Kevin C

That is saying the ERPA enrollment fee is being reduced because of the new PTIN fee, not the other way around. It doesn't look like that will help actuaries.

Our pre-approved documents allow the plan's required beginning date for non-owners to be the same as for owners. I've never used that provision. I don't think the plan provision would make the distribution a required minimum under the rollover rules, but if the distribution amount is determined the RMD method, it would be an installment ineligible for rollover.

For the de minimis part, take a look at Rev. Proc. 2008-50, Section 6.02 (5) Special exceptions to full correction.

and key employee deferrals count when you determine the required top heavy minimum contribution.

The September distribution when she wasn't eligible to receive it was an operational failure. The EPCRS correction is in Section 6.06(3) of Rev. Proc. 2008-50. They should consider themselves lucky the overpayment did not reduce allocations for other participants. Don't forget the EPCRS requirement that procedures change to try to prevent this from happening in the future.

You may want to take a look at the transcript of the 8/24/2010 IRS phone forum on EPCRS. The speaker addressed the failure of a 403(b) to timely adopt a plan document. He said to go ahead and fix it, don't wait for the new Rev. Proc. The entire transcript is here: http://www.irs.gov/pub/irs-tege/epcrs_phon..._transcript.pdf The handout from the forum can be accessed from here: http://www.irs.gov/retirement/article/0,,id=218995,00.html

I don't see any issue with it either. We have a few clients in the same situation that grant service credits. Our VS document defines Predecessor Employer as "An employer that previously employed the Employees of the Employer". If the Employer maintains the plan of a Predecessor Employer, service with that Predecessor Employer counts under the plan. Otherwise, the predecessor service only counts if it is designated in the adoption agreement.

If you received your attendance verification form for the 2010 ASPPA annual conference, you may want to look it over carefully. I attended two ethics sessions, but only one showed up in the ERPA Ethics column. Workshop 25 was the one that was not credited properly. I called the number listed and they e-mailed a corrected form.

If you are asking about adding an hours or last day requirement to match provisions that currently satisfy the ACP safe harbor rules, I would recommend you make the change effective the first day of next plan year. Notice that it says you will not satisfy the discrimination requirements of 1.401(m)-1(b). That is not the same as losing the ACP safe harbor. If you are asking about adding an hours or a last day restriction to an existing non-safe harbor match, has anyone already satisfied the current requirements to receive the match?

My vote is no. And I don't think the other suggested option works any better. The timing issue under 1.401(a)(4)-5(a) is based on the effect of the amendment. Both options would have the same result, so I don't see how their effect could be different.

There is a Nov. 23 IRS phone forum on the new cash balance regs. They are asking for questions you would like the speakers to address. http://www.irs.gov/retirement/article/0,,id=218995,00.html

Unfortunately, you can not merge a 401(k) and a 403(b). That's why one plan is terminated and the balances rolled over to the other. There is still no ADP test for deferrals in a 403(b). 403(b)'s have a universal availability requirement for deferrals instead of testing. The universal availability rules changed 1/1/2009, but they are still there. Testing requirements for employer contributions did not change. The match still needs an ACP test unless they are a church or public school. The biggest 403(b) advantage that went away 1/1/09 was the exemption from the 5500 audit requirement. If the plan has to file as a large plan, they now have the same audit requirement that a 401(k) plan does. Audit fees have increased so much the last few years, they usually charge more for the audit than we do for the TPA work.

2) results in a blackout after 3 business days. Were any blackout notices sent?

If you are worried about an amendment not being treated the same as the adoption of a prototype, you can always restate the document. I agree that logically the two should be treated the same, but we are talking about an IRS program. Out of curiosity, I looked at our VS documents. The exception Sieve mentioned when the CBA calls for plan participation is buried in the definition of Collectively Bargained Employee. I learned something new today, is it time to go home yet?

I'm not sure how much I would rely on the IRS response to this question. Their entire discussion was based on the statement that the mid year amendment prohibition is part of the Notice Requirement rules in the SH regs. It isn't. The mid-year amendment prohibition is part of the Plan Year Requirement in 1.401(k)-3(e). The same rule is part of the Plan Year Requirement in 1.401(m)-3(f). I read that as saying that any plan provisions that satisfy the rules of 1.401(k)-3 and 1.401(m)-3 can't be changed mid year. The two exceptions listed in the reg. are using the conditional 3% SH notice and mid year suspension or reduction of a SH match, which don't apply here. Restrictions on the timing of deferral elections are mentioned in 1.401(k)-3©(6)(ii) as part of the SH match rules, but I don't see anything similar in the 3% SH rules. Since you have a 3% SH, I think you have a strong argument that the plan provision dealing with the timing of deferrals election is not one of the provisions that satisfies the rules of the SH regs, so it can be amended mid-year. I don't think it matters that the document allows a change in procedures instead of a formal plan amendment. Provisions that satisfy the rules in 1.401(k)-3 must remain in effect for the entire year. That prevents a change to those provisions even if no amendment is needed.

That's the way I read 1.403(b)-5(a)(4)(ii)(B). They must be eligible to defer in the 401(k) if you are excluding them from the 403(b). That's an interesting design. Would you be willing to elaborate on the reason for this design?

We do preliminary TH testing for a couple of clients just before their year end. These are ones that don't want to contribute anything at all for their employees. Fortunately, most of our clients contribute enough employer $ that the TH minimum isn't an issue. Most of our small plans are already TH. Economic conditions are not the only thing that can affect TH status. We've had a few become TH after a long term non-key employee retires. At least with that one you have some advanced warning. The fun one is when you find out after year end that they changed their ownership percentages and there are a couple of new >1% owners making over $150K.

It would need to be submitted for a determination letter. 19.03(4) has more information on what kind of amendments can be made without having the plan no longer be considered identical to the pre-approved plan. I think the change they want to make would clearly be a change to the specimen language, so they would not have reliance on the opinion letter.

If the TH minimums are not deposited, they have a qualification issue since the top heavy rules are not satisfied and another qualification issue from the operational failure by not following the plan's TH provisions. If the business owner wants to roll over his/her distribution or have the distribution taxable when distributed, I think he/she has a vested interest in making sure the plan remains qualified.

From the preamble to the final 401(k) Regs:

The IRS website says the proposed regs require annual renewal. (5th paragraph) http://www.irs.gov/newsroom/article/0,,id=226697,00.html

I thought it was pretty clear about saying everyone must be eligible, unless they can be excluded. The effective opportunity rules are not written very well, but I don't see how they can be used to justify using a service requirement for deferrals in a 403(b). The 401(k) regs are clear that service and entry date provisions can be used to determine eligibility to defer in a 401(k). If the IRS wanted to do the same with 403(b), I think they would have written something similar into the 403(b) regs.

Has anyone heard if the $64.25 annual fee is by calendar year or something else? I'm not sure I want to sign up now if they are going to want another $64.25 in three months. The exam isn't an issue since I'm an ERPA.

I quoted a sentence from (2) where you have a problem. It says effective opportunity includes the right to make deferrals up to the limit. How does an employee who is not allowed to defer at all for a given calendar year have the right to defer up to the limit for that year? I think you also have a problem with the sentence you are using to try to justify a waiting period. It says "during each plan year". How does the person in my example have an effective opportunity to make a deferral election for the 2010 plan year if they are only allowed to make an election that is first effective in 2011? I think facts and circumstances is a problem for a waiting period, too. An employee not being allowed to defer during a plan year is a pretty strong fact and circumstance indicating he does not have the opportunity to defer for that year.

Austin, Part of your quoted section says: With a 90 day waiting period in a calendar year 403(b), how does someone hired full time on 10/1/2010 have an effective opportunity to defer for 2010? They are an employee, so they have to be considered in determining if universal availability is satisfied. They are not allowed to defer until 1/1/2011, so there is no right to contribute deferrals up to the limit for 2010. That means there is no effective opportunity in 2010 and the plan does not satisfy universal availability for 2010.