austin3515

Got a company with one plan. Is it possible to set up two separate plans with all HCE's and some NHCE's in one plan, as a safe harbor plan using the 4%Match, and all other NHCE's in another plan that is a straight 401(k) plan (distinctions made by production/nonproduction personnel). I'm assuming the only way to pass coverage is to aggregate the Plans because al HCE's are in one plan. But then because you aggregate for coverage, you must aggregate the Plans for ADP/ACP testing? But then one Plan is a Safe Harbor and exempt from ADP/ACP. Also, since there are no profit sharing contributions in either plan, I'm assuming I don't have any issues with 401(a)4. Is that right? My real question is "does the need to aggregate a safe harbor and a non-safe harbor plan to pass coverage blow the safe harbor all together?"

Perhaps it wasn't the best use of the term, but the point is it is geared to improve the saving abilities of the rich (as was most of EGTRRA)

Did you mean that the doc might say only non-keys get the forfeiutres? I thought only key employees never get a TH?

You obviously can't have retroactive participation dates in a 401(k). Therefore, if you keep the same eligibility requirements for the entire plan, you would need to have separate definitions of Entry Dates. What's most common is all across the board in my experience.

Once a participant, always a participant (unless break in service rules kick in, which here it seems they do not).

If someone is a nonkey employee who is still employed by the employer than they are eligible for the top heavy. Provisions of any other plan shouldn't have any affect on another plan. In other words, if based on the interpretation of the top heavy Plan, they are eligible, they should get the contribution. Remember, each plan document is stand-alone contract between the employees and the employer.

Correct on all counts! All non-keys must get 3% of employer contributions from any source including forfeitures. Anyone excluded from the top heavy because of the hours requirement must still get 3%, and you may exclude anyone who was not employed on the last day, if the plan does not require employment on the last day to receive the forfeitures.

What kind of a sicko would disallow someone caring for their parents in a time of need? That would be a disgrace and if challenged I would simply call the 6:00 news and start a PR war.

REgardless of whether its a good idea or not, timing is important, and the timing here is ridiculous! It was bad enough that after every single plan in the country was required to be rewritten from soup to nuts for GUST. Then Georgie Porgie passes EGTRRA and it was back to the drawing board again. Treasury is still digging themselves out of that whole, as tons of regulations still need to be issued. Now we're going to overhaul it again? More amendments? More restatements? Is he basically admitting that EGTRRA was a mistake? Also, talk about class warfare! How many people can take advantage of these opportunities? $7,500 each in LSA and whatever the new IRA thingamabob is called, $15K to ERSA's. That's $30K a year! Every American must realize that this another break for the rich - as if EGTRRA wasn't enough! It does nothing to address that the lower income people will still do noting to save, to say nothing of middle america. D- Georgie! But go kick some butt over in the Middle East! You've got this pension geeks support in those efforts!

Why not amend the plans to allow "elective transfers" between the plans? It's my understanding that for these transfers a severance from employment is not required. Then they just transfer their account balances, inclusive of the participant loans, and all of the problems seem to disappear... Am I missing something?

When someone defaults you get a "deemed distribution." The loan is still there an must be paid off until a distributable event occurs. Once a dsitributable event occurs, a "loan offset" can occur. For most plans, termination is a distributable event, although some will require one to five breaks in service prior to a distributable event. In 401(k) Plans, attaining age 59 1/2 is also a distributable event (i.e., termination not required) Once there is a loan offset, the loan is officially gone. I provided this elaboration to clarify the difference between loan offsets and deemed distributions, a concept which many readers may not understand. It is clear that the people who posted the two above posts understand this very well...

I thought catch-ups would only need to be created in the situation where there excess deferrals (either from failed ADP or 402(g) excesss). It would therefore seem to me that for purposes of the match you would treat all deferrals (including catch-ups) the same for purposes of matching contributions. Especially if the match is done each pay period. Am I missing something?

The Plan document should indicate whether apsousal consent is required for the loan. Foir example, I have a client with a money purchase plan, and prior to approval of a loan the plan document requires that spousal consent be required.

IS there a place where I can pull a sample participant loan program. For example, a separate written loan program is required in addition to the Plan Document in a Plan I am working with. Can someone recommend a site where such a document can be located? I found this one on reish.com. Any comments? http://www.reish.com/publications/pdf/loan...rogpolicies.pdf If the SPD describes the loan program, do we still need a separate written statement? Looking at the 2002 ERISA Outline Book (page 14.10), it seems as though all of the information I would need is already included.

Katherine - Just the why... I agree with the rest of the statement! Brian - thank's for the tip!

IT depends if they're an NHCE or an HCE. IF they're an HCE, the results can only get better, so why retest. If they're an NHCE, then the results will get worse, so you may have to rerun depending on the situation. Of course the Plan would have to be pretty generous to get a 415 failure for an NHCE in the post-EGTRRA rules.

Katherine, I respectfully disagree. I think they just like to make things more complicated than they need to be!

But if the money was in a conduit IRA, which is generally the case I imagine, that woud not be an issue. Of course if it was just a distribution in cash, I would agree 100%...

1) Politics. Same as any other nonsensical rule... 2) Nobody is debating that the SPD is sufficient. We're talking about the "extra mile," to ensure that participant's take advantage of what's available to them... I'm sick of this topic! No offense jpod, it was an interesting discsussion...

1) Says me! Maybe I'm being idealistic but it would bother me to know that a rehire with $3,000 in forfeited benefit was leaving that on the table. The rule makes sense. If someone comes back they should be able to vest in older employer contributions. In any event I suppose the truth lies somewhere in between what we both believe... Any other opinions out there? 2) I disagree. The point of doing away with the 5 year break is this: Why have the money tied up for 5 years when the person most likely is never coming back?? Paying administration fees, probavly getting kicked into an audit requirement because of it, etc., etc.

1) If Company policies can't be enforced. that's a problem. Can 100% compliance be obtained? Of course not, but if the local director of HR is told that he/she has to do something when a person is rehired, then its reasonable to expect that they will do that. Also, what percent of plans are sponsored by small companies? Its gotta be well over 50%, probably in the range of 75 to 80%, but that is admittedly a blind guess. 2) Many employers want their employees to have every penny their entitled to. If I was an employer, I know I would. The money is rightfully their's.

Hi its, devils advocate here... Maybe its because you don't distribute notices to rehires? What;s the best way to increase participation in a 401(k) Plan? Many experts say effective communication. Should this be any dfferent? I just have a feeling that 98% f the people who get the notice would say, "I can get back the money I forfeited???" And then they would then do whatever they could because to them its like getting free money... It;s like finding 100's of $10 bills in an old pair of pants!

As far as GUST goes, request a copy of the IRS determination letter and go no further. The IRS has already made sure that the adoption agreement and the prototype document are in compliance. As far as EGTRRA goes, there should be a separate amendment and (typically) a separate adoption agreement. If its a well known provider I'd be hard pressed to think it was somehow not compliant. I would just make sure that the amendments were in fact made. Also, if you're using a standardized prototype it should be designed such that its impossible to not be qualified as designed. I think you're time could be better spent then to review the product of a team of ERISA attorneys. I don't think there's many prototypes out there with qualification issues. And even if there are, the IRS has already blessed them.

HAve a client who had a bunch of problems with their payroll provider. As a result, a bunch of deferrals were not deposited until a few months after the end of the Plan Year, when they had a chance to do a reconciliation. Can we still say that the "amount involved" is just the interest that we gave participants as a result, the same way you could if it was 15 or 20 days late? Thanks,

All the TPA's I've talked to would do it if it meant the difference between pass/fail. But it is a "riskier position" and there's no telling what a particular IRS agent wouldgive you a hard time on. If employed I would communicate to the employer that there is some risk to it. That way if they get burned you can say I told you there was risk.