John Feldt ERPA CPC QPA

All or none. Except, anyone who is benefitting must be included. Reminder, if the ONLY reason they are not benefiting is because they fail to meet a condition (like hours or last day), then they can be excluded. For example, suppose a plan has an hours requirement to get a PS allocation. Employee terminates before meeting the hours requirement, they have under 500 hours, and they get no PS allocation: they can be excluded from the 410(b) test for the PS portion of the plan. All similar employees would have to be treated the same for 410(b). In contrast, suppose a plan has NO requirements for getting a PS allocation, but they have each person in their own rate group. Employee terminates and the employer allocates $0 to that group. Even if they have under 500 hours and they get no PS allocation: they can NOT excluded from the 410(b) test for the PS portion of the plan. Why? Because the sole reason they are not getting an allocation is NOT because they failed to reach the plan's conditions, instead it's because the employer decided they get zero. edited to add the cite: treasury regulation 1.410(b)-6(f)(vi): "it is applied with respect to all employees"

You might want to get paid in advance for the plan termination work. Recommend to explain (in writing) the problems, consequences, and provide your recommendation to file the plan under EPCRS so the eventual distributions will retain their tax-favored status as well if rolled over.

Without an amendment to exit safe harbor, the ADP/ACP test does not apply. Plan is still safe harbor, just not in compliance, although technically the safe harbor contribution is not due until 12 months after the end of the plan year, earlier if the SH was not an annual true-up. Sound like the employer stopped withholding deferrals from wages without the proper legal action allowing them to do so. These are operational defects which now jeopardize the plan's tax-favored status. Perhaps when they enter into bankruptcy they won't care about that either.

Did they exit safe harbor by amendment and also amend to remove the deferral option from the plan? The method suggested, to run ADP/ACP testing would apply then. Otherwise it's still a safe harbor plan (no ADP/ACP test), but is disqualified as Lou said. An EPCRS correction should be considered to bring back its tax-favored status. Where deferrals still withheld from paychecks?

GMK: Yes, very well articulationed.

Suppose the employee quit (fired) November 30, 2014 and had just turned in a deferral election form the day before for 2015. The get no "regular" paychecks after November 30. Also suppose their normal entry date would have been 1-1-2015. Then on February 14, 2015 their 2014 "commission" gets paid. Longer lag in time, but the same answer to the above question should also apply here too, right?

Maybe their class should receive an allocation of $1.00 each?

If the 403(b) plan is a nonERISA church plan and allows investments other than mutual funds and annuities, then a written document is required, even if it is a deferral only.

If it's a DB plan, it's exempt from PBGC, but I agree, it's not eligible for the EZ.

Short answers: Q1. Can the Simple IRA be terminated 3/1/2015 and EEs begin participating in the 401(k) Plan? A1. Not without consequences to the amounts already contributed to the SIMPLE for 2015. Q2. If so, the contributions made to the Simple IRA are counted towards the 402(g) limit, correct? A2. No. Contributions to an IRA are not used to offset the 402(g) limit. Longer responses: For a SIMPLE, there is a transition period, much like 410(b)(6)(c ), but it's a year longer, described under Internal Revenue Code Section 408(p)(10)(C ). If the Employer maintaining the SIMPLE plan satisfies the conditions required, they can continue to maintain the SIMPLE IRA during the transition period, even if the company stock sale means the Employer now also maintains a 401(k) plan. Conditions: 1.The Employer with the SIMPLE IRA must not change the coverage of the SIMPLE plan significantly, other than employee turnover related to the stock sale, if any. 2.The Employer with the SIMPLE IRA cannot also adopt another qualified plan (other than becoming the sponsor of a qualified plan due to the transaction to buy the stock of an employer that maintains a qualified plan) The transition period starts on the date of the business transaction and ends on the last day of the second calendar year following the end of calendar year in which the transaction occurs. Example 1: Company A maintains a SIMPLE IRA and no other plan. Company B maintains a 401(k) plan. Company A buy 100% of the stock of Company B on March 1, 2015, thus Company A now sponsors both a SIMPLE IRA and due to its ownership now of company B, it also maintains a 401(k) plan. The transition period begins March 1, 2015. The transition period can extend as long as December 31, 2017 (the end of the 2nd year following the year the transaction occurred. Example 2: Assume the same facts as example 1, but assume Company A adopts the 401(k) plan as a participating employer on July 1, 2015 and allows its employees to participate in the 401(k) plan starting July 1, 2015. In this example, the transition period begins March 1, 2015 but ends on June 30, 2015 due to the change in coverage. All contributions made to the SIMPLE for 2015 are now invalidated and must be returned by April 15, 2016, although the 25% penalty on the return of such contributions would not likely apply, and/or relief under Revenue Procedure 2013-12 can be sought. Example 3: Assume the same facts as example 2, but assume Company A ends the SIMPLE plan effective December 31, 2015 and adopts the 401(k) plan as a participating employer on January 1, 2016, allowing its employees to participate in the 401(k) plan on January 1, 2016. In this example, the transition period begins March 1, 2015 but ends on December 31, 2015 due to the change in coverage. Any contributions made to the SIMPLE for periods after December 31, 2015 are not valid. In example #2 above, the 25% penalty would not apply to any excess contributions made to a SIMPLE IRA for the year in which a qualified plan is established. This ONLY applies to the amounts contributed to the SIMPLE IRA for that year and only if such amounts were returned to the participant by the due date of their tax return for that year. Money deposited for a prior year does not meet this exception from the penalty tax and the usual 2-year rule still applies to determine if such tax applies to any distributions of the rest of the SIMPLE IRA accounts. Remember, if a withdrawal is made from a participant’s SIMPLE IRA account within 2 years from the day contributions were first deposited to the participant’s account, the 2-year rule applies a 25% penalty (instead of 10%) to the withdrawal in addition to regular income taxes (even if the amount is rolled over to a regular IRA or a qualified plan). But that also means the 25% penalty does not apply to anyone who is exempt from the regular 10% penalty, such as someone who is at least age 59½ at the time of the withdrawal, or who satisfies one of the exceptions under section 72(t). The SIMPLE-IRA withdrawal is reported by using code "S" on Form 1099-R to report premature distributions taken within the first two years. When an qualified plan is established, the exclusive plan rule for the SIMPLE states that it's the SIMPLE plan that becomes invalid due to the presence of the qualified plan (or of another SIMPLE). Once the transition period ends, hopefully the employer has taken action so they only have one plan in place, otherwise the SIMPLE plan has an error. The IRS has a fixit guide for this at http://www.irs.gov/Retirement-Plans/SIMPLE-IRA-Plan-Fix-It-Guide-Your-business-sponsors-another-qualified-plan

To avoid "disqualifying" the distributions from the old plan, wait 12 months after all benefits were distributed from the prior 401(k) plan to avoid the successor plan rule.

As long as the participant made an elective deferral equal to at least the catch-up ($5,500 for 2014), then yes, they can be provided the entire $57,500. Meaning, it is not just the 402(g) limit or ADP test failure that creates a "catch-up" deferral. If the plan limited regular deferrals for HCEs to 5% of compensation, they could still defer 5% of pay plus $5,500 (but they can't defer more than their wages, of course). In your case, deferrals get classified as catch-ups due to the 415 limitation. If the combined ER and EE allocations are enough to push the total allocation over the $52,000 limit for 2014, then deferrrals are classified as "catch-up" deferrals as needed up to the $5,500 limit. Of course, as you noted, all other testing still has to pass: 410(b), 401(a)(4), etc. I have not yet seen a document that would not allow this, but double check your plan language just in case. For example, it should say something like this: Catch-Up Deferral. A catch-up deferral is an elective deferral by a catch-up eligible participant and which is greater than: (1) a plan limit on elective deferrals; (2) the annual additions limit under section 415(d); (3) the elective deferral limit under section 402(g) or (4) the ADP limit under plan section X.X.

Yes, but I think they have to have a written plan document that allows such investment. Otherwise, I don't think a non-electing (non-ERISA) church plan has to have a plan document for a 403(b) plan that invests only in mutual funds and annuities. Also, it is my understanding 403(b) plans are generally not in trusts or have trustees, in contrast to this being required for qualified retirement plans. This reply of "Yes" is not advising you on the suitability of investing in difficult to value illiquid or ridiculously speculative assets for retirement income purposes, and certainly not advising you on investing in tulips or other "collectibles".

Trained on the law (the code) is one thing. I remember having to train an agent (many many years ago) that the treasury regulations also applied and that these generally "interpret" the law. The agent was stuck on the wording of the IRC 410(b) and was not looking at the 410(b) regulations, saying classes of employees can't be excluded from a plan, only age an service exclusions can apply. Of course some odd exceptions may occur, such as the 401(a)(26) regulations being written before the law was changed to apply the participation rules only to DB plans so the 401a26 regulations now get ignored for DC plans. Yet I ramble on...

I think concordiaplans is for a different synod.

The amendment could just name the names of the 2 NHCEs to avoid the QNEC issue. If you provide an SMM, you can provide it to just the two affected individuals. As to the determination letter, look at Rev. Proc. 2013-12, Section 5.01(4)(b): (4) Favorable Letter. The term "Favorable Letter" means, in the case of a Qualified Plan, a current favorable determination letter for an individually designed plan (including a volume submitter plan that is not identical to an approved volume submitter plan), a current favorable opinion letter for a Plan Sponsor that has adopted a master or prototype plan (standardized or nonstandardized), or a current favorable advisory letter and certification that the Plan Sponsor has adopted a plan that is identical to an approved volume submitter plan. A plan has a current favorable determination letter, opinion letter, or advisory letter if (a), (b), or © below is satisfied: (a) The plan has a favorable determination letter, opinion letter, or advisory letter that considers the law changes incorporated in the Plan Sponsor’s most recently expired remedial amendment cycle determined under the provisions of Rev. Proc. 2007-44. (b) The plan is initially adopted or effective after December 31, 2001, and the Plan Sponsor timely submits an application for a determination letter or adopts an approved master or prototype plan or volume submitter plan within the plan’s remedial amendment period under § 401(b).

Casino Dealer to Austin: 5. Austin: I'll stay. Casino: I suggest you hit, sir. Austin: I also like to live dangerously. Casino: 20 beat your 5 sir. I'm sorry, sir. Austin: Well I must admit, cards aren't my bag, baby.

In this equation, x * (x + 1) = 0 Thus, you have (2 + 2) * 0 = 5 * 0 Looks like dividing by zero can really take you places.

prettier then?

So, add the text as Tom suggests: Unless the employer only chooses to fund the match once someone terminates Then show the consultant and ask if their copy has the same.

Technically they are not late for the PPA restatement, so that would not have to be submitted, but might be useful to submit anyway as way to document the late execution of the interim amendments needed after the EGTRRA restatement. Do they have an executed TRA 86 document? If not, I you may need a TRA 86 restatement. Otherwise, you need a GUST restatement and an EGTRRA Restatement. If you don't do a PPA restatement with the application, then you need them to adopt each of the interim amendments that apply after EGTRRA restatement (eg. 415, HEART, WRERA, PPA) and submit those. If they adopt PPA now, that handles all of the interim amendents, other than Roth Transfers (conversions for those account not eligible for the usual in-service - if the plan does that). All of the interim amendments between GUST and EGTRRA are all late, sure, but they all get adopted when the EGTRRA document is executed. Again, same concept with the interim amendments after the EGTRRA restatement - they get adopted with the PPA restatement.

If an employer currently sponsors a profit sharing only plan, no 401(k) feature, and they terminate the plan, are they prohibited from starting up a new profit sharing plan or a new 401(k) plan within 12 months of the termination? It looks to me like treasury regulation 1.401(k)-1(d)(4) would not apply in this case. So perhaps they can start up a new plan without the 12 month wait?

I'm sure a test could be run that shows a failure, and then be shown such that adding that one individual makes that specific type of test pass. That said, I really think it's a bad idea to design certain plan features around one person, for example a client that adds a provision because one employee now "needs this". So, from a philisophical standpoint, I totally agree with QDRO and jpod. Maybe even more so if you're talking about a larger plan. For some very small employers, getting a benefit in the plan to this one employee could be big deal to the employer-employee relationship, especially if verbal promises were made and the employer wants to maintain their full trust. The regulation is not written to say that the plan, after having exhausted all possible testing scenarios, does not pass, so again, I believe -11(g) is available.

Jim, this above bold text, in my opinion, is a very critical item. If the written plan document had said "no testing", then it's possible that the basic document then automatically would apply the necessary requirements to make such discretionary match ACP-free, but since the testing checkbox says "test for ACP" then I think you are likely stuch having to test. edited to add: but of course, these comments are all made without having the actual document in hand.

The PPD documents I've seen, for example, define W-2 as already including the deferrals unless a separate election is made to have them excluded. As an opposite example, the Corbel documents I've seen have deferrals excluded by default from the W-2 definition unless a separate election is made to include them. Both documents of course are produced by the same company. Ah, and for purposes of deferrals, the basic document for PPD allows a lot of discretion for the employer to make a policy regarding what counts as compensation for deferral purposes.