Kevin C

The language I quoted in post #23 was added during the review process. I have a copy of the document as it was originally submitted to the IRS in January 2006. That language is not in the original version. For those of you with individually designed documents that don't require the allocation to satisfy 401(a)(4), have you received an EGTRRA determination letter?

That quote was from our EGTRRA VS document. But, I'm not the one currently in need of an -11(g) amendment. Laura, what does your document say?

In the New Comparability section for the PS allocation, it says:

So you are saying that, as long as the NHCE's get at least the allocation I want them to get, ignoring that the desired allocation under the current terms of the plan fails 401(a)(4) even though the plan says the allocation must pass 401(a)(4), then when the -11(g) amendment increases contributions for a small number of select individuals, everything is OK? I'm also having trouble grasping the conclusion that the -11(g) amendment being discussed only increases allocations for the 2 NHCE's. The desired level of contributions for the NHCE's does not support the desired allocation to the HCE prior to the amendment. If no amendment is done and no additional amounts are deposited, the HCE contribution must be reduced for the plan to pass 401(a)(4). The contribution becomes part of the accrued benefit when it is allocated under the terms of the plan. So, how is the portion of the desired HCE contribution that he could not get unless the plan is amended treated as anything other than an increase in the HCE's accrued benefit due to the plan amendment? Looking at it from the other direction, If the HCE's desired allocation IS part of his pre-amendment accrued benefit, then what about the NHCE desired allocations? The NHCE's would have to get larger allocations under the pre -11(g) terms of the plan for the plan to pass 401(a)(4). So, when they get less than they would have if the plan was not amended, how is that not reducing their accrued benefits?

Update to my post # 2. My last letter did the trick and we got the determination letter a couple of months ago. An IRS Customer Survey form just arrived. They want my opinion about the experience.

The ERPA exam website Q&A's say electronic application and payment won't be available until 2010. It's in the Applying for Enrollment section. I guess they want us to support the post office. Now we get to wait another 60 days for them to process the applications.

The pass list is on the ERPA website, by exam and candidate number. ERPA pass list

Didn't PPA section 905 allow for in-service distributions from money purchase and DB Plans at age 62, starting in 2007?

Please bear with me. I'm still trying to get a handle on this. Our GUST and EGTRRA VS new comparability documents require that the allocation satisfy the 401(a)(4) general test. The GUST version has a correction method, reduce the HCE allocation and spread it to the other groups. The EGTRRA version doesn't list a specific correction method. (g)(3)(vi)©(2) refers to amendments adopted by the last day of the plan year, which this amendment would not be. If you don't calculate the amount each person would have received under the terms of the plan before the amendment, how do you know whether or not you have reduced anyone's benefits?

Are you talking about 2009 RMD's or ones that should have been paid for prior years?

What gap period earnings allocation methods are allowed in the plan's final 401(k) & 401(m) regulations amendment?

Does the plan use current year or prior year testing?

As you said, only the NHCE's are required to receive the SH contribution. If the HCE's receive the SH match, their match has to meet the restrictions in 1.401(m)-3(d). In this case, it does. As long as something else doesn't mess up their SH status, I think they would be SH.

Rev. Ruling 64-1 and Rev. Ruling 57-351 came up when I tried a search.

Yes, the deferral limit can be decreased prospectively during the year. With a prospective change, there is no cutback issue. Note, the deferral limit not being consistent for the entire year will affect the determination of catch-ups. 1.414(v)-1 has a section on how to handle it if a plan imposed limit changes during the year.

By orphaned, do you mean that the plan sponsor ceased to exist? If the amount involved is fairly small, it may not be practical to do an exact correction. How much is in the forfeiture account? How many active participants in the plan when those amounts were forfeited? How many still have balances? If there are still forfeitures left over at the end, then somewhere along the line, the terms of the plan were not followed. The first steps I would take are to try to determine who the forfeited amounts came from and if those amounts were properly forfeited. Keep in mind that a partial termination or termination of the plan may change the vested percentage of those who forfeited these amounts. If the forfeitures don't end up being restored to those who forfeited them, what should have happened to those forfeitures and when?

The plan document will say when you become eligible for a distribution. The place to start is with the Summary Plan Description (SPD). It should say when distributions are paid. If you don't have a copy, give your employer a written request for one. Let us know what it says. It is fairly common for plans to say a terminated participant is eligible for a distribution after the end of the plan year in which he terminates employment. But, whatever they do, it has to be written into the document. Note that they will have a reasonable amount of time to get a distribution paid after you become eligible to receive it. If the plan says distributions are paid after the end of the plan year, that doesn't mean you will get paid on January 1.

Also, in scenario #1, the prior defaulted loan triggers additional security requirements for subsequent loans, if they are allowed. If they didn't meet those additional requirements, the second loans were not valid loans. 1.72(p)-1, Q&A 19 (b)(2).

I've seen it before on takeover plans. It is also briefly mentioned in the DOL loan regs.

Sorry, but I think the Rev. Proc. says otherwise. The quote above says for brief exclusions, you are not required to correct the deferrals as provided in section 2.02(1)(a)(ii)(B). That section has two parts. Part (2) is failure to implement a deferral election. You do have to correct the match.

The rules are different for a brief exclusion versus a longer term exclusion. If you can make sure this only happens once, I would think this would be a brief exclusion. It will be worthwhile to read through Rev. Proc 2008-50.

Did they count income from both businesses in prior years when both had a net profit?

Rats. Notice 2005-95 says the deadline for the automatic rollover amendment is the later of 1) the due date (including extensions) for the employer's tax return for the taxable year that includes 3/28/2005 or 2) the end of the plan year that includes 3/28/2005. 10/18/2006 was a Wednesday. I was hoping you had a non-calendar year fiscal year for the employer.

Yes, they are referring to the 80-120 rule. The 80-120 rule is in the Form 5500 instructions in the what to file section. The description includes a cite. If you filed as a large plan for 2007, the 80-120 rule won't help you. The rule lets you file the same way as you did in the prior year if your beginning of year participant count is 80-120. Once you are a large plan, your participant count will have to drop below 100 at the beginning of a year before you can file as a small plan.

If you want them to be annual additions for that plan year, 30 days after the deadline for deductibility.