Bird

I think the responders missed the point - Pennysaver has correctly identified that the subsequent "merger" activity is incorrect and is asking how to fix it, not whether it was really a termination or a merger. Generally, corrections are geared towards putting things back to where they should have been, so I'd guess that you're looking at allowing distributions from the PS now. That would probably violate the terms of the plan, so yes, an ERISA attorney's input should be sought. If the physical transfer of assets was recent, I'd consider simply shuffling them back to the old plan and then completing the termination as it should have been done.

Thanks...after posting I had a recollection of it being in the regs but you saved me some trouble.

So you're using Ft William for documents and Datair for admin and are thinking of using Datair for docs? The question was about using Ft. William for admin. Don't sweat it, I understand now.

I know it's been discussed here and I think the answer is - if the plan uses prior year testing, and there were no NHCEs in the prior year, then the HCEs are not subject to testing. Yes?

... Do I want to understand that?

To be precise, you want to create an allocation, using the document's allocation formula, that looks just like a permitted disparity allocation would (using 5.7% and the TWB). But then you still have to test! An integrated allocation will typically pass the general test...but not necessarily. If you have an HCE under the TWB and an NHCE over, the HCE will wind up with a higher adjusted allocation rate.

I just signed up; have used a free trial for a few weeks. It's not quite as intuitive as I would like, but I think that could be said of just about all plan admin software. And they are absolutely great about responding to Qs. It's going to take some work to get data moved over but I think it's worth it.

We would either add the LLC as an adopting employer (if both entities were active during the year) or just change the sponsor to the LLC.

As John noted, you have to follow the terms of the document. You can't just arbitrarily use some other allocation methodology, just because you know it is a safe harbor formula. Well. you said you wanted to use integration, so they won't all get the same percent, although after imputing permitted disparity it should be adjusted to nearly the same percent - if integrate at something other than 5.7% and something other than the TWB, and then you impute PD in the general test at 5.7% as you must, then you'll get different adjusted allocation rates. As long as the rate groups are all over 70% you don't need the ABT.

Of course it does. It's a shame that you have to waste your time on this. The trick is to come up with an allocation using the existing groups that is close to what you would get under an integrated formula, which may or may not be possible. The bottom line is that you must use the general test to pass nondiscrimination, since you don't have a safe harbor formula, and you are going to run that test on a contributions, not benefits, basis.

Brokerage accounts get a free pass, sort of. They're not considered to be designated investment alternatives and you "just" have to provide a description of the brokerage window or account and you have to disclose the fees associated with the brokerage window or account. What I'm concerned about are the plans that are using mutual fund accounts but are not on a platform, so the chart and other requirements won't be prepared by the custodian, and I don't think this qualifies as a "brokerage" account because it's a mutual fund account, effectively limiting the choices.

I agree, as long as the plan allows you to contribute whatever you want you can test however you want.

Correct, first eligible to receive a contribution in 2011.

I was told eons ago, and saw or found a citation, that it was definitely ok to run withholding through the sponsor's own account (but not the participants' net cash, although we've been more-or-less forced to sometimes and at the end of the day, I think it is "just" a self-corrected prohibited transaction). I don't have the citation for you now, sorry. We're setting up EFTPS batch processing where we process the withholding for the client through our own account (well, a separate account from our main business checking account). Yeah, that sets off some alarm bells and we're really pretty small for doing such stuff but I think it can be managed. I like the idea of being able to tell the client "just write a check to us and we'll take care of it." That's what they want and expect. Penchecks is an option, as noted. I've used them and the cost is pretty small, but I dunno, it just seems like an extra step and I felt like we were doing all the work anyway. But if you are only going to be doing a tiny handful then that's probably the way to go. The only other option is to get the client to somehow handle it on their own through EFTPS and I would not be optimistic about success there, to understate the case.

I've done mergers of plans for unrelated businesses, too. I don't think there's any reason you can't, again, with both sponsors' approval.

While I kind of think it should not be allowed, the Ft. William document allows it, and I've seen other documents with it: "The Company may make an additional Matching Contribution on behalf of each Participant in the amount of the positive difference, if any, between the Matching Contributions that would have been allocated to his Account had such contributions been determined on the basis of Compensation for the entire Plan Year and the Matching Contributions previously allocated to such Participant's Account."

We've done it both ways - 1) had the new employer adopt a new plan and terminate the old and let people do what they want, including rollover to new, and 2) just have the new employer adopt the old plan. If #2, we have the old employer consent to the action. There shouldn't be any net liability in a DC plan; I don't think I'd want to do it in a DB plan...though of course it was done routinely in the '80s for the sole purpose of getting at excess plan assets. I'd be more likely to suggest #1 if plan operations or documents were suspect or unknown.

No experiences to share but FWIW I think it's little more than a marketing gimmick too.

Semantics. A resolution changing the plan provisions is an amendment.

I don't think so.

You haven't said what your role is, or I missed it - are you with ABC? So many questions - you say Jenny was the plan administrator, but was she the Plan Administrator or was XYZ? Who was actually allocating the gains and losses? Who was preparing the 5500s? Why no thoughts about the prohibited transactions that occurred as a result of these loans? I wouldn't assume that the plan would pay the fees. If I were a participant and knew what was going on, I would just try to blow everybody up by going to the DOL. If I were with ABC or XYZ I would go to an attorney right away and not mess around with this board.

Interesting; we've always done a notice as a courtesy but I never saw anything that said it was required. I agree.

But you said they will "defer max" - a SEP is not a deferral-type plan. And you said they wouldn't participate in the 401(k) plan which is where profit sharing contributions could go. If you meant they want to make the maximum employER contribution of $49,000 in the SEP, then I understand, but it's not a deferral and not profit sharing either in the true sense of the words.

Yes. You may have a problem even if they are getting PS; read what the SEP says about controlled groups and whether you can use it at all or if it automatically covers all members of the CG. Also the first sentence about deferring and "want a PS" doesn't make sense to me.

It's ok by me. It actually depends on what the plan says, whether participant accounts are self-directed or not, but there's nothing inherently wrong with pooling the money. BUT - who, if anyone, is going to allocate earnings and keep track of how much is for each participant, so that 5 years down the road, you know who has how much of the account? If you don't have a third party administrator involved, then you're probably better off with separate accounts.