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A plan that excludes employees who customarily work less than 20 hours per week but contains language which states if hours exceed 1000 in any computation period the employee is eligible follows the participation rules under 410(a). However, what happens if the plan has dual eligibility (immediate for deferrals and 1000 hours for employer contributions). When an employee is hired it is estimated (based on the job title) that they would work greater than 20 hours per week and are allowed to start deferrals. In the first employment computation period they actually work less than 1000 hours and continue to work less than 1000 hours in each subsequent plan year. After the first 12 month employment computation period, when it was discovered they never worked 1000 hours, were you suppose to stop the deferrals and consider them excludable or since they were allowed into the plan do you continue to allow deferrals. Any thoughts would be appreciated.

I just inherited a 403(b) plan that provides for ER match and profit sharing contributions. It is my understanding, since the plan has ER contributions; it is subject to Title I of ERISA. The ERISA Outline Guide states plans that are subject to Title I of ERISA cannot use the part-time exclusion. However, when I look at the document, the part-time EE exclusion was checked for all sources. Am I missing something? Any thoughts would be greatly appreciated.

Try reading 2008 IRS Publication 525. I believe PPA changes were for excess contributions and not excess deferrals.

Excess Roth 402(g) of $1,000, loss of $100, net distribution equaled $900 and distribution took place before plan year end. Am I coding the 1099R correct? Box 1 Gross Distribution $900 Box 2a Taxable Amount $0 Box 5 Employee Contributions $1,000 I think box 1 and 2a are correct. My biggest concern is box 5. ERISA outline book states when there is a loss only one 1099R is required, amount reported in gross box and taxable amount box is the amount of the distribution (provided a pre-tax contribution), with a separate statement instructing participant on proper reporting of deferrals and loss on personal tax return. Thanks in advance for your imput.

Is there any quideance regarding how current the fee information must be?

Unless I am missing something the option of correcting for early inclusion of otherwise eligible employee by forfeiting the ineligible deferrals and making the employee whole outside the plan was never in EPCRS. I do see where it is addressed in Sal's book.

EPCRS correction of early inclusion of otherwise eligible employee failure allows for retroactive plan amendment to correct provided the employees affected by the amendment are predominantly non-highly compensated employees. The correction procedure further states the plan should submit the amendment to the service for a determination letter. We use a prototype document which states use EPCRS to correct failures. However, have been told that informally the IRS has stated they do not want plan sponsors to submit amendments for these types self correction. Do you submit your amendments?

The original proposed PPA technical correction bill had provisions for a mandatory non-spousal rollover option in qualified plans. However, that bill was never passed. Has any subsequent legislation been passed which requires plans to include mandatory non-spousal rollover option?

Could someone help me figure this out? If a plan's EIN ends in a 6, the initial submission period ended January 31, 2007. I am assuming that is the date they need to submit the document for review correct? If that assumption is correct, when does the EGTRRA document need to be restated? Thanks in advance for your help. Most of the plans I work on are protype documents.

Yes the son would be compensated. Thanks for all the comments! You have given me a great starting point for researching.

Could anyone point me in the right direction regarding researching the following? Is there anything in ERISA which precludes a son (not actively employed by father's company) to perform the investment advisory duties of father's company 401(k) plan?

Not sure where to find the answer to this question. Cross Tested Plan The document (Lenorad Street) states full year compensation is to be used for allocation purposes and has 1/1 and 7/1 entry dates. Can I use compensation while a participant for testing? Any thoughts would be greatly appreciated.

An employer maintained a money purchase and profit sharing plan. The plan year for the plans, and the taxable year for the employer, is the calendar year. The employer has amended the money purchase plan to terminate it and merge it into the profit sharing plan effective 4/30/08. What is the deadline for the employer to make the final contribution for the 01/01/08-04/30/08 short plan year money purchase contribution? Am I correct in thinking the contribution could still be deductible if made on 09/15/09 (taking into account 404(a)(6))?

We are performing a coverage test using Datair Windows. The plan we are testing has immediate eligibility for deferrals and 1000 hours in 12 months with semi-annual entry dates for the match. The coverage test for the match contribution is pulling in all participants. Datair is stating the test is correct because if the plan prescribes two or more different sets of minimum age and service eligibility requirements (for different sources), the excludable employees are only those who fail to satisfy all sets of age and service requirement (i.e., the lowest of the eligibility requirements must be used for all sources). Am I missing something is this correct? I thought the sources could be disaggregated and tested separately using the eligibility requirement for the source?

Thanks for the responses. I am still confused - If you map then allow participants to make investment elections, do you really have 404© protection for those partiicpants who never make investment changes.

PPA provides a special rule that extends 404© protection during “fund mapping” as long as the following three requirements are followed: 1. Notices provided at least 30 days before. 2. The participant or beneficiary does not provide affirmative investment instruction before the effective date of the change. 3. Immediately before the effective date of the change, the participant’s or beneficiary’s account was invested in accordance with elections made by the participant or beneficiary. So, if I am reading this correctly, you have to allow the participant to make investment elections. Correct??? Most times if we take over a plan the participant’s account is mapped and they are allowed to change elections after the initial mapping. How do others handle take over plan??

Our special tax notice states "The 10% penalty does not apply to death benefit distribution to a surviving spouse under age 59 1/2. However, if you roll over the death benefit, the taxable portion of any distribution from your IRA or eligible employer plan before you reach age 59 1/2 is subject to a 10% penalty tax in addition to federal income taxes unless an exception applies”. Does anyone know what the exceptions are?

I have read the final 415 regs and do not see where 2 ½ months is defined. Has anyone seen any guideance

Our document states for any plan year a participant made both Roth and elective pre-tax deferrals, the administrator operationally may implement an ordering rule procedure for the distribution of excess contributions. When calculating the associated earnings, would you only look at the earnings for the source you are distributing or would you look at the combined earnings for both the pretax and Roth contributions for the year?

Client is terminating their 401(k) plan and starting a 403(b) plan. 401(k) plan assets are being distributed to all participants. If a participant (over 70 1/2) is actively employed and intending to roll their 401(k) balance into the 403(b) plan, do we first have to take the RMD?

We are following the correction method allowed in EPCRS for the exclusion of an eligible employee. What is not addressed in EPCRS is whether you include the excluded employee in the ADP test. My basic question is – 1. Do you take the eligible employee out of the test completely? 2. Put the participant in the test with no contributions (before you calulate the NHCE ADP).? Any thoughts would be greatly appreciated. My guess is that the answer is in a previous post but I was unable to locate one.

Is nobody responding because the answer is just to obvious?

Question 1 The final 415 regulation modify compensation that is used for code section 415 (which is also used for purposes of determining highly compensated employees and applying the top heavy provisions) and deferral compensation (so that a participant cannot defer out of post-severance compensation that is not 415 compensation). Assume we amend a plan so that the plan’s 415 compensation definition is the same as the plan’s compensation definition (i.e. for allocation purposes). Thus, the following would apply for allocation and deferral purposes: The plan would include compensation paid the later of 2 ½ months after employment or the end of the year that includes the date of the termination for compensation for services performed during regular working hours, etc. and amounts paid for unused sick time, vacation, etc. However, before the decision (January 10, 2008) was made to change the definition, as defined above, one participant terminates (January 5, 2008) and is paid his final paycheck (which included unused sick and vacation time) and no deferrals were withheld. The participant had an election on file and clearly would have wanted deferrals taken out. Is this a problem? Question 2 If the plan includes payments to a participant who is permanently and totally disabled under the 415 regulations, do the employer contributions have to be 100% vested.

As a follow up questions - is it possible to have a different plan imposed limit for each HCE in the plan? As an example the plan has 15 HCE, would it be possible to have 15 different plan imposed limits?

Thanks.