austin3515

We might do half a dozen 11g's a year and we have a template, so it's not as though we're spending a lot of time doing 11g's. In the interest of full disclosure on occasion we do end up in a situation where it can be bit of a challenge to word the amendment to bring in the precise individual we want to, but we've always found a way. Generally it's pretty easy because the populations are small.

I think that is a matter of taste, in my humble opinion. You and I will arrive at the same allocation. I might need an -11g to get there, but then I will always be able to explain to someone in a concrete way that the reason they did not get the extra contribution was because of their employment status/hours worked. And no options are off the table for me as a result of this "inflexibility" because I always have the 11g in my back pocket. I'm not saying any other approach is wrong by the way. That's just the path that we have chosen.

As far as I can tell, these are the million dollar questions for which there does not appear to be any consensus: My thought is I have never seen a requirement that this be delineated in the document to be reasonable, but maybe there is. Has anyone looked more closely at this? It's not mentioned in Belgarath's site. I actually think this would not be a reasonable business classification. This seems like a perfect question for a Q&A. The last thing I will say is that what appears to be beyond reproach is either: Include a last day/1,000 hour rule if that is your intention (recall you can always do an -11g to bring in that terminated 25 year old, which has been asked/answered in IRS Q&A's). Make sure coverage passes the 70% ratio percentage test which is almost always a non-issue in these types of plans because generally your using the 3% SHNEC Because they are so simple and probably will always the desired outcome, why not use one of the two on each plan? Someone mentioned an inability to provide the gateway which is not accurate as any plan using a non-safe harbor allocation method should already include automatic gateway contributions. Maybe the poster was referring to an IDP where the attorney goofed. But he pre-approved ones should all have that language.

The doc should specifically say whether or not catch-ups are matched.

Let's say "Inexperienced TPA" was doing the 2009 5500 and was not aware of the exclusion and therefore was preparing a compilation of the 30 custodial accounts (no trust level report), and about 10 or 15 of those are pre 1/1/09. We would like to report the pre- 1/1/09 contracts as distributions to take advantage of the fact that they can be excluded. Anyone have any problems with this? I do not see anywhere in the FAB's and articles that in order to exclude them you needed to do so in 2009.

My opiion is if the bank puts the word foreclosure in the letter it's met my standard. They didnt give a lot of guidance here so tie goes to the runner...

But it is not advisable. I would definitely have two separate accounts. What if the participant wants to invest in high growth securities in Roth and fixed income in pre-tax (which would make a lot of sense...). Also, how can you guarantee the IRS will not challenge the cumulative earnings allocations between the sources? In a pooled account I think it is a lot different, but with brokerage accounts, I think commingling is a little silly...

But they will be 100% vested when made to THIS Plan. I think that is especially true if you can use it all up in the first deposit right when it xfers over.

Routine wear and tear is NOT a casualty. Article from McCay Hochman: http://www.mhco.com/BreakingNews/AHardship_051514.html "A critical criterion to look for when reviewing a hardship withdrawal request due to casualty loss is whether the event was sudden, unexpected, or unusual. The loss of property due to “progressive deterioration” does not qualify. Examples of progressive deterioration include termite damage or a roof that has leaked over time and must now be replaced."

Bird I just read your intro. I disagree, they could have said "disclose the amount of the fees" but they did not. In fact they said include a phone number...

Bird, thanks!!! So the amount is not required to be disclosed, do we all agree? Like I said best practice would be to disclose the fees but it then becomes a business decision whether or not to go the extra trouble. Our phone #'s are right on our notice/cover-letter so they could certainly call us.

Dear Johnny: The Plan requires employment status on the last day of the Plan Year to receive a contribution. As you recall, you drank the fizzy lifting drink and were fired because of that. Sincerely, Employer I like my letter better.

This is what we have been doing. GMK, I don;t have to tell you I'm sure that there are just 24 hours in a day and nothing that sounds simple ever turns out to be simple. Every simple project takes time.

The challenge for those of us who work with multiple providers is that it is hard enough to track the fees charged by the plan, let alone charged by outsiders. That;'s the dilemma...

No, it's an auto rollover to a terminated employee with less than $5,000 but more than $1,000. They just did not return their paperwork.

So including the fees charged by the IRA custodian to establish the account? I'm not going argue with that as being the best policy believe me, but where does it indicate that it is a requirement to disclose those fees? I have never heard of such a requirement to disclose the fee arrangement on the default IRA's before. I think that the distinction between best practice and a legal requirement is a very important distinction.

I'm not following. RK/TPA fees total $75, these are the fees paid by the Plan. The IRA custdodian charges $100 to open the account. Where are you disclosing these specific fees (it would help if you referenced the indicated dollar amounts to eliminate any confusion). What notice? These statements seem contradictory?

What obligation does a plan sponsor have to disclose the fees that will be charged by the IRA provider in order to open the default IRA account? So recordkeeper charges $75 to process a distribution, but the IRA provider charges $100 to open the account. This fee mind you is assessed from the IRA - it is not paid by the plan. What are people doing here?

I know the feeling!! With respect to whether or not a reasonable business classification is someone's employment status, I look to the examples provided. So for example if the definition of business classification is exemplified by things like salaried/hourly, or geographic location, we should look for common threads. Is it a business criteria to treat salaried/hourly people separately? Yes it is (and not just because the regs say so). It is also because the desired benefit structure may well be entirely different for these potentially vastly different audiences. Same w/ California vs Oregon. Perhaps in order to compete in Oregon the benefits need to be greater than those in California. That is a business criteria. Excluding terminated employees does not satisfy a business need in nearly the same way. To me, it is merely a policy. At any rate, I have never seen the value of not just including the last/1,000 hour rule if that is what you want to do. Even before I considered the availability of Average Benefits I had already ruled it out merely because of the term with break exclusion. Here is another good reason to include the last day rule: Johnny gets canned on 12/15/2014 and is expecting his profit sharing. He is mortified when he learns the employer is not giving his 15% of pay contribution. He demands an explanation (he is of course still bitter for being fired), he insists that he be shown where in the document his employment on the last day of the plan year is a pre-condition. What do you tell Johnny? The fact that you are technically correct is rarely a consolation to people.

Wow Tom, you just blew my mind... Would never have thought of that... The issue here is that you're not using a reasonable business classification to determine who gets a contribution. That's a coverage issue and if you're not using reasonable business classification you can't use Avg Ben for coverage. You can for RG Testing of course. That's a lot different than some get 3% some get 5% some get 10%.

They want to switch the first 5% to profit sharing so they can do cross-tested/profit sharing. ACP Testing I do not think will be an issue as the participation is very very good.

What do I need to watch out for with a match that says the first 5% will not be matched, but then the match is dollar for dollar for 5% through 10% (i.e., the max match is 5% of pay, if you contribute 10%). Same match formula applies to everyone. Is it just an effective availability test? Everyone in the organization is pretty highly paid.

Pretty much what Corbel said in terms of yay or nay, but you're explanation was very helpful. I agree with the logic you're using...

Thanks Calavera - that link was very helpful!

Oy vey.