austin3515

A-2. (a) Except as provided in paragraph (b) of this A-2 with respect to a 5-percent owner, as defined in paragraph (c) of this A-2, the term required beginning date means April 1 of the calendar year following the later of the calendar year in which the employee attains age 701⁄2 or the calendar year in which the employee retires from employment with the employer maintaining the plan I'm with jpod and BG150. Someone's term date / retirement date is universally defined as the last day on which they did work - NOT the first day on which they did not work. The IRS does not need to define what is meant by retirement because it is commonly understood and universally applied in the same manner. I googled this topic because I am currently answering this question for a client and this thread came up. So sorry for bumping an ancient topic, but I'd venture a guess that this is the time of year this will come up (as we get back our censuses and find out which Septuagenarian's retired (I had to google this word!)!

That;s what's nice about using the W-2 definition in the first place. Is it included in box 1? Yes? Then it's eligible comp.

§1.410(b)-7 Definition of plan and rules governing plan disaggregation and aggregation. (f) Section 403(b) plans. In determining whether a plan satisfies section 410(b), a plan subject to section 403(b)(12)(A)(i) is disregarded. However, in determining whether a plan subject to section 403(b)(12)(A)(i) satisfied section 410(b), plans that are not subject to section 403(b)(12)(A)(i) may be taken into account. OK, so here is my question. the 401(k) covers all of the HCE's and the 403b covers all of the NHCE's The first sentence above seems to suggest that I should disregard the 403b PLAN. Perhaps what this is saying is that if I disregard the PLAN, then what I have remaining is a bunch of nonexcludable NHCE's who are not benefitting even if they all get the same employer contribution? I want to make sure I understand what this reg is telling me I can and cannot do (I don;t actually have this scenario!). I guess what it is also telling me is that if need the average benefits test to pass coverage for the 401k plan i have to include all of the people covered by the 403b plan as zeroes?

ie. she has already done that so that according to the regs the hardship itself has been relieved. She has a different hardship now, one of consumer debt, which is not a hardship. That's essentially the logical conclusion, but it is good to know that it's not only logic but also generally written into the regs. I suppose the answer should not be different depending on the source of the financing. So for example, what if she did pay for it on her credit card or on a HELOC? Should she have been at a disadvantage merely for not segregating the debt? This is a rhetorical question - the answer should be "no".

Participant had a medical procedure 2 years ago and financed the procedure. The participant now wants to take a hardship to pay off the loan. It is clear that the financing was for the medical treatment. My initial response was "two years ago was just too long." Anyone have a different thought? So for example, what bills has she prioritized over this one? Did she pay off credit cards ahead of this? In other words at what point does it convert from a medical expense to decision regarding cash flow and personal financial management?

I was thinking Field of Dreams!

Oh geeze, me too! But the person I spoke with, probably every "senior" pension consultant is very familiar with this person through national speaking engagements and widely read publications. Kevin C's distinguished reputation does not extend beyond beyond these boards! At least not just as Kevin C. Who knows, maybe he is really Kevin Costner?

He said that int he 403b regs there was a statement that you can't use elective deferrals in the ACP testing. I was not able to locate that site but the case had already completely collapsed by then so I did not push it. It was like I had pension royalty on the phone and I didnt want to push my luck!

I checked with an industry "guru" and he shot it down too :(

I definitely like the idea of putting it back on clients to see if THEY want to go above and beyond for their employees. Some will be "absolutely I don;t want to "cheat" anyone out of what they are entitield to" and others will be like "No, let them come to me.," And I think I would know which clients would say what!

(f) Section 403(b) plans. In determining whether a plan satisfies section 410(b), a plan subject to section 403(b)(12)(A)(i) is disregarded. However, in determining whether a plan subject to section 403(b)(12)(A)(i) satisfied section 410(b), plans that are not subject to section 403(b)(12)(A)(i) may be taken into account. That does seem to pull the rug out from under me!

Sometimes it amazes me that other people have better ideas than Relius. This is such an obvious provision. I wonder if they added it to their newest pre-approved document. Disguised service conditions. An exclusion of employees by job category may not indirectly impose an impermissible service condition (i.e., a service condition that fails to satisfy the requirements of Code §410(a)). The exclusion of part-time Employees, seasonal Employees, temporary Employees or other job categories may be considered a disguised service condition where such categories are based solely on the amount of service performed by those Employees. A disguised service condition will not violate the minimum service conditions if such Employees are eligible to participate upon completion of a Year of Service. If the Employer excludes Employees under AA §3-1 or under AA §6C-3 of the Profit Sharing/401(k) Plan Adoption Agreement using a disguised service condition, such as part-time or seasonal Employee status, and any such Employee completes a Year of Service, such Employee will no longer be treated as an Excluded Employe

§1.401(m)-1(b)(4) I read through this and didnt see any problems. It says things like different plan year ends cant be aggregated, and different testing methods can't be aggregated. It doesnt seem to refer to the fact 403b elective deferrals and 401k contributions cant be aggregated.

HEre is the reg: I think it fits! (ii) Elective contributions taken into account under the ACP test. Elective contributions may be taken into account for the ACP test only if the cash or deferred arrangement under which the elective contributions are made is required to satisfy the ADP test in §1.401(k)-2(a)(1) and, then only to the extent that the cash or deferred arrangement would satisfy that test, including such elective contributions in the ADP for the plan year or applicable year. Thus, for example, elective deferrals made pursuant to a salary reduction agreement under an annuity described in section 403(b) are not permitted to be taken into account in an ACP test. Similarly, elective contributions under a cash or deferred arrangement that is using the section 401(k) safe harbor described in §1.401(k)-3 cannot be taken into account in an ACP test. In addition, for plan years ending on or after November 8, 2007, elective contributions which are not permitted to be taken into account for the ADP test for the plan year under §1.401(k)-2(a)(5)(ii), (iii), (v), or (vi) are not permitted to be taken into account for the ACP test.

Check this out. If it works, I seriously want a gold star! 403b covers the HCE's. The HCE's are exlcuded from the 401k. Plans both have the same match formula, so one ACP test, everyone gets the same match formula. We're failing the ACP test. We also happen to be passing the ADP test because of course no HCE's are making ANY 401k contributions. How do we feel about shifting ALL of the employees deferrals into the ACP test? Pretty neat right??

The TPA is done. There is no defense. If the TPA added the language they lose in court 10 out of 10. Just settle.

kmhaab, can you confirm that you're sure what I suggested is not the case? Is the Plan;s eligibility immediate? Did your client ever let them particpate, or did they always exclude them from the plan on a permanent basis on account of being under 1,600 hours? My scenario is in fact permissible.

If you really want to go outside the box, you could change the plan year-end. That might be completely unpractical, but I think it works. Never tried it myself, but curious if others think it is an acceptable workaround.

This might work: Participants expected to work less than 1,600 hours in a plan year are excluded from the Plan. Regardless, if any such participant is actually credited with 1,000 hours in their first 12 months of employment or any calendar year, then they are eligible after that computation period. So they are not eligible immediately, as would a 1,600 hour employee, but they are eligible after a year, thus satisfying 410(a). Do I win???

But really if the employer doesn't pick up the tab here, or at least half that's just really not cool...

Are you sying that you can self correct under EPCRS even using methods that are not listed in EPCRS? I didn't realize that was a possibility.

You must use the whole calendar year. Everything is always the whole calendar year. There is no such thing as a comp as a participant, etc. in these plans.

Reading through the new publication 560 just released and I'm struck by how they seem to go out of their not to call attention to the fact that Section 125 premiums reduce eligible compensation. It seems the only reference to this rule is that when it describes those pre-tax contributions that do not reduce compensation, 125 deductions are not listed. And of course it's stupid that your EMployer should be rewarded for making you pay more for health insurance premiums, or that you should be penalized for being older because your deductions are increased as premiums increase. Does the IRS not want me to follow this rule? It seems if they did they would say "hey, watch out - 125 deductions reduce comp!"

They are saying in this article that people can self-correct. I certainly will take them at their word but unless I am missing something this is not part of EPCRS? What are your thoughts on that?

ummm.... YEAH!!!