austin3515

I'm sure amendments will need to be adopted before 12/31/07. Are you using Corbel documents? If so, I'm sure they will be forthcoming. Really any document provider should have them eventually. They're probably waiting for some more guidance to materialize. I think starting with EGTRRA (i.e., post GUST) they abandoned the "wait till the next big restatement" philosophy, but you never know...

Although it was worth nothing, it blows my mind that his hasn't been repealed. This is a burden on small employers and even larger employers that have been owned by the same person for 20 years+. I can't understand why passing nondiscrimination on contributions each year doesn't suffice. I'm suprised there isn't more lobbying to get rid of it, but I suppose lobbying is a luxury of the fortune 500.

Bird, I'm looking at FAB 2006-3 "Form of Furnishing Statements" paragraph 3, and the only requirement I'm seeing regarding the multiple source notification is that it has to be "furnished in advance of the date on which a plan is required to furnisht the first pension benefit statement..." I'm interpretting that to mean we have until 5/15/07. Also, I'm incorporating the "multiple sources" language into my supplemental notice. Any thoughts on that?

Far be it from me to argue with Tom! I learned something new today

I think ECPRS suggests you would correct at a 50% rate. So maybe take half of what they elected and contribute that to the Plan.

This does not need to pass BRF's. Everyone is subject to the same match schedule. The fact someone chooses not to contribute at a certain level is the turf of the ACP test. If you had different levels of match for people with different lengths of service (as an example), that would need to pass BRF, because different groups of people are entitled different matches based on the same level of 401k contributions.

I think we all THINK we're experts If this employee is an HCE (i.e. if he/she earned more than 100,000 in 2006) then this is a definite no-go. I don't think you can specify that "individuals for whom a match was negotiated in their employment contract will get the match, but no one else will" because a Plan must provide for a definite allocation of contributions (i.e., based on objective criteria). I suppose a super aggressive position would be that this does meet that requirement but I hugely doubt it. What's more, there's no way your plan document provides for this today, and you have to follow the terms of the Plan. Depending on how the document reads you may still be able to amend it for 2007 (i.e. if participants must be employed on the ).

It's actually the opposite of deductible, in that it's double taxed!! Once when the interest is repaid with after-tax dollars, and then again when it is distributed!

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.