far the only reason for not omitting is "why take the chance?". If there is no clear mis-reading, then by definition, it is a good faith interpretation.

We have a lot of Hancock plans, and the only reason we're sending them statements is b/c of integration. So if this is classified as good faith it eliminates the need for us to do anything on a LOT of plan!

Wait a minute, I think I can easily make the good faith leap now: The law says (emphasis added): "must include an explanation of any permited disparity under section 401(l) of the internal revenue code "that may be applied in determining any accrued benefits described in clause (i). Clause (i) discusses a) total benefits accrued, b) nonforfeitable balance, etc. In a DC plan, the way in which total benefits accrued are determined is based on the ACCOUNT BALANCE, and not any formula. Because a description of permitted disparity is not relevant to detemining one's account balance (i.e., the market value of investments is determinative), it is not applicable in determining accrued benefits, and therefore the plan's use of permitted disparity need not be disclosed!!! Note too that Accrued Benefits refer to the benefit as of a particular date, and NOT a current year allocation. Please comment NOT on whether you think I'm correct (because that is irrelevant!). Please comment on whether you think this meets the good-faith requirement.

Sounds like maybe you're using the corbel prototype: If so if you check both the "exclude comp while not a participant" and then indicate "special effective date for safe harbor provisions" as 10/1/07 in the field provided, you will get the outcome you are looking for (in my opinion).

I was hoping someone else had a good faith interpretation that would lead to annual disclosure for integration!! I suppose "Congress couldn't possibly have intended THIS" wouldn't count as good faith...

I've seen some providers (one fairly large one, in particular) take the position that SS Integration need only be disclosed on an annual basis (they indicate that they have spoken with their legal counsel on the matter). I couldn't agree more that disclosing this fact quarterly is way over-kill, but the way I read the law the only exception to quarterly info. is for vesting. So are people disclosing SS integration Q'ly, or annually? If annually, what is the basis?

My professional opinion is that Corbel rocks. I'm sure it's on the high end of the spectrum, but as with most things in life, you get what you pay for...

The original post was that the employer would contribute more or less to certain employees based on their elections regarding health benefits. If some are HCE's and some are NHCE's, the nondiscrimination could get ugly. Of course, I have never heard of what you are discussing, so maybe there is a way to achieve their goals that I'm not aware of.

I just can't see that working. Even if it did, it would be a nondiscrimination testing nightmare!

Fender: Which of the safe harbor requirements was violated?

The requirement is SOLELY that the plan year be 3 months long, which in your case it is. (1.401(k)(e)(3)). There is no requirement that there be no operational defects for that short 3 month plan year (imagine the whole thing being blown because ONE person had no deferrals withheld! The only difference here is scale). Therefore, I think your safe harbor is in tact, and you correct this operational defect through EPCRS (which I should point out is no walk in the park--it will be pricey!!).

On what basis does he refer to himself as a pension attorney? Of course, are you certain he is not truly referring to employer contributions? As someone already mentioned he could contribute $12,500 through the date indicated by the attorney. And from the sole owner of a corp's perspective, that's a mere $2,500 less than the full 401(k) limit. The fact that it's profit sharing vs. 401(k) means nothing. i.e., perhaps it is you who are misunderstanding him?

When did anyone suggest that the loan became a distribution Question Mark. Let's say you had $10,000 in a checking account and you loaned your friend $3,000. What you're suggesting is that you should be able to withdraw $10,000 from the bank even though there is only $7,000 in your account. This analogy is dead on to your situation.

If you're looking for a section of the code/regs that will say "you cannot withdraw more money than you actually have" I can assure you it will be a fruitless search. Your other sources are not eligible for hardship. It's as though they do not exist.

I have an infant and a toddler, so it's not like my wife and I are gallavanting on the coast! Sometimes I have a spare minute or two, and with that I check out the boards, reads a quick NYTimes article or something like that!! I always wanted an Avatar, and when I finally found this one I was really disappointed that it didn't show up... don't if I'd say I was giddy when it appeared, but it was pretty cool...