austin3515

From the recent IRS Notice: The following mid-year changes are not subject to the provisions in the first paragraph of this section III.B, but instead would violate the requirements of §§ 1.401(k)-3 and 1.401(m)-3 unless the applicable regulatory conditions corresponding to each specified change are satisfied: (i) Adoption of a short plan year or any change to the plan year (permitted only as described in §§ 1.401(k)-3(e)(2), (3), and (4) and 1.401(m)-3(f)(2), (3), and (4)); (ii) Adoption of safe harbor plan status on or after the beginning of the plan year (permitted only as described in §§ 1.401(k)-3(f) and 1.401(m)-3(g)); and (iii)Reduction or suspension of safe harbor contributions or changes from safe harbor plan status to non-safe harbor plan status (permitted only as described in §§ 1.401(k)-3(g) and 1.401(m)-3(h)). And the regulations say this about reducing or suspending the match (for example) (g) Permissible reduction or suspension of safe harbor contributions (1) General rule (i) Matching contributions. A plan that provides for safe harbor matching contributions intended to satisfy the requirements of paragraph © of this section for a plan year will not fail to satisfy the requirements of section 401(k)(3) merely because the plan is amended during the plan year to reduce or suspend safe harbor matching contributions on future elective contributions (and, if applicable, employee contributions) provided that—

I have to say though, I think the design you suggested is such a good idea, where no one is harmed, that I think it actually ought to be added as a doable option eligible for ACP Safe Harbor Treatment. OF course it goes above and beyond the ADP Safe Harbor, but it seems silly not to make it eligible for the ACP Safe Harbor. Neat idea...

You've changed your story from your original post. Based on what you have said here (in which the first 3% is explicity NOT a match) you should refer to Lou S. first response. See also the last sentence of his last response.

Do the rules regarding partial plan terminations apply to 403bs? For example, if we froze a 403b plan and started up a 401k plan, would that trigger 100% vesting? It seems to me that those rules (411(d)(3)) appear to apply only to 401a plans.

That's what I'm thinking... As far as I know, the PC's have no other "clients" aside from Dr. Group, Inc.

Aha - But no common ownership at all. From your text: "Ten percent or more of the interests in the organization must be held, in the aggregate, by persons who are highly-compensated employees (pursuant to IRC § 414(q)) of the FSO or A-Org."

Doctors Group, Inc. is owned 50/50 by two Doctors. Another 4 Doctors work for Doctors Group, Inc. Each Dr. owns his own P.C. Doctors Group, Inc. pays the P.C. for their services based on contracts. These are not "management" services. The P.C.'s are being paid for the medical services their respective owners render. Something doesn't seem right about this. Clearly it is an affiliated service group, except that the services rendered are not management services, they are actual medical services. Perhaps the issue here is that they shouldn't even be using the P.C.'s because they are common law employees? The PC's do not do work for any other entity.

C'mon, that's gotta feel good Kevin, right? Thanks!

Can I limit Catch-up Eligible HCE's? So all HCE's eligible for catch-ups are limited to 5% of pay plus catch-ups? Or would that be age discrimination since your limiting people who are over age 50 exclusively?

You need to bring the MEP balances with you. The are taken into account for top-heavy, etc.

CFR 1.410(a)-3 - Minimum age and service conditions. (references age 25 strangely enough?? Apparently the regs have not been updated in a long time?( Example 1. Corporation A is divided into two divisions. In order to work in division 2 an employee must first have been employed in division 1 for 5 years. A plan provision which required division 2 employment for participation will be treated as a service requirement because such a provision has the effect of requiring 5 years of service. HEre is the drivers license one: Plan B requires as a condition of participation that each employee have had a driver's license for 15 years or more. This provision will be treated as an age requirement because such a provision has the effect of requiring an employee to attain a specified age. THANKS!

Ahh this is that "drivers license for 10 years" disguised age requirement - I'm on it!

In order to "prove my point" to my client I'd love to point to something in writing. I can't believe this has not been addressed somewhere by now...

But the groups are operationally defined as follows: People with More than 10 YOS get 10% People with More than 5 YOS get 5% People with Less Than 5 YOS get 0% Please tell me the consensus is that this violates ERISA. Prior TPA said "No, it's ok because everyone is in their own group."

Recordkeeper sent out a 1099-R for a 2015 loan default. It turns out the sponsor made a mistake on loan payments and now we are doing an EPCRS filing to correct. What are the participants options with respect to his 2015 tax return? Can he file it now? Should he include an explanation that an IRS application is pending? I assume the IRS will respond that income from a 1099 is missing, at which point we would resend the same explanation? I assume this would delay any refund for the participant?

I have discussed that with the client (inspired by your original post actually). I think it is sound advice. I hope they take it... As someone mentioned we do get these a lot from those crazy SSA filings and "sorry, you must have closed your account years ago" has been an effective response.

Ahhh, now I see the confusion. I am in the business, and all of our work since I started 10 years ago is scanned on the network. Several years of stuff before that is in boxes. We have often discussed what to do with it and always decided as you said it isn't that burdensome to keep it. Of course I can't say the same for our newer clients with respect to their pre-Austin Powers vendors. I'm not talking about me though. I'm talking about my clients, some of whom for example are in a different profession altogether. They are more focused on meeting payroll this week, or juggling uncooperative vendors, or hiring enough people to fill their orders. Perhaps this year they are tying deal with ACA. I think in general you represent the Fortune 500 type of clients (and we're all very impressed) with robust HR departments and do not take into consideration the "little people" that I represent. And some of them have the great misfortune of establishing a plan decades ago, and changing vendors periodically for the benefit of their participants. That is certainly the unfortunate position in which my current client finds itself.

That's what I was thinking too... The participant could easily say "great idea! let me check!" and then come back and say "see I told you I never got the money, I could not find that 1099-R!"

This guy is not an owner. He is clearly an NHCE at the time of the potential amendment. But there must be something to prevent a sponsor from waiving eligibility for anyone hired on 11/1/2015, if that someone is going to make $150K. Clearly that is discriminatory. It can't be "anything goes."

Client bought assets of another business in November 2015 (unbeknownst to me). Calendar year plan. They chose to recognize service with this entity. Only one employee was affected by this decision and they allowed him to make 401k and receive match in 2015 (and currently), where the eligibilty is 1 YOS/Age 21. His salalry is $135,000 per year. When determining whether or not the amendment to recogize service with this other entity is allowable, I need to make sure the amendment is nondiscriminatory. The same is true both for an amendment effective today and cetainly when doing the retroactive amendment under ECPRS (which must predominantly benefit NHCE's). What are your thoguhts regarding whether or not I can treat this individual as an NHCE versus an HCE? My initial thought about EPCRS is that the "predominantly benfits NHCE's" requirement is meaningless if you dont have to take into account their future status. I suppose the same concern can be true for any amendment that effectively waives eligibility for a new hire.

I speak for "the people" and that is all I will say about that.

"First, the "forever" standard is part of ERISA - maintain records as long as necessary to determine benefits payable - and frankly, it isn't that burdensome" :P :P :P (now that is snarky!)

Sorry, but it just seems like some of the "suggestions" (such as the forever standard, remembering obsure details from decades ago that people would be willing to testify to under oath no less) while they are commendable in a utopian world, are just not practical. I swear if Microsoft got this question they would say to the participant "Are you kidding me??" and promptly hang up on them. I'll tell you what, one of these days I'm going to call the big 5 accounting firm I worked for when I graduated and ask them for my money and see what they say! I took the distribution in 2000... Better yet, I'll wait 10 years and give it a shot...

LEt me be clear. There are no files. There are no memories beyond actually remembering the person. There is no one who will testify. I'm sure the owners would testify that they would not have forfeited the money.

Oh yeah, absolutely MoJo. Will call the participant today and see if they would accept $10,000 just to leave us alone. That would be a terrific precedent to set...