Leopurrd

Hi everyone, Am I correct in thinking that any plans with a Safe Harbor contribution must default to current year testing for ADP/ACP? (note: I realize that you don't have to test for these plans except in cases where the safe harbor is not followed/deposited). I have a colleague that says otherwise regarding this issue. FYI, it's a prototype document, but I don't think that makes any difference. Thanks!!!! Vicki

I don't think the IRS has issued anything definitive on the issue, but revproc 2005-66 states the requirements for a discretionary amendment (before last day of plan year). ASPPA issued an ASAP on this not too long ago which stated that many at the IRS feel that a change in testing method qualifies as a discretionary amendment. Sorry this isn't anything absolute, but I'm hoping it will help a bit. Vicki

Mike, Thanks for the reply on this; You learn something new everyday!!! Vicki

I'd be curious to see what other posters think... my take on the issue is that catch up contributions are reported the same as regular deferrals...why not count them for 2005?? IF the case is that his 2005 calendar year deferrals equaled his deferrals from 5-1-05-12/31/05 (or alternately saying he did not defer jan-apr of 2005) AND assuming he was age 50 or older in 2005....it shouldnt be a problem. Then when you reclassify catch ups (if any) at 4/30/07 you have 2006 and 2007 catch ups available? Just remember you can't double dip on the catch ups..once its done for that calendar year then there is no more! Vicki

Wow. Who knew such an innocent question would become a hot topic? Thanks again for all the posts. I'm more for the A and D, just so I don't get Uncle Sam in Relius. But I do agree that the instructions to the 5500 are very ambiguous on the reporting. I first went there to figure out what to report and came back without a straight answer.... Probably a good ? for the IRS Q&A this year! BTW, anyone else realize how the smilies can become addicting???

Thanks for the replies! I was able to find a copy of the 5500's preparer's manual (albeit from 2003) and it states that you should add everyone, whether they are an addition, deletion or correction? Seems that this is another foggy answer (when isn't it?) I know that you both report only A's, and as Bird pointed out, you sometimes have a 0 count for your SSA when only D's are reported. Have you ever received any IRS correspondence on this? Vicki

Hi everyone, I've been told two different ways on the SSA count for line 7i on the Form 5500: 1. Your # equals the total of A's and D's (or B's and C's as well but it's not common to report those here); or 2. Your # equals only the number of newly reported participants (aka the "a's"). Unfortunately I can't find anything definitive (in writing) to prove or disprove either way. Does anyone know of a source where I can find this info?? What is the standard practice on the board here?? Thanks for your help! Vicki

My notes say Kansas REQUIRES 5% state withholding. HTH, Vicki

Thanks for the replies. They were very informative!!! Vicki

Hi Everyone, Until this morning, I would have been 100% sure that the only corrective action for ineligible deferrals without amending the plan (for whatever reason, whether it be a suspension due to hardship or wrong entry date by plan sponsor) would be to use the deposit as a prepay in the plan and have the employer make the participant whole through an additional payroll check (to withhold the necessary taxes). However, after speaking with a colleague, it was pointed out (and I also researched) that VCP allows you to treat these deferrals as a corrective distribution and pay the (ineligible) deferrals and earnings out of the plan and report with a 1099R?? I wanted to make sure I read and heard correctly, because it sounds very weird to me! Thanks for your thoughts/comments. Vicki

Stephen, Thanks for the heads up. I have the current 2006 book for studying but I'd still like to review the EOB as additional reading. Actually, ASPPA lists the EOB as suggested reading on the website, so I'm just covering all bases. The outline they gave in 2005 helps me from going overkill on my reading!!! Happy Friday Vicki

Wow. Thanks for all the quick replies! I really appreciate all of your help and well wishes Laura - that was EXACTLY what I was looking for!!!! Vicki

In the past, I've always been able to print out a listing of the required reading sections of the ERISA outline book....but I'm not able to locate the topic outlines with the required reading sections at asppa.org for the Spring 2006 DC-3 exam. Is there anyone who knows where I can find this info or has a copy of the prior reading listings from a past exam to help me study? I'd be extremely grateful!!!! Thanks, Vicki

Thanks, Austin! Sometimes its the easy things that pass me by.....

Thanks, Tom...you are always so helpful!!! Vicki

I know that if a plan has a 1000/LDR provision you can exclude these people from the ACP test because they are not eligible....but what if a nonstandard plan has only a 500 hr requirement (no LDR - don't ask me why they have a NS doc!)? Can you also exclude these people? A code reference would be greatly appreciated with the answer, if you have it!!! Vicki

taking each plan year into consideration, if the ONLY contributions are 401k and safe harbor you are exempt from the top heavy rules. The plan may in fact be top heavy, but no additional $ are required. Rollovers would not apply, but forfeitures do. I recommend that when you draft the doc, have the forfeitures REDUCE and not reallocate. If you reallocate forfeitures according to the document one plan year, in addition to the safe harbor/401k contrib, you would not be exempt from the top heavy rules and the 3% minimum contribution would apply. HTH, Vicki

Many thanks to all of you for your help!!! Vicki

I swear I read or heard somewhere that the IRS ruled that a change in ADP/ACP testing method was a discretionary amendment and must be executed prior to the plan year end in which the change is effective.... Can someone tell me if I'm just making this up? Or, if it is in fact true, can you point me in the direction of the regs so I can cite this? Thanks! Vicki

Janet, Thanks for your reply! I thought that was the case but became unsure when I saw several Form 5500's with unqualified opinions with the limited scope box checked. SCARY!!! Vicki

Hi everyone! Stupid question from my neck of the woods..... If an accountant performs a limited scope audit, is it possible for them to issue an unqualified opinion? I was always under the impression that any limited scope audit could only issue a disclaimer, since they didn't look at/test the procedures at the financial institution. Thanks!!!! Vicki

All plans covered under Title I of ERISA must have a fid bond- I didn't think you were required to report the bond on the SAR unless more than 5% of your assets were nonqualifying? If I am incorrect please let me know - thanks!! Vicki

RAP means Remedial Amendment Period. I'm assuming that they amended after 2002 (i think) for GUST - I believe that you could only rely on the extended RAP if you signed a Good Faith Amendment? the IRS probably wants this signed/dated document.... (if you meant "extended", not "entended"??) I'd appreciate any comments from the board on this as I'm not great with document law/design!!!

Depends on the document. Does it limit how many loans you can have? If you are concerned about the remaining vested balance securing the original loan, It is only required that the 50% collateral be in the account on the date of the loan. (so it was OK then if he first took a loan of 50% and then took more of his account as a hardship distribution later on) As long as he does not violate the 50% loan limit (as of the date of the loan issuance) or any plan rules limiting the number of loans it should be OK??

I don't see why he would want to go SH if he doesnt contribute much to his ee's - it would lock him into a required, fully vested contribution. as long as he doesnt benefit from the plan you don't have an issue. However, i'd look to see how forfeitures are used in the plan; if its allocated on comp, etc you could have a th issue. you may want to re-word to reduce in that situation.