John Feldt ERPA CPC QPA

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.

If you need to amend the plan under 1.401(a)(4)-11(g) to bring in one or more NHCEs for the nonelective, retroactively for the prior plan year, the regulations allow you to do so up until 9.5 months after the end of that plan year.

NHCE? Seems okay under -11(g).

2% cash balance is NOT 2% x 5-year avg comp payable as a life annuity at NRA.

With a DB/DC combo tested plan, for many reasons, not just top heavy, having each person in their own class in the DC plan can save your plan's design many times. That takes care of having to give a terminee more than the top heavy minimum when you don't want to provide extra, but it also allows you to give a terminee (or anyone) more when you need to for 401(a)(4) purposes. Also look at what's used in the DB plan for accruing a benefit and consider how the design will fare under 401(a)(26) when terminations occur. In addition, if you want to use the persent value of the DB accruals as an offset for a portion of the gateway, consider the notion that you can't apply conditions for the gateway minimum, so watch out for the DC allocation if the NHCE did not accrue a benefit in the DB plan that plan year.

"has anyone ever heard of getting VCP blessing for correcting less than all years" Yes, but no blessing on the older years, sort of. I worked with a case where the plan had failed to add back in the section 125 deferral elections for compensation purposes starting in the 1990s when they started a 125 plan. This occurrred all the way up until just a few years ago. The plan was submitted under VCP and they explained to the Service that they simply did not have records available to determined if any benefits were due for years prior to 1999 because records were not available. The Service approved the application, but first they required the plan sponsor add a caveat that basically said if any employee comes forward with pre-1999 information such that their benefits could be corrected, that the plan sponsor would make such correction for those employees.

The contributions are not aggregated for 415, so no impact there. If the 401(k) plan's definition of "compensation" is affected by a 457(b) deferral, then that perhaps could impact things.

Exceptions duly noted.

Correct, the Gold memo indicates that a document written to exclude primarily full time staff from the plan (thus covering primarily short-service employees) violates the "spirit" of the regulations. I think the Carol Gold memo is indicating that the mathematical tests used and dictated by Treasury Regulation 1.401(a)(4)-1(a) are sometimes not applicable even though it says "This section sets forth the exclusive rules ..." and that instead, Treasury Regulation 1.401(a)(4)-1(c )(2) can override such exclusive mathematical rules as it says "The provisions of [401(a)(4)] must be interpreted in a reasonable manner ..." Now I would have thought that the mathematics of an exclusive rule was not subject to any interpretation (unless perhaps it's 'new math' being used), but 1.401(a)(4)-1(c )(2) is written right in there. Maybe we just call it the "gotcha" clause.

Yes, based on your responses, my guess would be that the discretionary match will need to be ACP tested. You can always check with the document provider for their opinion since they've written the actual provisions of the plan itself.

You stated that no participant will be allocated a discretionary match greater than 4% of such partcipant's compensation. That's one piece of the requirements to avoid the ACP test. Most of the other pieces are in the plan's document. Does the plan limit the amount of deferrals that will be considered for the additional match to 6% of compensation? Does this discretionary match have any allocation conditions? Or more accurately, is there any way that an HCE could end up with a higher match than any NHCE if both deferred the same percent of pay? Does the document spell out whether or not the plan will test the match using current or prior year testing, or does it say "safe harbor - no testing"?

Many laws passed by the government, such as ERISA, are not applied to the lords and ladies and other noblemen of the government, but instead meant only to help the wee people outside the castle walls.

Under 401(a)(4), the compensation required for testing benefits is defined in 1.401(a)(4)-3(e), but the plan's definition can differ for purposes of accruing benefits.

It depends on the demographics. As a larger plan, I assume, it may not have problems passing, but you'll have to run the test to know for certain. Closed for 5 years - probably still okay for coverage and 401(a)(26). If this is a smaller plan, those issues would probably have already affected the plan.