austin3515

The point of an SPD is to communicate important provisions to participants. So absent any other requirements, I wouldn't think it would be required. However, employees don't read those things as a matter of fact. I could definitely see a law suit for a part. who got screwed on this, so it seems to me to be an excellent policy to communicate this to rehires...

I would also check the "computation period" for the match. I'd say starting matching int he middle of a plan year probably causes problems. Discretionary matches are usually worded to be based on compensation and deferrals for the Plan Year, and likely doesn't acomodate willie nilli on/off matches during the year. The only way I can see this being okay is if match is calculated based on payroll period deferrals (or month or quarter assuming the match is started on the first day of one of those). But again, I don't think this is typical of a discretionary match formula. Also, many docs require the amount of the match to be communicated at the beginning of the Plan year. Any other opinions?

My God Tom, how many years have you been doing this stuff? My goal in pensions is to catch up to you. I wonder sometimes if I'll ever get there... What do you do? Do you work for a TPA firm?

I think Katherine is right because I too made this very mistake!

Nuff said... I was half kidding about asking Sal!

I'm just curious to hear Sal's thoughts on the matter. Heck he probably golfs with those guys!

Let's call Sal Tripodi! Anyone have his number?

It does say that! That was actually why I had the question in the first place. Actually, I think its worded such that the top heavy is made to the Plan covered by 412 to the extent that each participant is covered... We sent an email to the client to make sure it was addressed... Thanks!

I'm almost positive I read in both the ERISA Outline Book and the 401(k) Answer Book that receivables are excluded for non-pensions except in the first year. Can both of the "Bibles" be wrong? My world will shatter if they are!

Two Plans, one Profit Sharing, one Target Benefit. The Plans are top heavy as aggregated. They cover the same employees. PS recently changed eligibility to 6 months, but left Target Benefit at one year. Is there any funky exception to the 3% contribution if one of the Plans is subject to the minimum funding requirements? Thanks,

Off the subject, but is a 5.7% load a good option for what is most likely a short-term duration of investment? How long do most employees stay in a 401(k) Plan? It's tough to justify 5.7% up front investment expense when you pull all your money out in 3 years, isn't it?

IT seems to me that in 401(A) its pretty clear that it has to be "impossible" to get the money back out for the employer's use. In all the previous discussions, and likely the ones your referencing, the only option is to offset other employer contributions, or perhaps offset administrative expenses paid by the Plan. I don't think what your asking is possible.

There is no requirement that a discretionary match be announced that I am aware of - that would make it non-discretionary. I think its advisable to announce it, and even more advisable to abide by it. However, many plan documents do require the administrator to disclose this. However, I doubt to much complaining would result from an increase in the contribution. The decrease is where you would run into a lot of problems. I would recommend not increasing the cap, but rather the rate. So if the match was announced as 50% of 6%, revise it to 75% of 6%. That way, no one would have deferred more or less as a result of the change, and everyone deferring gets more money.

1) Generally the due date of federal tax returns (including extensions if applicable( 2) Don't know. what credit? 3) IF the Plan is top heavy as of 12/31/00 (i.e 60% of balances at 12/31/00 are held by key employees), this impacts contributions for the 12/31/01 plan year. 12/31/01 compensation is used to calculate the minimum. There is some confusion about who is a "key employee" for purposes of who gets the contribution, but I think the majority believe key employees as of 12/31/00 (in this example) would not get a 3% contribution. Therefore, if someone became key in 01, they would still be entitled to the top heavy minimum. 4) The Plan could be disqualified, deductions disallowed. I also want to say that if they are not made 100% of the key account balances are taxable distributions (or am I thinking of something else?). The trustee might want to mke the top heavy ontribution, and then just distribute in accordance with the participants final elections (i.e. rollovers, distributions, etc.)

My guess is no. A big part of the safe harbor provisions are notices to participants and without a time machine you'd have difficulty doing that retroactively. I hope you've been running your ADP/ACP tests!. Although somehow I suspect that you're asking this question because they haven't been done (or worse, they're not passing) There is of course no reason why you couldn't amend the document to be safe harbor next year. I do think the amendments can be effective part way through the year, but I defer to some of the Heavyweights on this message board for that one.

So no rate of match issue, but that doesn't matter because a different problem exists - namely you were never entitled to the match anyway? By the way, I have a Plan doc. (Individually designed by a reputable ERISA firm), and it also says that any match earned related to excess deferrals shall be forfeited.

Okay but then what's to stop me from telling a client to defer $15K in 2002 to take advantage of a matching contribution that is not capped (i.e. 50% of deferrals, with no limit). They pick up an extra $2,500 in matching contributions, with no penalty from what I can see. Am I missing something? Or is it just so wrong its ridiculous to try? Assume for discussion that passing the ACP would not be a problem.

I am an auditor, and agree that a lot of auditors who don't have the experience they should. One thing I find pertinent to add is that I have a client with ML, daily valued etc. Somehow they manage to maintain negative cash in a particular plan (not something I've seen on my other plans that use ML). Perhaps a monthly reconciliation would have identified this oddity in the beginning rather than two years after it arose. I agree whole heartedly with bank reconciliation analogy. Finally, I would also like to point out that the auditor cannot "make" the client do anything. We can recommend stuff. Sometimes that stuff may be unreasonable, but it may be the only way to be certain that material issues are identified. Then, when something goes wrong, we can say "well we told you do this, and you didn't. Had you done this, the problem would have been avoided." Multi-million dollar claim settled uneventfully out of court by writing a short letter recommending a reconciliation. It's important to remember that a firm can be ruined (Andersen who?) if things go wrong and we "should have" caught the mistake. Even if people lie cheat and steal, we're still expected to find everything.

I can tell you that I have a client who started a new plan, effective date of 3/1/XX, and deferrals began in June, with no reference to that date in the doc.

I wouldn't want to administer it, but I would like to have it as a participant...

That's AWESOME! I gotta get one of those!

Reason? IF you tried to find reason behind any of this stuff it would be a life long unsuccessful mission. My question was on the mechanics, and your answer was exactly what I was looking for! Thanks

I've read a couple of articles on the final participant loan regulations and they seem to mention something about "credit card loans." Unfortunately, they assume the reader knows the what the heck they're talking about, and I have no clue. What is this reference about?

IS that because the limit is the lesser of ADP of NHCE's plus 2 or 2x the ADP of NHCE's? I guess I was thinking it would be 2%? LEt's say there were 100 NHE's deferring 0%. Would that indicate that the plan was not effectively available to the employees? Would that cause a separate problem?

Perfect! Thanks guys!