austin3515

It seems unusual that a plan would exclude union members other than union members who are HCE's. I'm wondering if the HCE's were never eligible for the office plan to begin with. IF the office plan simply excludes union employees (without any additional special language about HCE's) I'd say you've got a problem because your union HCE's didn't belong in the Plan in the first place. What's more, something about that provision smells a little like discrimination. I think it's a coverage issue because the "office plan" needs to disaggregate the union employees for testing. Your only covering HCE union employees so it would be impossible for you to pass coverage. Is the union plan maintained by the union itself or the employer? If it's the former, I'm not sure you can even aggregate the union plan for testing? So my questions are 1) are you sure the HCE's are allowed in the office plan and 2) who sponsors the union plan?

If you could provide a site, that would be great - I'm actually dealing with this exact situation on my own. Everything I saw led me to the opposite conclusion.

1) You need to covert Canadian Dollars to USD because the applicable limit is denominated in USD. 2) I like the site that you have indicated HOWEVER, I don't think that section applies because the employee DOES have US-Source income for part of the year. So take an example: John Doe from Canada transfers to the US on 6/30/07. I don't see any way around aggregating his compensation for the first and second half of the year to see if he is an HCE for 2008. The real interesting question is do you look at the Canadian compensation for 2006 to see if he is an HCE for 2007? I still think the answer is yes except for one thing that keeps nagging at my brain: If that's the case, then what is the point of the rule you cited?

McDonald's got rid of it for a reason...

From the 5330 instructions (Rev 10/04): The second tier tax is a 100% tax that is applied "if the initial "tax" is not corrected within the taxable period." I think the use of the word "tax" is sort of a typo as the surrounding text clearly related to correcting the PT--not sure how to "correct a tax"? The trick here is the definition of taxable period, which is the earliest of: a) The date correction is completed (sort of hard to miss this one) b) The date of a mailing of a notice of deficiency c) The date on which the tax under 4975(a) is "assessed" In my opinion, this could be interpreted loosely as follows: You only need to pay the 2nd tier tax if the DOL is the one that catches you. My recollection from DOL seminars is that in reality the 100% tax is almost never imposed - rather it is a big stick that the DOL can wield as a negotiation tactic. One thing is for sure, I have NEVER heard the DOL/IRS discuss this 2nd tier tax as it relates to late deposits, and I think the above is the reason why. It is important to note that the example (which is a fairly typical situation involving prior years) does not include the 100% tax.

It can definitely wait. The point of completing the affilliated employer sections is to include the employees of that employer.

Coverage doesn't care if they get a SHNEC or a PS contriubtion. They're treated as benefitting either way. Then you turn to nondiscrimination, and you need to run rate group testing because (probably) there are different allocation conditions on profit sharing then safe harbor. But, lucky for you, all of the nonexcludable NHCE's are receving the same 3% of pay that your HCE's are getting, so rate group testing is passed by default (i.e., because everyone is benefitting in every rate group). So with this plan design, you can never have any nondiscrimination/coverage issues EXCEPT: if the plan is top-heavy, you've blown the exemption by allocating profit sharing contributions. If only part-year pay is used to calculate the SHNEC, you'll need to give them an additionl top-heavy minimum.

What JSimmins is referring to in his first paragraph is "fail-safe" language - in other words, if the Plan is failing coverage, then participants not benefitting will automatically be brought in (one by one) until the test is passed. So the Plan, as written, will never fail coverage. If your plan has it will read something like "if the plan does not pass 410(b), then..." If your plan does not have this, it could be good news - plans with fail-safe language are precluded from using the average benefits test, which you might pass!! B/c HCE's are generally older than the employees, cross-testing the average benefits generally helps.

Agreed that your correction is passed due and you have qualifcation issue, but you don't need to involve the IRS. Check out the IRS's EPCRS correction program. You can definitely self correct this using the "one-to-one" correction method (assuming the other eligibility requirements are met). Basically what this says is that if your have refunds of $5,000 in total that you would contribute a QNEC to the employees of $5,000 as a "penalty" for not correcting it in time. I'm saying you can self correct, because under EPCRS, you have until the last day of the second plan year following the date on which the corrective distributions were required (Section 9.02), which gives you until 12/31/2008 to self-correct a failed test from 2005 EVEN IF THE FAILURE IS SIGNIFICANT. Here is a link to the IRS program: http://www.irs.gov/pub/irs-drop/rp-06-27.pdf

I've done this. I can't see how limiting the HCE's to zero discriminates in their favor. LEt's say he/she was not limited to zero and the ADP test was failed--the HCE would be able to retain AT LEAST the catch-up amount in the Plan, if not more. Okay, I suppose it might help another HCE keep money in the Plan, because of the ordering of refunds, etc. but I fall back on my original comment (i.e., limiting HCE's to zero discriminates against the HCE's).

Does she realize that the funds would be paid right back to her immediately?

IRS issued a ruling on how to calculate this (2006-38). http://www.relius.net/include/IRSPDF/IRR-06-38.pdf Here's Corbel's write up of this. http://www.relius.net/news/technicalupdate...?ID=343&T=P

Okay so the next time I came in, it defaulted to this board... If I could delete this posting I would... But kudo's to benefitslink for doing things right!!

Does anyone else dislike the new page layout? I gues the theory may have been put the most popular item towards the bottom to get more traffic on the "less trafficed" areas, but what a drag! Hey benefitslink, can you have in the user profile to default you to a favorite board (i.e., 401k plans)?

29 CFR 825.215 paragraph d(4) http://www.dol.gov/dol/allcfr/Title_29/Par...9CFR825.215.htm

The doc does provide that maternity/paternity leaves cannot cause a break, but it doesn't mention FMLA leaves in particular. Are there any sites on the Internet?

Does anyone know of a good write-up regarding the impact of FMLA on retirement plan administration? I know they must be treated as active on the last day of the Plan Year, but I'm curious if they need to be credited with any hours of service?

One plan document would never amend another. I think you have a plan document failure. Maybe it's in EPCRS? Definitely you are correct that all must use TPG, of course, because nondiscrim must be run at the employer level for coverage (at a minimum).

First of all, do they have guaranteed payments? It's not only profit allocations, but rather the sum of profit allocations PLUS guaranteed payments. If disallowed deposits have been made they must be returned (adjusted for earnings).

IF they were eligible to defer they are included. Wheter they made 401(k) contributions or not is irrelevant. You're thinking of coverage rules regarding when an employee can be exlcuded (i.e., termed w/ less than 500 hours), and those rules do not apply to an ADP test.

I think the audit period is generally 3 years. You should at least go back three years.

At last... Thanks Tom!!!

Okay, but only NHCE's are getting QNEC's (to the extentt hat they are being used to pass the ADP test) so it's harder to pass the gateway without QNEC's. So I'll ask one last time and then I quit - You should exclude QNEC's from the gateway? For all you die hard laymen out there, I believe the consensus is that you should exclude the QNEC's from the gateway test. However, I still maintain that this has not been specifically addressed. The distinction is that the gateway contribution simply opens the door to allow you to run the testing based on EBARS, and is not necessarily part of the test (i.e., the rate group testing). I've heard people much smarter than me rationalize including QNEC's in the gateway in this way.

So Mike, at the risk of beating a dead horse, you would NOT include QNEC's in the gateway?

I think you'll find that ERISA Outline Book would say it's reasonable to pro-rate. I recall that the IRS position on 401(k) contributions during the year is that 401(k) can be made during the year because income really is earned throughout the year - the fact that it's deemed earned on the last day doesn't change this. Based on this, I would be comfortable pro-rating, but definitely check out the outline book.