Kevin C

jpod, 1. Your post #5 suggests correcting an operational failure to withold the amount elected by the participants by withholding twice as much as they elected for a later pay period. For both affected pay periods, the amount withheld would not be what the participants elected. I'm saying that I don't think the two errors cancel each other out. 2. I was describing the Rev. Proc. correction for a brief exclusion. The match is part of that correction. If I did not mention the match, it might mislead someone into thinking no correction of any kind is needed in that situation.

If you qualify, there is a special rule for brief exclusions in Rev. Proc. 2008-50, Appendix B, Section 2.02. The missed match gets deposited, but you don't have to to correct the deferrals. jpod, I don't think two operational failures in opposite directions means there is no operational failure.

My, my, someone is cranky. If you don't think a discussion about whether a disclaimer of benefits constitutes prohibited assignment or alienation that includes cites might be useful, perhaps you can provide some useful information for the OP. ANY incorrect action or inaction regarding a qualified plan can create a liability issue. There are DB plans that provide pre-retirement death benefits even if the surviving spouse is not the beneficiary. If they pay the benefit despite the surviving spouse's objection, what are they going to do when the uncashed checks become stale, are voided and the amounts are credited back to the plan account?

The final regs published 2/24/2009 softened the EACA requirements. I thought the preamble discussion was more clear about the changes than the regulations themselves. The regulations are not in effect yet, but following the final regulations is deemed to be a good faith interpretation of the code.

I decided to post again even though you didn't respond to my question. If the amendment did change the safe harbor provisions, then I think you have a problem with the 1.401(k)-3(e)(1) prohibition of mid-year amendments. Another issue to consider is the 1.401(k)-3(b) requirement that all eligible NHCE's receive the SH contribution. If some of the participants eligible to defer who have not met 21 & 1 receive the SH and others do not, you have not satisfied the SH requirements. If you treat the plan as two plans under 1.401(k)-3(h)(3), you should be able to limit the loss of SH to the portion of the plan with the participants who have not met 21 & 1. I don't know if the same argument would work with the mid-year amendment issue.

You might find some useful information in GCM 39858.

The DOL has an abandoned plan program that covers plans like this. Their website includes a link where you can search to see if the plan is already in the program. The fact sheet link has contact information for questions. That would be a place to start. Our local DOL office (Dallas) has one person who handles the abandoned plans in our region. If you can find out who that person is for your local office, they may be able to help you. http://www.dol.gov/ebsa/compliance_assistance.html#section9 I would also check on Freeerisa.com to see if they are current in their Form 5500 filings. If they stopped filing, pointing that out may help you get the DOL's attention. The penalty for late filing is usually $25 per day, but can be as high as $1,100 per day.

There are several different ways to calculate the earnings adjustment. Take a look at Rev. Proc. 2008-50, Appendix B, Section 3.

Did the amendment change the deferral eligibility requirements? Or, was there only a change in the safe harbor provisions?

The Federal Register listing of the program on 3/28/2002 included this: FOR FURTHER INFORMATION CONTACT: Jennifer C. Warner or Scott C. Albert, Office of the Chief Accountant, Pension and Welfare Benefits Administration, telephone (202) 693-8360. This is not a toll-free number. The DOL website gives the same phone number.

A loan that is treated as a deemed distribution is not considered as a distribution for purposes of 401(a). The section 436 limitations are referenced in 401(a)(29). A loan offset is a distribution. But, if the distribution restrictions would not allow the participant with a defaulted loan to receive a distribution, I think that would prevent the plan from offsetting the loan and the loan default would be a deemed distribution instead. 1.72(p)-1

The match limitation you are referring to is in Note that it says "any eligible NHCE". That term is defined in 1.401(k)-6 as "Eligible NHCE. Eligible NHCE means an eligible employee who is not an HCE." In the same section, "eligible employee is defined as : So, when you are comparing the matching contribution rate of HCE's to the rates that would apply to eligible NHCE's, you are only looking at NHCE's who are eligible to defer under the plan. If both plans pass coverage independently, the NHCE's in the other plan are not eligible employees under the SH plan.

Here is some guidance on part-time employees. http://www.irs.gov/pub/irs-tege/qab_021406.pdf It is possible to have different eligibility requirements for full-time and part-time employees. Our EGTRRA VS documents have an option that provides immediate eligibility for full-time and eligibility after completion of a year of service for part-time.

The deposit timing rules apply to amounts paid to the employer by a participant and amounts withheld from paychecks. If nothing was withheld from the paychecks, I don't see how the timing rules would apply. What you have is an operational failure to implement their deferral elections for that pay period.

I'm reading the regs as saying that for top heavy testing, any rollover to a plan of the same employer is a related rollover.

I agree it should have been a 2. She terminated in the calendar year she turned age 55 and received the distribution after termination of employment. Notice 87-13, Q&A 20 has a more detailed description of the rule.

Company A, B, C & D employees can only get distributions if they have a distributable event. I don't see anything in the regs saying that having your employer no longer participate in the plan or a partial plan termination are distributable events. If someone has a cite saying they are distributable events, I'd love to see it. They can get a distribution if the plan they are in terminates and their employer does not sponsor an alternative defined contribution plan for at least 12 months after the final distributions. With what you have described, Companies A, B, C & D would adopt a new plan. Their portion of the old plan would be spun-off and merged into the new plan. Then, the new plan could terminate. But, it seems silly to adopt a new plan and immediately terminate it. Or, you could have Company E adopt a new plan. Then, spin-off the portion of the old plan for the sold employees and merge it into Company E's new plan. The old plan can then be terminated by Companies A, B, C & D. You get to the same place. This option makes more sense to me.

Interesting situation. Have they shared the reasoning behind wanting to do it this way? Are Companies A, B, C & D going to have a DC plan going forward? Does Company E currently have a DC plan?

EPCRS has a correction method for brief exclusions. Here is a prior discussion. http://benefitslink.com/boards/index.php?showtopic=41860

Only certain types of institutions can issue a certification that will allow a limited scope audit. See the Schedule H instructions for line 3b for a description and cites. It sounds like American Funds can not issue a certification, but the trust company they use when they are directed trustee can issue a certification. Of course, using a trust company generally means more fees.

Could this be it? http://benefitslink.com/links/20090615-071494.html The only other one I can think of is LaRue, but that was a DC Plan and longer ago.

Sieve, If you use compensation for the full 12 month year for the SHNEC, I don't think you have any proration issues. The regulation cited talks about the period for determining compensation. In that case, it would be a 12 month period. If, however, compensation prior to becoming eligible to defer is excluded in determining the SHNEC, then I think §1.401(a)(17)-1(b)(3)(iii)(B) allows you to not prorate the 401(a)(17) limit.

Sieve, when you are adding a SH CODA to an existing PS plan, you get an exemption from the requirement that the SH be adopted before the beginning of the plan year. Look at the last sentence of 1.401(k)-3(e)(2). As for the really important question, they didn't try very hard because they didn't like him. Why else would they call him "Humpty Dumpty"?

Take a look at 1.401(k)-3(e)(4). Having a substantial business hardship is one of the situations where you can stay safe harbor when you terminate with a short final plan year. Make sure you look at 412(d) for the substantial business hardship requirements. They are pretty restrictive. If the corporate assets are being sold, look at 410(b)(6)©.

John, It could be written into the document either way.