austin3515

That was why TAGData nixed the amendment.

I think the point is you must be failing SOMETHING. 99 Participants out of 100 are receiving a profit sharing contribution (allocated as a straight % of pay), there's no way your arguments apply. You can't amend the plan to add participant 100 under 11g (in my opinion). Also, Blinky, if you're 11g amendment is to eliminate a last day rule, that amendment could benefit both HCE's and NHCE's, depending on who terminated before year-end. I think your arguments have merit Mike, but only in very limited circumstances.

I just submitted this to TagData and they said you must fail a test for this to work. Otherwise, it is a discretionary amendment, which must be executed before the end of the year. Proceed with caution is my advice

I'm interested to know the basis for doing this amendment based on 11(g)-which applies to "corrective amendments." What are we correcting?

11-(g) is specifically for correcting failed coverage/nondiscrimination testing - not just adding Johnny cause you feel bad that you cut down his hours. Ironically, 411(d) probably supports why you can't do this.

Absolutely - It would be a taxable distrbiution from the plan to them, but they can use their after-tax personal moneyin any way they wish--including payment of Plan fees. I suppose you could take the portion allocable to their accounts directly from their accounts without processing the distribution. For example, you could allocate the expense pro-rata based on account balances - their portion comes from their account, and the balance comes from a distribution that they subsequently take from their account. This might be a tad aggressive, but I think their personal sacrifice to get participants paid out will be appreciated by the government, who otherwise would be left to deal with an orphan plan (high on their list of pet peeves).

They'll have a list of request that will be at least 2 pages long. And yes, they are required to do at least limited procedures for a few years back (if not more). The first year especially will be a pain (they'll need plan documents, they'll need to right long boring memos about everything you do, etc.). I audited plans for about 5 years before converting to TPA work... If you haven't already selected an auditor, make sure you get one that does these on a regular basis (at least 20 or 30 a year). The AICPA has some sort of a "quality center" which is kind of an endorsment I think (it was introduced after I left the industry). Remember, if you hire an auditor who has no clue what they're doing that's your problem. Blaming the auditor won't get the DOL off your back. The DOL also has a pamphlet on their web-site about picking an auditor.

Since when does anyone of this make sense??? We just blindly follow a bunch of innane rules!

Here's the Reg: A plan that satisfies the ADP safe harbor requirements of §1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4% of each employee’s compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees.” If not for the EOB, I would never have come to that conclusion. There must have been a Q&A or something...

After hearing your answer, and re-reading the EOB, it is clear to me now that indeed, you would simply run the test exluding the SH Match. Thanks!

Tom, there were two choices in my original post: which one sounds correct?

Plan is a SH Match (Basic formula) w/ Discretionary Match as well. The discretionary match has a last day/1,000 hour rule, so I'm running ACP testing,. The regs say I can elect to exclude deferrals that do not exceed 4% of pay. Can I just exclude the Basic SH MAtch altogether from the ACP test? Or should I run the testing, all inclusive, and then subtract for everyones' contribution percentages (obviously if it's less than zero, I would limit to zero).

I'm not yet convinced. Every document I've ever seen indicates that in the first year, the NHC average is deemed to be 3%. IF (and only IF) you elected in the document to use current year testing in the first year, then I agree with everything y'all are saying. If you're plan document says your NHCE average is deemed to be 3% than it's 3%. I've never known them to read "deemed to be 3% unless there are no NHCE's." The stipulation in the regulation that a plan with no NHCE's is "deemed to pass" is to clarify that HCE's are not limited zero simply because there are no NHCE's. In this "deemed to be 3%" scenario, the rule seems to become irrelevant.

ADP has their Total Source plan (a giant multiple employer plan) which presumably thousands of plans have adopted. You would think they wouldn't have much of a business if that wasn't an option (along with many other things). I figure their document would look a lot like a prototype, where each employer completes their own"adoption/adoption agreement" of the total source basic plan document. Anyone ever seen one of their documents?

I think what some people are saying though is that you should have limited them to 5% in 2006 (first year ADP for NHC's is deemed to be 5%, no matter what). Which, if they contributed the maximum did not happen ($15,000/$220,000 = 6.82%. In 2007, I think we all agree you're okay though.

Here is my impression of Lisa Morjiri-Azad: :angry: I'd vote for any president who promises to kick her out on the street.

Not in my opinion. When one LLC owns another, we're usually talking about a parent-subsidiary controlled group, and the cut-off for control is 80%. But, for the brother-sister controlled group (i.e., 5 or fewer common owners control 80%, and have identical interests totalling 50%) is not met either. The only common owners are the owners of LLC A, and again, they do not own at least 80% of BOTH companies (i.e., because they own less than 80% of B.

Amen to that Bird!

LEgally, the money is owed to the PLAN, not the employee. The Plan in turn has an obligation to the Participant. Giving the money directly to the participant does nothing to satisfy the obligation owed to the Plan. No specific site will exist saying that you need to follow the terms of the Plan (actually, that's in the 401(a) somewhere). In the Original Posters defense, it sounds like he works for a company sponsoring a plan, not a TPA.

The answer is indeed the former. Satisfying eligiblity (and passing an entry date) is all that is required to become a participant. You didn't mention entry dates, so you'd better check your doc, if you haven't already.

I think what Tom Geer is getting at is: -Are we in the "Employee who transfers from a class of ineligible employees to eligible employees" (in which case Janet M's answer will generally prevail--this applies if A and X are a controlled group) or -is this just plain old eligibility, in which case the entry dates MIGHT apply. The following assumes that A and X are unrelated. I actually doubt the Plan Document will be specific regarding application of entry dates. If it is not, I'd say the Administrator needs to make an interpretation and either: document the interpretation, or amend the document to be specific regarding the entry dates. In this scenario, I believe the document would be controlling - I don;t think ERISA specifically mandates one way or the other.

That's a little sketchy, but it SHOULD be okay. I'd probably do the same thing in the same situation, assuming all the appropriate elections were signed by the employee, so that it was CLEARLY a payroll glitch.

Nothing wrong with this formula, long as you pass ACP, far as I know. A tiered match where you get into trouble is if a different match formula altogether applies to different people.

You should be able to test based on any 414(s) compensation (unless the doc mandates another definition). As for allocating contriubtions, the document should tell you how to allocate it, or what your options are.

That's not a high fee. That's an obnoxious fee. Your employer should be afraid--very afraid--as a fiduciary. Maybe you should tell your employer - they may not be aware?