Leopurrd

Thanks, Tom! I agree that your quizzes are extremely difficult. Although, can I suggest a kid-themed quiz? I could probably tell you any Wiggles song if you had a picture from one of their bazillion videos, thanks to my youngins! I attended the cram session in 2005 (on a whim, I knew I'd need help with DB eventually!) so I'm using that as a study guide along with the required ASPPA readings. Can I mention how glad I am that they don't penalize you for the wrong answers anymore? I'm afraid I wouldn't be taking this test now if it were true today.

Thanks, Stephen! I'll keep that in mind.

I'd love to form some sort of study group if possible? Or, if you're a prior test taker, any hints (or perhaps prior copies of the tests?) you have would be greatly appreciated. Unfortunately, I'm a DC girl so this test is looking mighty scary Thanks!!!! Vicki

3. Heathers 22. Monkeybone

Hey Tom...Thanks for posting this! Your quizzes are always fun. Yes, the spreadsheet worked for me. Then again, I only knew 2!!! The first #2 is Elektra. The other one I knew was Pearl Harbor, but that was already answered!! Vicki

the 50% "collateral" is only on the day of the loan, according to 72(p). In service is fine afterwards as long as the doc permits. Watch out for language in your loan policy asking for loans to be paid in full upon a distributable event (aka in service) Vicki

Actually, I don't think the SSA was removed yet, it will be when electronic filing is required (2008 forms and up). There's a prior post on this you can see as well, but ASPPA released an ASAP stating that the IRS has claimed the form 5500 filing itself will start the statute. Vicki

Basically its your certified statement from the custodian that should go along with their SAS 70. It allows the auditor to rely on the SAS 70 report, so the custodian's controls won't need to be tested by the plan's auditor. (Hence the term "limited scope"). If you're just the TPA and not the custodian (which i'm guessing is correct since you're asking this question), you'll need to ask the custodian for their SAS 70 and certification, and forward it onto your client or their auditors. Not every institution may have one, though. I've ran into some smaller plans with brokerage accounts that do not provide a SAS 70/certification since it was not on their recordkeeping platform. Vicki

There's 4 by my count: -spouse has no direct ownership in business -spouse does not participate (manage/direct, etc) -no more than 50% of the business' gross income can be from passive activities -spouse can't be "next in line" to take the business (like a right of first refusal) Be careful though; if they have a child then you have a CG due to simple attribution... the child is deemed to own 100% of each parent's ownership. Vicki

Stephen - Thanks for your reply! I do agree that they should not even provide an extension and just allow us to mark the extension box on the 5500! I was thinking along the lines that they probably wouldn't notice, but it never hurts to ask! WDIK - yes, the extension was filed by 6/30.

Sorry! I was reading WAY too much into the post. I took it as a different entry for each source! Since your doc says exclude comp prior to participation, your SH contribution would be based on comp from 7/1 to 12/31 for those who enter the plan on 7/1. please see my prior post for top heavy issues.... Vicki

Has anyone had any experience with an Incorrect Form 5558 and can advise on the best way to handle the situation? We prepared an extension for an 11/30 PYE and sent to the client; of course, their auditors prepared a "corrected" form listing the plan as a 12/31 PYE and extension deadline of 10/15/06!!!! Will this date issue cause a problem with the IRS/DOL? Can we just put a copy of the correct 5558 on the 5500 when we file it, or do we need to send a reasonable cause letter? I've never had this happen before, fortunately! Thanks for any suggestions. Vicki

Locust is right...just make sure you send the letter requesting a return receipt. if you find out they don't live there anymore, the plan sponsor is required to reasonably locate them. Try: -IRS or SSA location program -notifying beneficiaries of your search (from form) -private programs or credit inquiries again, as Locust suggested, make it clear that if they don't tell you to distribute the lump sum immediately, their funds will not be easily accessible later. You are allowed to charge location expenses to the balance. If they still are missing after your search, your distribution form should be a "deferred QJSA, commencing at Normal Retirement Age", per my DC-3 book from ASPPA. Vicki

Form 5500-EZ is not required until total assets reach 100,000 - but you asked about a Form 5500? If your one participant is an owner or spouse of the owner, you would be eligible to file the EZ and would meet the 100,000 exemption. when a plan has a participant besides the owner/spouse, then you would be required to file a Form 5500, which is not exempt from filing simply because of the amount of plan assets. Vicki

I agree with Belgarath on the fact that eligibility is not a protected benefit. Sal discusses this in his outline book, if you're looking for more info. I'm not sure how this affects a safe harbor plan, though - Was the notice was distributed with eligibility requirements? If so, you can choose to grandfather the old participants in..you may want to take this into consideration when drafting the amendment. Vicki

I'm a little confused on your post. What do the 2 entry dates correspond to? the deferrals and the non-elective? Your document would tell you what comp to use for plan purposes. If you are not exempt from the top heavy rules, and your doc excludes pre-participation comp, you are correct in thinking your top heavy would be based on full year. Technically speaking, half the 3% would be 100% vested and subject to withdrawal restrictions (safe harbor contrib) and the other half would be on the top heavy vesting schedule (add'l $ to get to the top heavy limit). keep in mind that if your plan consists of deferrals and safe harbor only, you are exempt from the top heavy rules. also, with your 2 entry dates, you may need to run ADP testing on your excludible employees (which should always pass unless you have a new owner). HTH, Vicki

I think you have to use the plan years that end in the same calendar year; so you would use 12/31/06 for Plan B. However, with them being so far apart, I'm not sure how this actually works! I only remember this from some DC-3 reading. Sorry I can't be of more help. Hopefully someone else from the board will post! Vicki

I haven't had late deposits in a while (knock on wood), but I do remember that when I did, I added a footnote to Schedule I stating that corrections were made in full via 5330. Vicki

it depends. What does your loan policy say? Some state that repayment can only be made via payroll deduction, others do not. You could always re-amortize the loan to extend the repayment period, if possible (up to 5 years for non-residence loan). Vicki

Hello all, I'm studying for my DC-3 exam and came across the mandatory distribution exception for those participant who have reached the later of age of 62 or NRA. I was wondering if anyone could explain what options you are allowed if you become 62/meet NRA as provided in the plan? Do the automatic rollover rules no longer apply? Or perhaps you can take a full cash distribution since you are at retirement age? Sorry for asking here, but my DC book does not cover what happens when you meet this age in the chapter... Thanks in advance for any posts on the topic. Vicki

I'm assuming you are speaking of participant loans - I believe 72(p) states that security for the loan should be equal to 50% of the participant's balance as of the loan issuance date (or, a 1-to-1 ratio - if you had a 10,000 balance, your max loan would be 5,000 and your plan balance as security would also be 5,000). If the participant wanted to take a hardship at a later date, which would put the participant's balance below the 50% threshold, it would be OK, because you did not violate 72(p) at the time of the loan issuance. If I'm wrong on any account, I'm sure another poster will correct me. Thanks! Vicki

Hi Moira, Just because the plan signed a resolution to terminate does not necessarily mean a final 5500 was filed. In fact, they probably are just now getting ready to file a final for the previous plan, because only now have all the assets been distributed. The prior employer needs to worry about the qualification of the plan, specifically if it was restated/amended as required, since you only have 12 months to distribute the assets after signing the resolution. Otherwise the plan would be required to stay in compliance until all assets have been distributed. There may be additional implications that I'm not aware of, but I'm sure one of the other posters here can explain those. As for your liability, I'm sure you would need to know if the rollovers were from a qualified plan or not. I can't imagine a plan losing it's qualification for distributing assets later than needed, assuming that the plan was timely restated and amended as required....then again, they do some kooky things at the IRS offices nowadays. HTH, Vicki

Actually, I believe the recent final 401(k) regs allow a prototype to have two different testing methods... But I'm still curious about the ACP test for contributions that do not meet the safe harbor!

Tom - Thanks for your reply. I agree with you on the subject, but I think its a losing battle for me here! At least I know the fundamentals of the testing BG - If I'm remembering correctly, you didn't have to worry about the 5 year window during the GUST restatement period. But once the GUST period ended you were locked for the 5 year period if you used current (since you can always switch from prior to current since you never overlap data that way). Yes, you are correct that a prototype specifies testing, which is why I was so confused on the matter of a safe harbor plan with prior year testing! I'm just hoping we never have to actually test this plan Thanks again for all the replies! Vicki

Archimage, thanks for your reply. Must this current year election be stated in the document? I know that non-safe harbor plans must state their testing method, but what about safe harbor plans? I'm asking because I've always been told in the past to check the current year box when drafting documents, but now I've been told that we can elect prior year, and the plan will automatically default to current because of the regs?? If this is true, what about the change in testing method rule, where you have to be on current for 5 years before switching back to prior? if the plan goes safe harbor and then must test, this locks them into current. so why check the prior year box anyway? Sorry if I'm not making complete sense, but what was posed to me doesn't make sense, and it's continuing to spiral on..... Thanks again for your help! Vicki