ak2ary

Dick Wickersham clearly believed that the amendment needed to be adopted prior to the beginning of the plan year... but he never wrote it down,, and he's not there anymore The IRS is painfully aware of this question and has been for years. They have had ample opportunity to address it and have chosen not to. At each conference I have seen it mentioned, in the presence of IRS speakers the practicioner co presenter has said that in the absence of guidance they see no reason that it has to be adopted prior to 12 months following the plan year end I think from a best practices standpoint there is more security in amending during the plan year. However, I believe in the absence of guidance to the contrary, the later amendment is more than defensible

The proposed regs have a 1/1/07 effective date and will grandfather benefits accrued prior to the effective date of the reg change. However, to prevent folks from accelerating accruals by plan amendment, the proposed regs carry a 5/25/05 effective date for benefits accruing under plans adopted or amended after 5/25/05

It seems to me that, depending on existing plan language you may be able to accomplish this. If the plan is written in such a way that the contribution for NHCEs is automatically increased to satisfy the gateways, then simply declare whatever contribution you like for the owner and zero for the all others group. By operation of existing plan language the NHCEs in the all others group will spring to the greater of the top heavy or gateway amount and the HCEs/keys (ie the kids) will stay at zero

My recollection is that you would use the plan's assumptions to determine the benefit payable as a lump sum without consideration of 417(e), and then convert to a QJSA and normalize that benefit. Thus if a plan provides for a lump sum calculates at 83 IAM 6%, you would ignore the 417(e) rate in determining the most valuable benefit, but if the plan only used 417(e) for determining the lump sum, the 417(e) is the plans assumption set, and has to be recognized in the MVAR

Subparagraph (iv) of the same section "social security benefits and all other factors used to compute benefits shall be treated as remaining constant as of the current year for all years after the current year" In this case the participant's employee category would be a factor assumed to remain constant

Compliance with the 411(b) accrual rules is a form requirement and is applied prospectively only. Thus, if I am a class A employee, I have a scheduled level accrual for all future years which satisfies the 133 1/3 rule. On the day I become a Class B employee, looking prospectively, I have a new level accrual for all future years which satisfies the 133 1/3 rule. You do not look back after the change in class nor do you assume a change in class prospectively. That is, of course, unless there is a progression from A to B (eg A is less than 5 years service; B is more than 5 years)

I agree that #1 is the only method that makes sense with respect to the 100% of pay limit... Assume hi-3 pay of 90,000 and the participant had commenced a $70,000 life annuity 10 years ago. Clearly his maximum benefit now is $90,000 a $20,000 increase at commencement age, regardless of what commencement age may be.

The gateway contribution is only required for employees who are receiving a contribution under the plan. So...if the plan is not top heavy and your otherwise excludables are not eligible under the profit sharing portion of the plan, they are not required to get a gateway. The same is true for terminated employees or < 1000 hour employees if the plan has a last day or 1000 hour rule

gracias... BTW I spoke with Holland on this issue and they are concerned about the deemed 401(k) issue as well as the definitely determinable allocation formula requirement. They realize that their current stand on definitely determinable allocation formula permits this "one person per category" structure and have said publicly that "At this time" they are allowing it. In the next breath, they have talked about the demed "k" and that if a participant has the ability to alter his pay by electing to make a greater contribution to a plan, it is a CODA. The work around is that the employer's governing body has to determine the contribution to each allocation class, not the employee/member of the class. That doesn't mean the employer cannot take into acount the employees needs/wants/desires, but the employee cannot have the full control of the contribution...it's a fine line and I could see one email from a partner saying "I've decided to put $25,000 in the Profit Sharing plan this year" could cause real problems

I've seen this referenced here before. Are you referring to something other than the reasonable classification portion of the average benefits test? Most plans will use the ratio percentage test as their primary coverage test. For rate group testing you only look to the plan passing the Average Benefit Percentage Test portion of the average benefits test and never look at the reasonable classification test. So.. that's a long winded way of asking why reasonable classification as a coverage issue come up here?