Kevin C

No. The HCE can still defer the full $22,500 for the calendar year. The $5,500 of 2012 deferrals reclassified as catch-up due to the 415 limit at 6/30/2012 does not count against the 2012 402(g) limit. That means when the HCE gets to $17,000 in deferrals for 2012, only $11,500 of the 402(g) limit has been used. See 1.414(v)-1(h) example 5, including paragraph (v). As for the remaining $1,000 in excess of 415 at 6/30/2012, you will need to check the plan document. You will likely find that the automatic correction method previously used was replaced with a reference to using EPCRS.

You can also check the DOL's website to see if the 403(b) plan files a Form 5500. ERISA covered plans are required to file. http://www.efast.dol.gov/portal/app/dissem...?execution=e1s1 The existence or absence of a Form 5500 in the DOL database won't necessarily give you a definite answer to the ERISA question, but it's free and fairly easy to do. The search feature on the DOL site is fairly picky. If what you enter doesn't exactly match the first part of what is in the DOL database, it won't find the filing. I would start by searching for the first two or three words in the plan name. www.freeerisa.com has a more flexible search feature, but you'll have to sign up to do a search. It's free, but you will get advertising e-mails.

I think they are too late for 2011, but they could do something for 2012. Since you said Profit Sharing Plan, I'm assuming no 401(k) component. To get a contribution for only the NHCE for 2012, how about restating the PS plan as a 401(k) and including the ability to do a pro-rata QNEC for the NHCEs? You'll want to make sure the document doesn't say an ADP/ACP failure is needed to do a QNEC. A 401(k) might work better for them than a PS for other reasons, too.

The plan document will tell you what to do with the forfeitures in excess of the fees. If it's a prototype or VS, you'll have to go to the base document.

If you have the current on-line EOB, you might want to look at the discussion starting on page 11.386. It says a "reasonable" definition of compensation for deferrals needs to be used or deferrals will fail to be effectively available on a nondiscriminatory basis as required by 1.401(a)(4)-4©. It goes on to say 1.414(s)-1(d)(2) provides a "reasonableness" test for a definition of compensation. I don't think every other pay day will satisfy that reasonableness test. I also have to wonder if perhaps the owner gets paid once a month.

If you don't provide the notice, you are under the normal fiduciary rules, like in a trustee directed plan. After all, the investment is not being made based on a participant election. As far as lawsuits the other way, here is one from the news section. http://www.courthousenews.com/2012/03/06/44457.htm

http://www.ca6.uscourts.gov/opinions.pdf/12a0203p-06.pdf Austin, This case came up in the news section today. Two participants with existing balances sued after they were defaulted into the QDIA when they did not respond to information sent to them about having to make a new investment election or be defaulted into the QDIA. There is a section of the ruling dealing with sending the QDIA notice, which the two say they never received.

Even if you are able to get a determination letter, I'm not sure how much good it would do. The 2001 version of Publication 794 had the following caution: That caution is not in the current version of the publication. I can't find anything about why it was removed. I did find a 2006 QAB that discusses the issue. The gist of it is that they felt the issue of indirect age or service requirements was best dealt with during examination instead of during a determination letter request. Anyone know if that has changed? http://www.irs.gov/pub/irs-tege/qab_021406.pdf

We've always treated the loan program as part of the SPD and include it with the SPD. I don't see how your SPD disclosure could accurately reflect the contents of the plan (§2520.102-3) unless it includes the loan provisions. There is also a requirement in (l) of that reg to describe situations that could result in an offset of benefits. A loan could certainly end up doing that.

For a non-safe harbor plan, it does say you can use the ADP for the respective group to determine the correction. However, I would not be comfortable using 0%. I think a better option would be to use the correction method for a safe harbor plan and calculate the correction using a 3% missed deferral rate.

I suggest you call the DOL person you dealt with and ask them what to do with the 5500's. Since they have already looked over the situation, they may surprise you with what they say. The few times I've had DOL involvement where there was an issue with prior year 5500's, they took into consideration the government's expense of processing the amended filings.

I pulled out my 2011 annual conference DVD. The SH mid-year amendment questions, 39 and 40 start at 1:18:20 on the clock. The response to the first question about changing deferral eligiblity was Ilene mentions something about her recollection being the only amendments are Roth and Hardship. I took that as a reference to the cited guidance on amendments. The next question is another mid-year question. The response is Now I'm being told the IRS said last week that the ONLY mid-year amendments allowed to safe harbor plans are adding Roth and expanding hardships to funeral expenses. I see changing from saying we are sticking with the published guidance to saying no amendments other than those addressed in Annoucement 207-59 are allowed is a "major" change.

Was that response in the Q&A handout, or addressed at the podium? You have me really wanting to hear the tape on this one. I'm really surprised on one objected to a major shift on such a huge issue. After all, the consequence of an improper amendment is disqualification, not just the loss of SH status.

00hskrgrl, you are not taking into account that you are allowed to permissively disaggregate otherwise excludables into a separate plan for testing purposes. Under the scenario under discussion, the "plan" containing the otherwise excludables would not be SH, but the "plan" containing the non-excludables would be SH. Bill, I've heard some bizarre things said by government representatives, but that one takes the cake. I see a lot of TAM requests in their future if they pull that garbage in audits.

The match portion of the correction for a failure to implement a deferral election is addressed in Rev. Proc. 2008-50, Appendix A .05(5)©. If the participant would have received additional match if the deferrals had been done correctly, then the additional match they would have received is part of the correction. There are rules in the Rev. Proc. for short periods of exclusion, but I don't see any mention of taking the missed deferrals from a later paycheck.

I may be the only one, but I didn't see Announcement 2007-59 as telling me anything I didn't already know. There is no mention of Roth in either 1.401(k)-3 or 1.401(m)-3. Likewise, I don't see any requirements for hardship provisions in either reg. To me, that means Roth provisions and Hardship provisions are not "provisions that satisfy the rules of this section", with section meaning 1.401(k)-3 and 1.401(m)-3, so the mid-year prohibition doesn't apply. The IRS has said at conferences that they have received requests for additional guidance, but will not be issuing any. Since they are not going to issue any more guidance, we can only rely on what we have.

I heard something different at those conferences. I heard the IRS representatives say they are not going to issue additional guidance about mid-year amendments to SH plans. I have never heard an IRS representative say that adding Roth and hardships for funeral expenses are the only mid-year amendments that can be made mid-year. To me, the original guidance in the Regs is very clear in saying the mid-year amendment prohibition applies to provisions that satisfy any of the safe harbor rules.

If you are looking at doing this mid-year, you might have an issue with 1.401(k)-3(e)(1)'s prohibition of mid-year amendments to safe harbor provisions. For example, if the current document says everyone eligible to defer receives the safe harbor contribution and you amend it so only those 21 & 1 receive the SH. There is no guidance regarding whether it is considered amending the SH provisions if the provisions change but the same people are eligible both before and after the amendment. Personally, I think that kind of change would be prohibited a mid-year amendment and I would make the change at the beginning of next year. However, if for example the document currently says the SH contribution eligibility is the same as the 21 & 1 match eligibility and you are only amending the deferral eligibility, I think you are ok with a mid-year change. Am I splitting hairs? Yes. Is it illogical? Yes. But, then we are dealing with IRS regulations. I'm sure others will have differing opinions.

Companies A & B sponsor a 401(k) plan. A & B are part of a controlled group. Unrelated Company C purchases B in a stock purchase. All employees of B will go on C's payroll immediately after the sale. C has its own 401(k). Have the employees of B had a severance from employment that would let them receive a distribution from the A & B 401(k) Plan?

If you are referring to the late deposit of loan payments withheld from paychecks, I think you are looking at the wrong correction program. The EPCRS loan corrections are for loans that don't satisfy 72(p). Late deposits are covered by the DOL's VFCP program, which includes a PT exemption if you comply with the program. http://www.dol.gov/ebsa/compliance_assistance.html#section8

There are some ESOP exceptions under 411(d)(6) for changes in distribution options. See 1.411(d)-4 Q&A 2 (d).

I'm in the rehires are a "D" camp. The instructions say that if a terminated participant rehires before the due date for the filing, you don't report them. If they rehire in a later year, coding them as a "D" gets the same result. When they term again, they will either get paid or be reported on the SSA. Why would it be different for a frozen plan?

You won't be able to do anything without information on what was done for 2009 and likely later years. For example, it is possible the withholding was paid from an employer account. We've had clients do that. I would either have the client contact the IRS and ask for a 945 account history or, you can get them to sign a 2848 and you request it for them. The last letter we received from the IRS about a 945 filing had the return address Ogden, UT 84201-0038 and a phone number 1-800-829-0115.

Examples (3) and (5) of §2550.408b-1(a)(4) address circumstances where that kind of situation could become a PT. In this case, I think that unless he pressures himself to take the loan and re-loan the proceeds to the company or unless he conditions the loan on the proceeds being re-loaned, he should be ok.

We use the other approach. The PN is corrected on the current 5500 filing and the EIN/PN used in the prior year is noted on line 4. Eventually, you will get a letter either asking for the a filing under one of the PNs. Responding to that letter with an explanation of what happened usually takes care of it. Our experience has been that you can't correct the EIN/PN on a return that has already been filed unless you get a live person to contact.