John Feldt ERPA CPC QPA

Good, so, when you see a plan where the safe harbor match is about 3% of their deferral amount, not approximately 3% (or more) of their compensation, you would mention this as a potential issue for the plan sponsor to look into. We've seen a couple of plans (much like the 3% example above) where the provider, big bundled provider, somehow disclaims all responsibility, and does not notify the sponsor of the reasonableness of the match amounts - because it's calculated per payroll and they disclaim all reponsibility. 3% of deferral is tiny compared to 3% of pay - come on!

If the plan has an SPD requirement, I think the disclosure to the participants has to identify the actual individual trustee(s) by name (unless a financial institution is the trustee, then the institution name is listed). The document and SPD may be able use titles or some other naming convention for convenience sake, but a signature is required to accept the role of trustee, and any time an individual gets removed or added as trustee, a notice to the participants with actual trustee names to satisfy the participant disclosure requirements. At least that's how I read the requirement, FWIW.

A new recordkeeper that won't accept deferral money until the big money transfers. Huh, that's certainly one way to do business. I think a 10-day extension from the reasonable segregation date might be available in limited situations. To obtain such relief, I think the employer must comply with some very specific requirements under the DOL regulations at 29 C.F.R. Section 2510.3-102(d). I think the requirements include a written notice to each employee and the employer obtaining a performance bond prior to the extension. Without looking this up again, I am not sure if this is still available after the January 2010 final regulations were issued. I know of no other exception. I would probably ask the Recordkeeper to provide a citation to back up their position, or that they find a way to accept these deposits. Absent their willingness to help out a new client, I would suggest they set up a local trust account in the name of the plan's trust. Deposit the deferrals timely into that trust. When the new recordkeeper is willing to accept those assets, run a valuation to allocate the earnings and send it in. You may have to consider the document, especially if the document spells out whether or not the participants get to direct their investments. Many plans merely make that an administrative decision for the Plan Administrator.

I don't see an amendment under 1.401(a)(4)-11(g) as a mid-year amendment. If they can't agree, then have them prepare and/or pay for cost to do a VCP submission to make the cash balance plan pass in order to remain qualified. Depending on the provider, it is possible they might see this issue as your problem, not theirs, since it's the cash balance plan that can't pass the testing on its own.

Was it a transfer of excess assets from a terminated DB plan? If so, it can be allocated just like an employer contribution over a period not exceeding seven years. you'll need to know when it got there.

When I was working with a former employer, one of our clients used pbi Reasearch Services (many years ago): web.pbinfo.com

Each individual partner in a partnership is generally taxed just like a sole proprietor, and their “compensation” for retirement plan purposes is equal to their net earnings from self-employment (NESE). This amount is generally equal to line 14a of the partner’s K-1 after making adjustments by subtracting: 1. the additional first year depreciation for Section 179 deductions (if any), 2. partnership expenses paid by the partner but not reimbursed by the partnership as shown on Schedule E attached to the partner’s Form 1040, 3. any oil and gas depletion (rare), and 4. one-half SE tax (164(f) deduction) related only to this partnership as found on the front of the partner’s Form 1040, meaning if there are other businesses producing NESE for the partner, an additional reasonable adjustment is needed. 5. After applying #1-4 above, this net amount is further reduced by the contributions allocated in the retirement plans for the partner, other than 401(k) salary deferrals.

Not in any of our plans. We don't have the AE rate greater than the crediting rate.

and that assumes Congress remains inactive.

Perhaps you could put "Treasury Dept. IRS" as the licensing jurisdiction?

You are correct. Unless the special last 3-years catch-up applies, the $17,500 limit applies to a combined total of employee plus employer vested allocations for the year. The Age 50 catch-up of $5,500 is a deferral, so you wouldn't be able to an allocation $23,000 without the age 50 employee deferral of at least $5,500.

I guess a discretionary profit sharing would be similar, needing fear that overcomes your integrity? Only a DB plan or money purchase plan then?

Nothing prudent about making a promise that can't be kept, sure. But it seems prudent to me to state the obvious by saying we have no crystal ball and so we don't know the future, thus the match is discretionary. QDROphile - do you work for Apple where year-end cash exists no matter the revenue stream for the year? Okay, just kidding. Back to the original post, I agree with RPG that it would be nice to see the announcement of the match. Perhaps it was worded to say if we can afford a match, we will match up to 100% of the amount you defer, ignoring any deferral over 6% of your compensation. However, that is merely the structure of the match. If our revenues cannot afford any match, there will be no match. If we can afford half the match, then instead of 100%, we would match 50%.

I thought the first day of the plan year must also be available as a date of plan entry. If I find the cite, I will post.

For most small plans, this idea can cost a lot of benefits to make sure the plan satisfies 401(a)(26) (think zero return or less). Maybe employee benefit costs aren't an issue for the owners of the company. But worst of all for a small plan, you are setting up the plan to get the owner a lump sum payment at the 415 limit and the actual return comes in at 28% so now calculate the 415 pre-retirement discount at 28% from normal retirement. Tell him because the assets did so well he has to work another year and hope the investments don't go over 5.5% this time?

A plan covering the 100% owner (and spouse) is not subject to ERISA, so ERISA Section 404(a)(5) does not apply.

Generally, Yes. You can file VCP for a church plan. Certain corrections may require having or obtaining a determination letter. See section 4.10 of Revenue Procedure 2013-12. Since this is a nonelecting church plan, you have no reliance on any opinion/advisory letter if the plan used a prototype or vol sub document.

Perhaps it could look like this (see attached): 6-year cycle chart - Kidder.pdf

Now if they would just extend to January 31, 2016 then we would have, with no overlap: 2 years 401(k)/PS/MP 2 years DB 2 years 403(b) :repeat:

Seems right. The service piece might be 9/10 x 100% of pay - if 8 years is past service and one year is current service. Assumes life annuity form of benefit. No prior DB plan with that employer.

Yes, HCE and NHCE are not delineated in the top heavy rules.

The deadline for the first SH notice for a plan that is implementing its initial deferral option is: no later than the effective date for deferrals to begin.

§1.401(a)(26)-5. Employees who benefit under a plan (a) Employees benefiting under a plan (1) In general. --Except as provided in paragraph (a)(2) of this section, an employee is treated as benefiting under a plan for a plan year if and only if, for that plan year, the employee would be treated as benefiting under the provisions of §1.410(b)-3(a), without regard to §1.410(b)-3(a)(iv). (2) Sequential or concurrent benefit offset arrangements (i) In general. --An employee is treated as accruing a benefit under a plan that includes an offset or reduction of benefits that satisfies either paragraph (a)(2)(ii) or (a)(2)(iii) of this section if either the employee accrues a benefit under the plan for the year, or the employee would have accrued a benefit if the offset or reduction portion of the benefit formula were disregarded. In addition, an employee is treated as accruing a meaningful benefit for purposes of prior benefit structure testing under §1.401(a)(26)-3 if the employee would have accrued a meaningful benefit if the offset or reduction portion of the benefit formula were disregarded. ... etc. ... (iii) Concurrent benefit offset arrangements (A) General rule. --An offset or reduction of benefits under a defined benefit plan satisfies the requirements of this paragraph (a)(2)(iii) if the benefit formula provides a benefit that is offset or reduced by contributions or benefits under another plan that is maintained by the same employer and the following additional requirements are met: (1) The contributions or benefits under a plan that are used to offset or reduce the benefits under the positive portion of the formula being tested accrued under such other plan; (2) The employees who benefit under the formula being tested also benefit under the other plan on a reasonable and uniform basis; and (3) The contributions or benefits under the plan that are used to offset or reduce the benefits under the formula being tested are not used to offset or reduce that employee's benefits under any other plan or any other formula. Be sure to meet all of the conditions in (a)(2)(ii) or (a)(2)(iii). (a)(2)(iii)(A)(2) - the employees in the DC plan benefit on a uniform basis. This can sometimes cause problems too.

I don't have the reference in hand, but I am certain that when a participant elects a lump sum payment in a DB plan, the "account balance" method can be used in the year the lump sum is paid. Otherwise, no, it cannot be used.

1. You are correct, only the balances vesting for the year count plus the vested contributions for the year count against the annual 457(b) deferral limit. Employee deferrals, vested employer contributions, and any prior non-vested balances that now become vested during the year - all of these add together and count against the annual 457(b) deferral limit ($17,500 ignoring any last-3 years catchups). Actually, i am not sure that the nonvested amounts are even considered as 457(b) amounts. 2. Correct, but you could easily exceed the limit in a future year when the nonvested amounts begin to vest and thus count against the 457(b) deferral limit in such future year. Suppose the in 2014 a nonvested employer contribution of $17,500 increases by 6% (earnings of $1,050) so it is now valued at $18,550 in 2015. Suppose the plan has 100% vesting upon death. The participant dies in 2015 and the $18,550 becomes vested, which will likely exceed the annual deferral limit for 2015. 3. 457(b) plans require a written plan document. The plan document dictates whether or not a vesting schedule applies. Many times the 457(b) deferral, whether made by the employer or by the employee, is considered by the employee as their wages that they could have been paid, but they put it in the plan. A vesting schedule on that amount usually does not sit well with them. Remember, the people actually eligible for a nonprofit corporation's 457(b) plan are not the rank and file employees (must generally be a top hat group).