austin3515

Jim, it sounds like you were answering the question based on a profit sharing scenario? The op was for match. I'm with you up till 3 but then: 4) Run the ACP test, counting only the people eligible for the plan (assuming the plan passed the coverage test). Moira, no offense, but if you're asking this question, you shouldn't be responsible for the testing. The rules are complicated and the conequence of failing nondiscrimination can be severe.

Subtle, but I think there is a problem. The terminated participants should get a fee reduction for the revenue sharing, the same way the employer does. Why should all the benefits of revenue sharing annure to the sponsor at the expense of plan participants (regardless of their status)?

We tried to make ours as short as possible, but with the vesting disclosures, it's tough to get it on one page. Ours ranges from 1 1/2 to 2 full pages depending on how complicated the plan is.

You're all better people than I am. 7 years ago?? Let it lie man!!

LEt's jump back a step: Is this a 401k plan? If it is, you can't distribute the 401k account balances even under termination if the employees are covered by the acquiring companies plan (any DC plan, even it is not a 401k plan). The only exception to this is if one Big Company acquired a wholly owned subsidiary of another Big Company. The exception says tht in this situation, the employees are treated as having a severance from employment, so the successor plan issues refered to above are irrelevant.

There is some debate. Some suggest (including the DOL) that you're really supposed to submit a whole separate report for the short-period, because you may only "defer attaching the auditors report." It doesn't actually say you can merge the two together. But I spoke to the Chief Accountant's Office at the DOL and was told that "it shouldn't be a problem" if you simply prepared comparative statements with: 12/31/05, 12/31/06 for the balance sheets; and 11/1/05-12/31/05 for the first year's income statement; and 1/1/06-12/31/06 for the second year's income statement. It seems that the "spirit if not the letter of the law" is satisfied in this way.

How about: Other: Partners who own > 5% of the business. You could leave out all Partners, but then if any end up owning less than 5% you need to watch out for coverage issues. You can always discriminate against 5% owners...

So basically, you want to create an allocation group for terminated NHCE's, and then give them declare a "contribution" of $0. Sounds like a back-door last day rule. Even though you;re being very sneaky, I think it is actually pretty transparent. I can't say for sure, but I think there'd be rules against having different allocation conditions for HCE's and NHCE's.

Good luck passing the ACP test!

I think it's interesting that there was a lot of talk that there would be a "safe harbor" for timely deposit of 401(k) contributions out by the end of the summer. Nothing yet! I take this as a sign that the DOL is butting heads with the powers that be in defending their insanely aggressive pursuit of timely deposit of deferrals. I've done the math regarding weekly vs. monthly deposits, and the difference is not significant. So maybe things will get easier in the future, but then again, maybe not... We've taken the approach of using the DOL calculator to calc lost earnings on late deposits, simply because it's cheaper. Then take your chances that the Plan doesn't get audited, and if it does get audited, hope they don't make an issue about it. And 99/100 times, that's worked. We've had DOL audits where the DOL has completed the on-line calculator for us, and told us that this is what is owed to the Plan (within the last 3 months)!

No where in there does it mention 401(a)(4)?? My frustration is that the rules regarding timing of contributions are spelled out so clearly for deduction issues (in the site you provided) and for 415 issues, but nowhere for coverage/nondiscrimination? For waht it's worth, I know I have a deduction issue and a 415 issue for the Plan I'm working on. I'm trying to figure out if I have a nondiscrimination/coverage issue as well.

can someone point me to a page in the ERISA Outline Book where it discusses when employer contriubtions must be deposited to the trust in order to be treated as "relating" to a prior plan year? It's clear as day when you're discussing 404 deduction limits, and 415 annual additions, but I can only find a vague reference to "the year in which the contribution is TREATED as allocated." 1.401(a)(4)-2©(2)(ii). I don't think the 415 regs are necessarily always relevant because the limitation might not necessarily be the Plan Year. Any help is greatly appreciated.

Did you read ASPPA's letter to the IRS asking for some leniency on your last point? Do you think it will work?

I feel your pain. I would love to one day invent such a thing, but I don't think it exists, because there are so many variables, like: age interest rates future rates of return payroll taxes future tax rates There must be more! Still it would be nice if there was a template where you could make your own assumptions about all of these things. Someone mentioned Roth, but even the Roth/Regular 401(k) decision would be illuminated by such a calculator. If I ever get to it, I'll post it on these boards.

Not even a gray area, they're definitely eligible for deferrals. Everything is based on pay-dates. For example, if this was a profit sharing contribution, I don't the question would even have been asked--the ee gets the contribution on all pay-DATES as a participant (assuming comp b4 participation is excluded).

For some very reason silly reason, amending the Plan to delay someone's distribution by a longer period than currently provided is a cutback (you can delay it by like a month, I think). It's somewhere in the regs, though I can't site it. This applies to all participants on a given date, so if you wanted to add a feature like this it could only apply to new participants. Not that that would be hard to administer I have heard of practioners gambling on not getting caught (i.e., and amending the plan to provide for a delay in payout), because as you can see the havoc created by not having such a provision is significant. By the way, you want to watch out for what's called a "sham termination." That is, "terminating" someone for the explicit purpose of allowing a distribution and then rehiring them. That's a big no no. If you search the boards you'll find lots of discussions on that.

Sure there's cash! The participant received a cash distribution equal to exactly the amount of the outstanding debt, and immediately wrote a check to the employer It happened so fast, even his bank didn't notice!

I don't think you can do this. Can't tell ya why, it just doesn't sound right. I'm not sure you can have someone repay a debt by sacrificing ERISA benefits?? A deemed DB CODA - there's first for me! I do think this could be construed as a CODA though.

Sounds like you're discouraging people from enrolling! I wouldn't go anywhere near that.

There are no exceptions to the rule - just because you have a monthly payroll run does not mean you can stall on the deposits for you weekly payroll runs. As has been mentioned, the DOL likes to see a deposit after each payroll. I'd change your semi-montly payroll to a bi-weekly payroll. I doubt employees would mind being paid a little more often...

I've seen what Poje is saying many times.

Oh... I agree with you, that is a pain in the @$$. Actually, I should've read your post more closely. I don't think that is a series of transacitons. The point of looking at a series oft ransactions is to avoid someone simply circumventing the reporting rule by breaking one big transaction into a bunch of small ones. I think if you read the regs on these series transactions you'll find that there must be some sort of a common thread between the transactions? Maybe, but maybe not...

That's right, but so what? IT's not a prohibitted transaction, it's just a "big transaction." No harm done.

"Wife will have no involvement until Agency is gone" To address this point specifically, coverage is determined at year-end, considering the entire year. But this is an interesting "twist." I'm curious if others agree with my conclusion?

Sounds like their funds have gone up 50% over seven years - not 50% each year. That sounds pretty average actually (<7% per year, after the affects of compounding).