Kevin C

I listened to that forum. They usually make the transcript available at some point after the presentation. It is not on their site yet. The speaker said they consider prime + 2% to be a reasonable rate. That doesn't mean something less is not reasonable, just that you may need to justify that a different rate is reasonable.

If this is an ERISA covered plan, I would forget about using the <20 hour per week exclusion. The ERISA minimum participation rules will eventually force you to allow a person to defer who fits in the <20 hour per week category. The usual example is someone who previously worked 1,000 hours and drops below 1,000 hours in later years. The IRS regs will have you exclude them for the year after the first year they work less than 1,000 hours, but ERISA says they must be eligble to defer. At that point, the all or nothing rule in (4)(i) of the second cite above kicks in and you can't use the <20 hour per week exclusion. Even if it isn't an ERISA covered plan, I would advise against using it. We have an on-going IRS audit where the agent is insisting the all or nothing rule applies if a single <20 hours per week person is allowed to defer by mistake. The agent wants them to retroactively include about 200 people and correct their "improper exclusion" under EPCRS. There are some older threads discussing the <20 hour per week exclusion.

Try here: https://www.cpg.org/linkservid/8AA9B309-D15...2010%20Taxes%29 It's the 2011 tax guide on this page: https://www.cpg.org/forms-and-publications/...ax-publications

There is an old thread where it was suggested an -11(g) amendment could keep a plan qualified after SH problems. Your situation made me think of that thread. Now that you mention it, 401(b) would be a better cite since it is a 2011 amendment that caused the problem.

-11(g) works for 401(a)(4) issues. ADP and ACP compliance is covered by 401(a)(4). See 1.401(a)(4)-1(b)(2)(ii)(B). That reg section is referenced in -11(g)(2).

I think they are included in the ACP testing. From 1.401(m)-5: If you follow the definition of "Plan" in 1.401(m)-5, it means a plan after the application of mandatory/permissive aggregation/disaggregation under 410(b). Deferrals and the 401(m) portion are mandatorily disaggregated, so they are treated as separate plans. I think the highlighted sentence above would also apply if they have not contributed enough to another "plan" to receive the match.

How about an -11(g) amendment?

I would add another option: Consider yourself lucky they didn't send a letter denying the timely filed extension.

That is eligibility/entry for the non-elective portion of the plan. What is it for deferrals? You posted in the 401(k) section, so I was thinking about deferrals. Retroactive entry doesn't work too well with deferrals.

On another note, those are interesting plan provisions. When would someone hired full time on 8/15/2011 enter the plan?

The rules accomodate private delivery services. They refer to them as PDS in the reg. The part I quoted applies if you send it and don't get proof of delivery. Our mail carrier won't postmark the certified mail receipt. You have to take it to the post office to get the receipt postmarked. I haven't looked into registered mail, "for as little as $10.60" per the helpful preamble. If we have to send someone to the post office to make sure we are covered if they lose the filing, it may be cheaper in the long run to switch to private delivery.

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures. http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures. http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

I guess "some" includes the IRS. A determination letter only covers the document and amendments (if any) submitted with the request. Are submitting for a new letter with each good faith interim amendment? Missed or late interim amendments cause the same problems regardless of the type of document. Timely adopted good faith interim amendments for all plans have an extended RAP to the end of the current applicable 5 year cycle or 6 year cycle under Rev. Proc. 2007-44, Section 5.03 to correct any defects. Anyone else attend the EGTRRA restatement session at the ASPPA annual conference a few years back? The speakers asked the audience who was going to submit their clients' pre-approved documents for determination letters. I saw about 10 hands raised saying yes. The speakers then asked why. The person who went to the mic replied because we've already billed them for it.

I wouldn't be so quick to give up on the prior determination letter. If they filed for one, you can request a copy from the IRS. http://benefitslink.com/boards/index.php?s...st&p=213841 What prototype document did they use for the TRA 86 restatement? If they used one of the major providers, you may be able to find a copy. For the determination letter requirements for VCP, look at Rev. Proc. 2008-50, Section 6.05.

We had a plan like that come to us several years ago when an IRS auditor discovered that the plan had not been amended in 10+ years. The sanction was $6,500 and they had to adopt a current restated document.

Please enlighten me about those at least half a dozen practical reasons why a determination letter on a VS or M&P plan saying the form of the document complies with IRC 401 is better than reliance on an opinion letter saying the form of the document complies with IRC 401.

It depends on what you mean by "essentially makes no changes ...". The rules for reliance on the VS opinion letter are in Rev. Proc. 2005-16, Section 19. If the changes made cause the plan to lose reliance on the opinion letter, I would file the Form 5307 as a minor modifier. If by changes, you mean selecting options permitted under the terms of the plan, I don't see much of a reason to file for a determination letter. Others might argue that you should request a determination letter so that next time you request one, the IRS doesn't go back before the latest letter.

Do you want the 2010 SH contribution to count as annual additions for 2010 or for 2011? If the deposit is made in December 2011, it will count as 2011 annual additions. That will cause a problem if anyone who received the SH contribution termed in 2010. You should also check your plan document. It may say that the employer contributions are due by the due date for the employer's tax return including extensions thereof.

The problem is that the Universal Availability rules under 403(b) and the ERISA participation rules are not consistent. The <20 hour per week exclusion in 403(b) is based on expected hours the first year and for later years, whether the person is credited with 1,000 hours in the prior year. Under ERISA once you are credited with 1,000 hours in a year, you stay in the plan even if your hours drop below 1,000 for a later year. So, if someone works 1,000 hours in a year and then drops below 1,000 hours in later years, the <20 hour per week exclusion will exclude them from deferrals in the year following the year they first worked less than 1,000 hours. That is an ERISA violation since it has the effect of requiring more than one year of service for deferral eligiblity. Add to that

If the Dr. is age 50, there is also the ability to have an extra $5,500 of catch-up in a 401(k). If his/her compensation is less than $196,000, it becomes important that deferrals don't count against the deduction limit.

I think that is what they had me do, too. I faxed the request and they sent a copy of the most recent letter to our client in about 2 weeks.

Are you sure the plan wasn't ever submitted for a letter? The reason I ask is that VS reliance on the opinion letter is a fairly new thing. I think it may have started with the GUST documents. Prior to that, VS documents were normally submitted for determination letters. The last filing I did that needed a copy of the determination letter, the client could not locate it. I requested and received a copy of the latest determination letter from the IRS. From the IRS website:

Here is your problem: If you apply two year eligibility for the discretionary piece, an HCE could get a higher match rate than the rate that would apply to an NHCE with less than 2 years of service.

I don't think it really matters whether or not you can disaggregate in this case. ADP/ACP testing only includes eligible employees, which in your example, class B employees are not. So, aggregating the ineligible class B employees has no impact at all on the testing. The missing piece is that the SH rules only require that all eligible NHCE's get the SH. There is no requirement that someone ineligible to defer has to receive anything. I agree. But, I think that indicates a flaw in your example. The rules do make sense here because of the frequent use of the term "eligible employee". Wouldn't the situation you are describing be the same with a plan that has 6 month eligibility for deferrals? Those with less than 6 months of service have less than a year of service, but they are being treated differently than those with 6-12 months of service. The important difference is that one group is eligible to defer and the other is not.