John Feldt ERPA CPC QPA

This shows the 2009 limits and methodology: http://www.irs.gov/pub/irs-tege/2009_415_white_paper.pdf I see no 2010 "white paper" yet.

Catchup is 5,479 ? 402(g) is 16,437 ? 401a17 is 242,700 ? DC 415 is 48,540 ? DB 415 is 194,160 ? Key is 157,755 ? HCE is 109,664 ? Simple is 11,378 ? Maybe.

Defined benefit = $195,000 Defined contribution = $49,000 Section 402(g)(1) = $16,500 401(a)(17), 404(l), 408(k)(3)©, and 408(k)(6)(D)(ii) = $245,000 Section 416(i)(1)(A)(i) $160,000 Section 409(o)(1)©(ii) ESOP 5-year distribution period = $985,000 / $195,000 HCE, Section 414(q)(1)(B) = $110,000 Section 414(v)(2)(B)(i) for catch-up contributions = $5,500 Section 414(v)(2)(B)(ii) for catch-up contributions = $2,500 Gov Plan Compensation limitation = $360,000 Compensation amount under Section 408(k)(2)© (SEPs) = $550 Section 408(p)(2)(E) SIMPLE = $11,500 Section 457(e)(15) = $16,500

Yep. Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act. The limitations that are adjusted by reference to Section 415(d) will remain unchanged for 2010. This is because the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. There you have it.

http://www.publicbroadcasting.net/wuky/new...nts.to.elderly# The amount people can contribute to 401 (k) accounts, Individual Retirement Accounts and defined benefits plans also are affected by negative inflation, the officials said. Some in the investment community have expressed concern that contribution limits might be reduced, they said. "The Treasury Department and the IRS (Internal Revenue Service) will be issuing a release later this week -- tomorrow or the next day -- that will indicate that our interpretation of the statutory cost of living adjustment formula is that there will be no decrease," said one official. "The Treasury interpretation will prevent any reduction in those pension, 401 (k), IRA dollar limits and thresholds for 2010," the official added. So it's possible we might not even see anything today. I guess I'll stop hitting refresh on my google search for "irs 2010 cola" within the last hour...

Here's a paragraph from an article from the united transportation union dated today: http://www.utu.org/worksite/detail_news.cfm?ArticleID=49322 "Obama also announced Wednesday that the IRS would soon issue tax guidance preventing reductions in contribution limits for certain retirement funds, including 401(k) plans and Individual Retirement Accounts. There has been concern among some in the financial industry that federal law could require the limits to be reduced because inflation will be negative this year." It that's true, then the IRS is re-writing the method on the colas?

Yeah, predicting isn't quite as straight-forward this year. In the Code, it supports the idea that it can go down by the definition used for the base period, as it states: 415(d) COST-OF-LIVING ADJUSTMENTS. -- IN GENERAL. --The Secretary shall adjust annually the $160,000 amount in subsection (b)(1)(A), in the case of a participant who separated from service, the amount taken into account under subsection (b)(1)(B), and the $40,000 amount in subsection ©(1)(A), for increases in the cost-of-living in accordance with regulations prescribed by the Secretary. 415(d)(2) METHOD. --The regulations prescribed under paragraph (1) shall provide for an adjustment with respect to any calendar year based on the increase in the applicable index for the calendar quarter ending September 30 of the preceding calendar year over such index for the base period, and adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act. 415(d)(3) BASE PERIOD. --For purpose of paragraph (2) -- The base period taken into account for purposes of paragraph (1)(A) is the calendar quarter beginning July 1, 2001. But if that link regarding the White House statement is correct, saying it will stay flat, then we certainly have reason for pause here.

We'll see - here's an article already in Benefitslinks' stack of stuff for today: http://www.businessinsurance.com/article/2.../NEWS/910149985

We've come across a plan that has age 21 and 1 YOS with semi-annual entry dates, but it waived the age and service requirements in the first year by using language that says those employed on or before 3-1-2008 were exempt from the age and service requirements. The company started its business in February 2008. The only two people that were employed by March 1st were the owner-HCEs. A few staff employees were hired July 2008 (after July 1). Doesn't 410(b)(2)(D) require that the lowest age and service requirement be considered for determining coverage, and doesn't such a waiver constitute no age and service for 2008? Or is the waiver of requirements just considered as part of the plan's conditions of participation which would fit in 410(b)(4)(A)? - I would not think so. Or does the semi-annual entry date solve this issue somehow?

The interest crediting rules say that interest must be credited at least annually. Provide a credit of $0.00, which is their prior balance x the crediting rate, and post that zero to their account for that first year. The same would apply to someone who quit, was paid out, then came back the next year.

Do you know anyone who prepares IDP 401(k) documents or other DC documents for each cycle? For example, someone who currently has or is working on an IDP 401(k) document with updated language for all of the cycle D LRMs within the document (not as add-on amendments)? We've tried a few firms so far with no luck.

How much is that same employer contributing and deducting for their DC plan, if any, for that same tax-year?

They should be reported on 7e. Does it really matter? I don't think the DOL or IRS or PBGC will make a big stink if you report them the best you can based on the data you have after making attempts to get accurate information. If they are in pay status you certainly should be able to know because of how the 1099-R was coded (death).

Your deadline is not 01/31/2009 for a new plan adopted late in 2008. This is definitely the more confusing part of the 5-year cycle. Go ahead and submit the plan now. Maybe another poster can explain Rev Proc 2007-44 better (or correct me if I am wrong). Look at examples 7, 8 and 9 in section 15, as the end of the 401(b) remedial amendment period matters with new plans. The way I read it is that end of the initial cycle for your new plan is really 01/31/2014 (I could be wrong). I think you will still have reliance for the plan's first year even if you submitted by 01/31/2014, but I would submit now anyway.

If your DB plan is an individually designed plan, and you want IRS reliance on the plan's language (meaning you want a D letter), then your restatement is (or was) required based on the last digit of the sponsor EIN, with several exceptions. Take a look at Rev. Proc. 2007-44 for those details. EINs ending in 1 or 6 generally had a deadline of 01/31/2007, 2 and 7 had until 01/31/2008, and so on. If you don't want a D letter, you do not need to restate. However, that excludes you from some of the things allowed under EPCRS (I think), and you are breaver than me to not want IRS D letter reliance. If your DB plan uses a pre-approved document, such as a prototype, then the EGTRRA restatement window will open sometime around February 1, 2010. To compare, the DC window was to open around 01/31/2008 and the IRS actually opened it on March 31, 2008. http://www.irs.gov/retirement/article/0,,id=146977,00.html If your firm is a document sponsor for a DB prototype, you should be listed here: http://www.irs.gov/pub/irs-tege/egtrra_listdb.pdf

After trying to add benefits for all of the eligible employees by removing the last day and 1000 hour requirements, the last step starts removing the plan's eligibility requirements. However, aren't the lowest requirements are required for determining the total EE counts in the test? If so, that starts bringing in more NHCEs into the denominator (from the big plan) and they are not helping. I no longer squeak by. In fact the sqeaking does not occur. I should have noticed this before the earlier posts. Back to square one. I agree Laura, that the ABT then becomes an option. If the ABT fails, then no solution is available?

Maybe someday, long from now, when these are available in a prototype - then the 5-person plan market would benefit from these.

Actually, if the plan gave a QNEC to all NHCEs in the small plan, regardless of eligibility, then they would just squeak by - they require age 21 and a year (keep in mind that some of those ineligible employees were only there for a week or two during that short plan year). If that would work, I assume the plan would not have to be amended (since that would be a -11(g) type of amendment). So does the last step in the plans 410(b) failsafe language cover this: "If, after application of the correction procedure above, the coverage requirements are still not satisfied, the Employer may apply the same procedure to an otherwise excludable class of Employees until the ratio percentage test is passed." Assume the plan allows a QNEC. Certainly the window was the right time to make the change, but it doesn't appear that they received any advice from their service provider. We can only hope that this becomes an opportunity for a change to be made regarding their service provider...

Actually, let me clarify: we gave a match to all of the NHCEs who had met the age and service requirements and had elected to defer, regardless of whether or not they had 1000 hours or last day (the plan's allocation requirements). There wasn't a named group excluded or anything like that, if that was your question.

Yep. The math says the small plan doesn't have enough people to make it pass. Avg. Benefits is out. We also said ugh. The problem was avoidable 2 years ago when they first became a controlled group, but their bundled provider (asset gathering is first, anything else is a lower priority) did not make the plan years the same until it was too late. The bundled provider is asking us, saying something like 'help us, somebody, please help'.

What would you suggest?

If 404 does not apply (gov. sponsor or nonprofit), in 1.415©-1, you find: Date of employer contributions ... If ... contributions are made by an employer exempt from Federal income tax (including a governmental employer), the contributions must be made to the plan no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year (as applicable, depending on the basis on which the employer keeps its books) with or within which the particular limitation year ends... The safe harbor contribution deadline is twelve months after the plan year end, but if made after the above date, the contribution would be an annual addition for year in which contribution occurred instead of the year for which it was made. To me, that's October 15 for a calendar year.

Two 401(k) plans, two employers in a controlled group. Neither plan is safe harbor. The Big plan has deferrals and an annual discretionary match option. Calendar year plan. No match intended for 2008. The Small plan has deferrals and a discretionary match. Plan year was 9/30, until 9/30/2008, when they had a short year ending 12/31/2008. They contributed a discretionary match for the 12/31/2008 year. Small plan did not have enough NHCEs in the short plan year for the match portion of their plan to pass coverage, the ratio test result is about 45%. They have a NS PT that applies 410(b) failsafe language, but even after exhausting all of the listed steps, the plan does not have enough NHCEs to pass coverage for the match. Big plan has a discretionary match option. They could decide to provide a match for 2008. Could the two plans be aggregated for coverage purposes for the match? One plan year is short, the other is 12 months, but they both end 12/31/2008.

Isn't that tag line reserved for another user? I think if the company is not-for-profit (or a government), then the deposit would be due on the 15th of the 10th month after the end of the plan year, regardless of whether they file any return at all or do an extension.

Plan to file all of them (if you want D letter reliance) by 01/31/2010. See Rev. Proc 2007-44 section 10.02 - they are in cycle D. A simple guide would be nice. Maybe will get a post on that.