austin3515

Found it! 1999 ASPPA Conference Q&A w/ the IRS 59. In a 401(k) plan, does 401(a)(17) preclude the following: A. A earns $300,000 annually. He enrolls in 401(k) calendar year plan in August, after earning $175,000. He defers $10,000 in the balance of the year. B. A earns $300,000 annually. He participates in a calendar year 401(k) plan making monthly deferrals of a flat dollar amount of 1/12 of $10,000 in 1998, even though his pay exceeded $160,000 before he was done making elective deferrals. C. Same as 2, but deferrals are a percentage of pay (3.33333%). IRS answer: We believe that all three scenarios should be ok. This will be discussed additionally from the podium. http://www.asppa.org/archive/gac/1999/99irsq&a.htm

That's not true. I can't cite any regulations/notices for you, but they're out there. I'm sure someone will have it handy!

Anyone know of an insurance company who will sell a fidelity bond covering a Puerto Rico plan?

I suggest that not working anymore should satisfy any reasonable definition of termination - even if the termination is a result of a stock acquisition.. After all, the term is not defined anywhere.

I think he means nonelective contribution. If you want to max out the owner, you definitely want to use 401(k). You should usee the SH 3%, so you satisfy most of the TH, and if you want to x-test, it will count towards the gateway. I guess if you wanted the SH match, you could use an integrated allocation, but you might still need to kick in extra for the THM. There is absolutely no way to max out the owner with no 401(k) and no contributions for the ee's other than a SH match...

Excerpt from sited reg: unless plan provisions THAT SATISFY THE RULES OF THIS SECTION are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. I submit that hardship distributions can be eliminated as they are not required to satisfy this section. So too can eligibility be changed, as there are no special time of participation requirements for a 401(k) Plan. I don't think this statement means that you can;t amend your plan all year - you just can't amend it to add a 1,000 hour condition on the safe harbor, or add a vesting schedule to it, etc.

Jeez, I would think your client's deserve the benefit of the doubt! A specimen sounds like a perfectly reasonable request to me...

You've got a better chance at complying with the law if you do the opposite of TransAmerica says. You're on the money. Sounds like you're aware too that your top heavy exemption is blown in the plan design you're describing.

Let's say the problem was a little more aggregious - that is, the employer ignored a deferral election and never put the money away. Wouldn't it be reasonable to make a contribution equal to the missed deferrals? I'm certain at least half of the responders would tell you that you should at LEAST put in 50%. So haven't you gone above and beyond by putting in 100%? Depending on how big the plan is, I'd go in under VCP - I mean lets face it, the only one getting screwed here is the Company. Unless the deferrals were deducted on the return, not even the government is getting screwed. I too have seen lots of things go wrong, and this definitely at the top of the list!!!

Can't be done. The match plan and the PS plan are two totally independent "plans". This should not be confused with the top heavy rule, which allows THM's to be offset by the match.

This wouldn't be excluding participants based on service. One plan would simply be closed to new entrants. It's no different than grandfathering employees into a DB plan, and rolling out a 401(k) for the new employees, which I dare say happens often. You might be able to accomplish what you want in one plan, too. I think Janet M is asking the key question.

Bring em in!!!

That's how I felt too... I think a snowball has a better chance in you know where, than a non-barcoded attachment to a schedule I has of being read... Apparently though, Steve Forbes suggested doing just this...

For a non-audited schedule I, are people attaching a schedule of late deposits in order to demonstrate that the correction has been made? Or are you just filling in line 4a, since the schedule is not required anyway?

You mentioned multiemployer plans, but this is a multiple employer plan?

Plan effective 4/1/04, with 9/30/04 PYE, so 2004 form is filed for the first plan year because it began in 2004. Now for the 9/30/05 Plan Year, I need to file another 2004 form because that plan year began in 2004. Will the DOL get confused (i.e., will the software program spit it out)? I'm wondering if my intitial form should be filed on a 2003 form to avoid confusion (obviously, I would indicate the appropriate plan year in the space provided).

PEople just aren't going to require participants to fill out new paperwork everytime their name changes due to marriage divorce. What would be the point? Would their ever really be a dispute about whether or not this person really was at one time known by another name?

If most of the "contributions" were allocated to NHCE's there's nothing to correct. The only time you usually run into trouble with this is if the fees are calculated based on account balance, and the owner's got a huge share. Sounds like yours are transaction based, which sounds more like a per-capita contriubtion? Even if the fee is "per share allocated", it should still pass nondiscrimination. Were you maxing out under 404?

I've heard of plans that match 200% with crappy participation. Depends on the employees. "Free money" doesn't help if you can't put food on the table or pay the mortgage...

Just got back a DOL Letter - the DOL calced using the best performing fund. I guess the DOL calculator is really dead...

IAn Dingwall, chief accountant at the DOL, has said in seminars that I've attended that a zero interest account is fine to comply with the "assets held in trust requirement." As others have suggested, the DOL's only concern with respect to employee contributions is that they are held in trust, and therefore protected by the broad trust laws. How they are invested is a FIDUCIARY issue, and I think a participant would be hard pressed to file a suit (class or individual) to recover any losses from a non-interest bearing account because the lost earnings are simply not significant (assuming they are invested at least monthly). I know this is a common alternative to making investments each pay period.

M PReston - I thought the regulations stated that the deposits would be considered profit sharing if made BEFORE the services were rendered? So if they're after services are rendered but before pay-date, you should be okay. Once the service is rendered, it seems that the Plan has an inevitable right to the assets (and the amount can be determined), even if the pay-date has not yet passed. So you run payroll Wednesday, doesn't it seem logical to send the money in on Wednesday? Even if pay-day is Friday? I think most pay-period depositers do it this way...

I think it was me who said (I added the brackets to clarify): Finally, the "match on the missed deferrals" for 1/6 assumes that eligible employees were excluded from deferrals, when they should not have been [the "match" is the correction set forth in EPCRS for this type of failure]. To this, I would suggest that an argument could be made that these earnings relateed to 2004 based on the "de minimis" rule in reg 1.415 something or other. Do a search for "de minimis" in each of the 415 regs and you'll find it somewhere. I've seen EXPERT ERISA attorneys make this claim despite the plan's use of W-2 wages.

I agree with PIP too. I'd bet the farm there's no last day/1,000 gour rule. Although there will almost certainly be a section entitled "Timing of Deposits" it is clear that there should be multiple deposits during the year. But 3.1 definitely relates to initial eligibility. More likely than not, the document is a Corbel volume submitter based document, and all the Corbel Docs have eligibility in Section 3 and Contributions in Section 4. No way an attorney who drafts documents on a regular basis (or even occassionally) would have allocation conditions following Section 4.1. Finally, the "match on the missed deferrals" for 1/6 assumes that eligible employees were excluded from deferrals, when they should not have been. To this, I would suggest that an argument could be made that these earnings relateed to 2004 based on the "de minimis" rule in reg 1.415 something or other. Do a search for "de minimis" in each of the 415 regs and you'll find it somewhere. I've seen EXPERT ERISA attorneys make this claim despite the plan's use of W-2 wages.

NAIU - We had the EXACT scenario you just described, which is why I was shocked to hear J2D2's response...