John Feldt ERPA CPC QPA

'The VS does have "wait and see" language.' Does this mean the document says that no testing is needed for an employer's plan if they gave a maybe notice and then adopted SH for the year? and that testing is needed for those employers' plans that gave a maybe notice but did not adopt SH for the year? If that's the case your document seems to be okay. If not, you may have adocument failure and that will need to be fixed, because there's no getting out of the need for testing on an employer-by-employer basis. Since you have a plan with unrelated multiple employers, then each Employer's plan is tested without regard to the other unrelated employers' plans for coverage, nondiscrimination, and top heavy. Thus, an employer with safe harbor still needs to pass coverage, and depending on the design, may need to test for top heavy (you'll need info on any other qualified plans of that employer to do the TH test). If an employer in the MEP is part of a controlled group but their plan in the MEP does not cover all employers of their controlled group (or suppose it only covers employees of one of their locations), then you need additional census data to do coverage testing. The plans that have adopted safe harbor designs would pass their nondiscrimination by virtue of being safe harbor. For the 5 employers that are not safe harbor, you'll need to do 5 ADP tests (and an ACP test for each of them that provided a match).

What about coverage? If the lowest age/service entry requirement that can be applied for any employee for the plan year is "none", no age or service (because that's the requirement for the HCE), then those other people hired after January 1 are not exlcudable from testing, isn't that right? If so, then that makes coverage fail?

At the ASPPA annual conference, Lorraine Dorsa mentioned that she tries to avoid using an employee's name when defining a rate class for benefit accrual (DB plans), to avoid the possibility of it creating a problem because of the 'similarly situated employee' issue. This approach was mentioned not just for NHCEs, but also for HCEs. We have a few plans where the HCE accrual rate groups are defined by using the HCE's name, for example "Group A consists Captain John Smith, an owner-employee" and the document has a definition for owner-employee. I think the potential problem exists any time one person ends up in a class by themselves, regardless of what language was used to get them into their own class. Do you think this poses a significant issue or problem that would merit re-writing a few plans?

A recent 5310 filing for a DB plan (plan adopted effective October 1, 2003) came back with a request for a check for $1,000. The plan is and always has been on a prototype document, is a very small plan, and has at least 1 NHCE. The agent said: "The plan does not qualify for the $0 user fee under Section 620 of EGTRRA due to the fact that it is an initial plan that was not submitted by 2/02/10, the end of the EGTRRA remedial amendment period.." We will have them refer to the Form 8717 instructions. I assume these instructions are still current and correct when they say "the application may be eligible for elimination of the user fee provided the plan was first in existence after January 2, 1996." Is this still true, or is the agent correct?

We are debating the deadline for an interim amendment for a non-electing church plan. For example, the 401(a)(31)(B) amendment was generally due the later of a) 12/31/2005 or b) the due due of the tax return for the year that contained 3/28/2005. If the organization is not required to file a tax return, does that mean their deadline is earlier than everyone else, meaning 12/31/2005 is the final deadline for a calendar year organization? Is there any guidance for that?

So you're saying that the formula for the active employees, even when the plan imposes no hours requirement for their allocation at the end of the year, can be changed during the year as long as they do not yet have 500 hours? Here's the TAM that was referenced: http://benefitslink.com/IRS/tam9735001.html

Maybe they think this type of news is better to release after the elections are over...

$106,800 is the Social Security Taxable Wage Base (barring any congressional action to change it) http://www.socialsecurity.gov/pressoffice/...lafacts2011.htm

I think it's commonly tried and comes up frequently (maybe 1% to 2% of the clients) in the small plan market.

So, "the current availability test could be treated as satisfied if there are at least similar investment options available to NHCs that do not have such a condition" Back to the OP: If the NHCE participants have similar investment options that do not have such a minimum balance condition, then you can avoid the test, based on the informal IRS comments.

Well, unless Sal changed his mind in the 2010 version of the EOB, here's what I find on page 9.153, which is Chapter 9 (Nondiscrim), Section X, Part B,2.e. of the 2009 EOB. "... the eighth option is a separate brokerage account. The brokerage account option requires [a] $50,000 minimum account balance, whereas all account balances may be invested in any of the other seven options. The brokerage account option is a separate right or feature that must be tested for availability ..." Thus sayeth Sal. Please review and comment.

Is this discriminatory? Maybe. If enough NHCEs have $25,000 accounts, then you're okay. Do I need to test this 'feature of the plan'? Yes.

Is being able to take an in-service reduction a protected plan feature? I think it is, but the IRS allowed for an amendment to remove the in-service option without violating 411 as long as the amendment was adopted within a certain time frame. I think that deadline is over now. Thus, the reason for the original post.

By " on applicable date " for adopting the amendment, what do you mean? Do you think a simultaneous adoption of a fully unreduced early retirement benefit at age 55 handle the multiplier issue? No one terminated and the plan is not integrated.

Back in 2007/2008, the IRS released something that used the word 'deference' which we found out later really meant 'prove it'. A prospect that still has their NRA of 55 in their document now, is concerned that they don't have a study that proves that their normal retirement age is typical for their industry. The plan allows for in-service at Normal Retirement Age. How would you suggest fixing this?

PPA Yes. HEART is due by the end of their 2010 Plan Year, so maybe, depends on their plan year.

Yes. From SunGard's Technical Update: DC Plan Sponsors with an EIN ending in 5 or 0 (cycle E) have until January 31, 2011, to complete their EGTRRA restatement. Therefore, a plan sponsor on cycle E that is using a prototype or volume submitter document can rely on the 5-year cycle deadline if it missed the April 30, 2010, deadline. So, approximately 20% of the plan sponsors who thought they were late are not. They can qualify for the January 31, 2011, restatement deadline. Q-1: If a plan sponsor using a prototype or volume submitter document utilizes the January 31, 2011, deadline (i.e., cycle E) rather than the April 30, 2010, deadline, will the plan sponsor be able to have retroactive reliance (i.e., back to the beginning of the 2002 plan year) on the prototype or volume submitter letter? Yes. By adopting a pre-approved plan by January 31, 2011, the last day of the (cycle E) plan’s remedial amendment period cycle, the plan is entitled to reliance upon the pre-approved plan sponsor’s approval letter (assuming the sponsor only makes elections permitted under the pre-approved plan). Some helpful links: http://www.relius.net/News/TechnicalUpdates.aspx?ID=533 http://www.irs.gov/retirement/article/0,,id=227643,00.html http://www.irs.gov/pub/irs-tege/rne_sum10.pdf

Suppose the plan also has a nonelective component. Suppose the 50-year-old NHCE making $100,000 of pay receives a $44,500 nonelective allocation (brother or girlfriend of the owner, you decide), and defers $6,000 - some of that deferral is catchup deferral. The plan should say something about getting safe harbor match on that deferral. Other example: Someone eligible for 2 plans during the year (switched jobs) who deferred the max in one plan, but that plan allows no catchup deferrals. They defer only catch-up in the SH match plan. SH match should be applied. Note:Edited to make the 1st example not exceed 415.

A loose sister organization? Would that be an anti-nun organization? Maybe I read that wrong...

I think it's required. If you're using a pre-approved document (prototype or volume submitter) it should be spelled out in the basic document or adoption agreement.

Now, if you take this route, be careful that there are not so many SPD's out there that the employer can't keep it straight. Label them clearly on the cover page of the SPD regarding who they are for, and perhaps put "CONFIDENTIAL" on any SPDs that are only for the HCEs and/or owners. There are some DOL penalties for not providing the proper SPD disclosures. In one case, where 6 levels of benefit accruals existed in a plan, we simply provided just 2 SPDs. One for the shareholders of the employer, and one for everyone else. If they have employees that might move around from one class to the other (like NHCE to HCE due to pay changes), it might be best to put that language in just one SPD.

Sure, here's what we looked at: §2520.102-4 Option for different summary plan descriptions. In some cases an employee benefit plan may provide different benefits for various classes of participants and beneficiaries. For example, a plan amendment altering benefits may apply to only those participants who are employees of an employer when the amendment is adopted and to employees who later become participants, but not to participants who no longer are employees when the amendment is adopted. (See §2520.104b-4.) Similarly, a plan may provide for different benefits for participants employed at different plants of the employer, or for different classes of participants in the same plant. In such cases the plan administrator may fulfill the requirement to furnish a summary plan description to participants covered under the plan and beneficiaries receiving benefits under the plan by furnishing to each member of each class of participants and beneficiaries a copy of a summary plan description appropriate to that class. Each summary plan description so prepared shall follow the style and format prescribed in §2520.102-2, and shall contain all information which is required to be contained in the summary plan description under §2520.102-3. It may omit information which is not applicable to the class of participants or beneficiaries to which it is furnished. It should also clearly identify on the first page of the text the class of participants and beneficiaries for which it has been prepared and the plan's coverage of other classes. If the classes which the employee benefit plan covers are too numerous to be listed adequately on the first page of the text of the summary plan description, they may be listed elsewhere in the text so long as the first page of the text contains a reference to the page or pages in the text which contain this information. Thus, we believe it is okay to provide one SPD that describes the benefits to one class (e.g. the owners) as long as it explains, on page 1, that the plan also covers other classes of employees, but that this SPD only describes the benefits for [describe the owner class covered]. Then in the next SPD, we believe it is okay to provide one SPD that describes the benefits to another class (e.g. non-owners) as long as it explains, on page 1, that the plan also covers other classes but this SPD only describes the benefits of [describe the non-owner class covered]. We threw out the idea to say "For details, see your Plan Administrator if this affects you." We don't think that would fly. What do you think?

Yes it would apply also to 457(b) pans, but only government-sponsored 457(b) plans since a tax-exempt (non-profit) sponsored 457(b) plan's distribution is not eligible for rollover. I think it could be possible to amend a plan to lower the age for in-service eligibility (or to remove the age minimum) and limit such in-service "distribution" option such that it only applies to in-plan Roth conversions. Of course I am only speculating.

The 100% owner is the only employee/participant and wants to freeze the DB plan. Because this plan is not subject to ERISA, not 204(h) notice is required. Their advisor thinks it's required for all DB plans. Am I missing something?

Also, be careful of the Top Heavy minimum if the one HCE getting zero is not an officer (not key).