Kevin C

The safe harbor notice must be provided a reasonable period of time before the beginning of the year. 30-90 days is deemed to be reasonable. Less than 30 days and it's a facts and circumstances determination. So, is today a reasonable period of time before the beginning of the year? It's a judgment call. I think you have a strong argument that sending the notice today is a reasonable period before the beginning of the year. But, as more days pass, it will be increasingly more difficult to argue it is reasonable.

If A & B cooperate, yes, the portion of plan A covering the sold employees can be spun off and merged into Plan B. But, there may be reasons why Plan B wouldn't want to do so. For example, there may be operational issues with plan A or, there may be protected benefits under plan A that don't fit with the terms of plan B. What is your position in this? If you represent A or B, you'll need to get professional advice.

I don't think you can get it back. But, you can always ask. The worst they can do is say no. http://www.dol.gov/ebsa/faqs/faq_dfvc.html

Wow, it's been a long time since I've dealt with that. From what I recall, that was a transitional rule that allowed your formula to consider service prior to the effective date of the regulations. Those regs were effective for plan years beginning on or after 1994 (unless it was extended elsewhere). I'm not sure it would help you now since I think it only applies to service for years prior to the effective date of the regs. What we did back then was to change the formula to only consider service from the change forward. That gives you a zero theoretical reserve. I thought all the target benefit plans went away after EGTRRA.

You got me curious. After looking at the regs, it might work. The reasonable definition requirement mentioned that would normally prevent a compensation definition of 1/3 of Comp is in 1.414(s)-1(d)(2). But, look at the following: Putting it together, © lists compensation definitions that automatically satisfy 414(s). Then, ©(5) says you can modify one of those definitions to exclude some or all of the HCE's compensation. The reasonable definition requirement is part of the rules for using an alternative definition under 1.414(s)-1(d). The problem may be getting that kind of provision into the document. I'm thinking that you would also need to limit the HCE compensation to 1/3 of the 401(a)(17) limit. If an HCE making $300,000 gets a larger allocation than one making $250,000, I think you would have difficulty arguing you were not considering compensation in excess of the 401(a)(17) limit in determining benefits.

If unchecking the deferrals allowed box prevents you from entering some of the provisions you need for existing accounts, you may be able to make it work by allowing deferrals / match, but limiting them to zero. I had to do that once when a client wanted to remove match provisions, but I still needed to be able to list the match vesting schedule for the old $.

Sorry Mike, but unless you can show me something in 401(a)(30) that says you consider the plan determined catch-up, we'll have to agree to disagree. Have you looked to see what your DC valuation system does with this situation?

My read of 401(a)(30) is that it is saying plan determined catch-ups are disregarded. With plan determined catch-ups disregarded, you are left with actual deferrals and 402(g) triggered catch-up. In effect, we have two separate catch-up determinations, one for the employee under 401(a)(30)/402(g) and one for the plan under 414(v). 401(a)(30), quoted in a prior post, says to combine deferrals in all plans of the employer and use the deferral limit in 402(g). 402(g)'s reference to catch-up, also quoted in a prior post, says to disregard the plan catch-up determination under 414(v). What am I missing that says we use the plan catch-up determination under 401(a)(30) / 402(g)? But, let's assume for a minute that we do count the plan catch-up under 401(a)(30) / 402(g). When is the $900 determined to be a plan catch-up as of 3/31? It certainly isn't on 3/31. In most cases, it would normally be within 2.5 months. But, if the sponsor is considering a QNEC, or for some reason they just don't get around to the testing, it could be substantially later. Until the testing is finalized, it is decided by the employer to issue refunds instead of doing a QNEC, AND the participant is notified, how is the participant (or anyone else) going to know exactly what portion of his deferrals are being considered as plan catch-up as of 3/31? Plan catch-ups are required to be universally available, so you have other problems if your testing is later corrected yielding lower refunds. It gets even more interesting if you have a later plan year end. We have a 401(k) with a 10/31 year end. How would you handle your interpretation when the testing normally isn't completed before the participant's tax year ends?

... unless the plan is only valued annually or semi-annually.

No, his plan determined catch-up is only $5,500. Under the 414(v) regs, amounts only get classified as a plan determined catch-up to the extent of the available catch-up limit. At the point that he reaches $21,600 of deferrals, he has a plan determined catch-up of $5,500, so additional deferrals do not create additional plan determined catch-up. I think that is what you and Mike are pointing out. The only point we disagree on is whether that affects his ability to defer the last $900 for the year. I'm not sure what that means for the plan. It could mean that the last $900 of deferrals count in the ADP test. It could mean something else. That's something the IRS gets to decide. At a previous job, my supervisor had a plaque on his wall that read: "You don't have to be crazy to work here, but it helps!" I need one of those.

I think both would need to accurately describe who gets the SH match. I hope they don't match each payroll. Year end bonuses could make that interesting for the first payroll of a new year. A top 20% election could be interesting, too. If eligibility for the SH match depends on HCE status, it seems that would make the top 20% election part of the SH match eligibility provisions that satisfy the rules of the SH regs. But, I assume you wouldn't elect it anyway.

Closer. Let's take it a step at a time. 1. First, the easy part The 414(v) catch-up rules say the $900 becomes catch-up as of 3/31/12 due to the failed ADP test. That is in the participant's 2012 tax year, so it is a 2012 plan determined catch-up. That part, to me is clear. The flip side is under 401(a)(30) - 402(g). The plan's catch-up determination is disregarded, and the participant has not yet deferred for 2012. At 3/31/12, he has used up zero of his 2012 402(g) limit. 2. Now comes the messy part If he had deferred during 1/1/12 - 3/31/12, the 414(v) reg examples say you reclassify part of those deferrals as catch-up, which lets him still defer the full $22,500 for 2012. The 414(v) regs don't address what you do if he did not defer from 1/1/12 - 3/31/12, which causes our problem. When you go through the 414(v) reg rules literally, it doesn't work because it looks like he exceeded his deferral limit using the plan determined catch-up. The first $900 of the plan determined catch-up limit is used at 3/31/12. Then, when his deferrals for the year get over $17,000, he uses up additional plan determined catch-up. At $21,600, the 414(v) regs say he has maxed out the plan determined catch-up limit. But, 401(a)(30) and 402(g) say to disregard the plan's determination of catch-up. When he has deferred $21,600 for 2012, those sections say he can still defer another $900, because he has not hit his $17,000 + $5,500 limit for the year. Our plan document provisions mirror the 402(g) language and say he can defer $22,500 for tax year 2012. There are two separate catch-up determinations; one for the plan under 414(v) and one for the participant under 402(g). 3. So, do we ignore the plan terms and 402(g) and limit his deferrals to $21,600? Or, do we let him defer the full amount allowed under the plan and 402(g) and have the 414(v) regs blow up on us? After widening my view of the 414(v) regs to include 402(g), I think we have to let him defer the full $22,500. How do we deal with the 414(v) regulations problem? I don't know. I think we will need some additional guidance from the IRS to get a good answer.

No, it doesn't change anything. We are talking about a single plan, so including other plans of the employer isn't an issue. 401(a)(30) refers to 402(g) to specify the amount of the deferral limit, so the 402(g) language is still the key. Now, if 402(g) had said the regular deferral limit could be exceeded to the extent of the available catch-up limit under 414(v), you get the result you describe. But, it does not say that. 1.401(a)-30 refers you to the 402(g) regulations for the amount of the deferral limit. Those regulations have not been updated for EGTRRA, so they don't help here. What do your plan documents (and SPDs) say about the deferral limit? Ours mirror the language in 402(g).

ERISA, I think you are missing the point I'm trying to make. The rules you are citing as saying he can't defer the full $22,500 are in 1.414(v)-1. Section 402(g) says the maximum deferral for an individual is determined without regard to the plan's catch-up determination under 414(v). Under 402(g), you are disregarding the plan's determination that he used up $900 of his 2012 414(v) catch-up limit on 3/31/12, so how are you able to limit his deferrals to $21,600? The only way you get a limit of $21,600 is by applying the plan's 414(v) determined catch-up amount. In this situation, 402(g) and 414(v) conflict with each other. But, 402(g) says you ignore 414(v), not the other way around. It's a mess, but I'm not convinced the answer is to ignore 402(g) and limit his deferrals due to 414(v).

If the plan allows deferrals up to the 402(g) limit, like almost all of ours do, I don't see how you could limit him to less than $22,500. When you disregard the plan's catch-up determination, as an individual he has not used any of his catch-up limit until his deferrals exceed $17,000. I don't think the IRS contemplated this kind of situation when they wrote 1.414(v)-1 and in this unusual case those rules conflict with 402(g). Maybe someone with some influence at ASPPA could get this on the Q&A list?

No, the catch up limit applies to the participant's taxable year. See 1.414(v)-1©(1) & (2). The catch-ups counted in a non-calendar plan year are whatever amounts become catch-ups as of a date in that plan year. For example, if he defers $22,000 in December 2011 and $22,500 in January 2012, he would have two calendar years worth of catch-ups in the 3/31/2012 plan year. The timing rules in 1.414(v)-1©(3) tell you when the amounts are considered to be catch-up. For amounts reclassified due to a failed ADP test, it happens as of the last day of the plan year. In your case, 3/31/2012, which is in the 2012 taxable year, so it applies towards the 2012 catch-up limit. He has not deferred yet in 2012, so his full 2012 catch-up limit is available and the $900 does not need to be refunded. The hard question is what happens with his deferrals for the rest of the year. If you only look at the catch-up regulations, it looks like his deferrals for the remainder of the year may be reduced. But, 402(g) says that the individual's deferral limit is determined without regard to the plan's determination of catch-ups. I think that means that he can still defer the full $22,500 for 2012, but it isn't very clear to me what deferrals you count in the ADP test at 3/31/2013 if he does defer the full $22,500.

So, not providing a SH notice at all this year is correctable with a "simple revision to an administrative procedure" if the participants are not prevented from making a timely deferral election, but having non-SH information in the SH notice change mid-year causes the plan to fail to satisfy the SH notice requirement and disqualifies the plan? http://www.irs.gov/Retirement-Plans/Fixing...(k)-Plan-Notice From a different perspective, I'll point out that there are no rules in the SH regs dealing with deferral eligiblity (Q#37), investment alternatives (Q#38), profit sharing coverage (Q#39) or the Trustee (Q#40). Q#36 is about changing the plan year, so it really isn't a mid-year amendment issue as the situation is described. Q#42 deals with a bankruptcy court overruling a plan document, so I don't think it really tells us about how the SH plan rules work. Q#41 is the interesting one. Going strictly from the regs, I would have said no, it can't be done because it amends provisions that satisfy the rules of the SH regs. If you use the information in the SH notice standard, I think you get a "no" answer since the amendment would change information in the SH suspension notice that had already been provided. But, the IRS says you can get a do-over as long as adequate notice is provided so that "the eligible employees' deferrals decisions are not compromised with the rescission of the amendment". For now, I view that response as addressing a special case, instead of broad informal guidance.

The printed copy I have doesn't show the release date. I printed it on 7/26/2012 using WK Intelliconnect. It was the current version at that time. I'm referring to 2550.404a-5(h)(1).

My copy of the regs is slightly different. It says: We're planning on one disclosure each calendar year, with future disclosures provided when the 1st quarter statements go out.

If you have access to the DC Q&A's from the 2011 ASPPA annual conference, this type of arrangement is in question 4. The discussion from the podium is worth listening to, if you can get access to the recording. My recollection is that the short answer was that the normal type of new comparability provisions in use are not a problem. The IRS speaker was concerned with a design they came across that allowed a participant election regarding bonuses that would affect the compensation and compensation amount for that participant. The speaker asked if anyone had ever had a deemed CODA issue raised by the IRS. I didn't see any hands.

The view counts were increasing on posts until some time in the last couple of weeks. But, I think it only counted the first time you viewed a post.

The direct link works for me. Other than the initial period it disappeared, it's worked for me using IE 9. I get the IPS error at times, too. I also noticed the views counts don't seem to be working lately. There a number of threads with several replies that show 0 views.

You can request a waiver of the excise tax as part of a VCP filing. If it involves 50 or fewer participants, the filing fee is $500. If the participant is an owner-employee or a 10% owner of a corporation, you have to include an explanation. The details are scattered around in Rev. Proc. 2008-50.

The due date for large plan deferral deposits is a subjective determination. If they have a well staffed payroll department and everyone on a given pay schedule is on the same payroll, I would expect the deposits to be made fairly quickly. But, if for example, they have one person handling separate payrolls for 20 or 30 separate locations split between the two pay schedules, they may be able to justify taking more time to deposit. If the DOL comes calling, the investigator will determine what he/she thinks the deadline is. We've seen a substantial variation in the standard used from investigator to investigator. But, in our experience, the odds of getting one to agree to monthly deposits in the situation you describe are pretty slim. A PT occurs if the deferral funds are not deposited timely. If the deposit is mailed, the deposit date is the date the check was mailed provided the check clears the bank. The mailbox rule is from a footnote to the preamble of the final deposit regulations. Getting the deposits invested timely is a separate issue.

There are some old threads on the topic. The SH special rules for plan mergers are in 1.401(k)-5. Actually, they would be if there were any. It says "[Reserved]". 1. I'm don't see why the old plan being SH on the merger date would affect ability to merge. You still have to maintain the 100% vesting and distribution restrictions for the SH account in the receiving plan even if the SH provisions are removed before the merger. As for being able to do a merger with a SH plan mid-year, no one knows for sure. I would do the merger at the end of the year. 2. There are short plan year rules that let you stay SH if there is a plan termination in connection with a 410(b)(6)© transaction in 1.401(k)-3(e)(4). Does a merger count as a plan termination? I don't know. Again, the best solution is to do this at year end, so you don't have a short year. When you say recently acquired, do you mean in 2012? If so, your 410(b)(6)© transition period would get you through the end of 2013 for a calendar year plan.