John Feldt ERPA CPC QPA

But since you are required to be SH for the entire next 12-month plan year, after the short year, you have now committed SH for another 12 more months (albeit maybe as a SH match or as a NEC for NHCEs only). If the Employer can't afford 3% now, it is unlikely that they would want to commit to 12 more months starting from now (instead of just terminating) even with those slight changes to who gets the SH.

DC plans: 1/2/1997 DB plans: 1/3/1996 From the 8717 instructions: Exemption from User Fee The exemption from the user fee applies to all eligible employers (defined below) who request a determination letter within the first five plan years or, if later, the end of the remedial amendment period that begins within the first five plan years with respect to a plan. Undersection 620 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), an application for a defined contribution plan from an eligible employer for a plan that was first effective on or after January 2, 1997, will automatically meet this requirement. An application for a defined benefit plan from an eligible employer for a plan that was first effective on or after January 3, 1996, will automatically meet this requirement. See Notice 2002-1, 2002-1 C.B. 283 as amplified by Notice 2003-49, 2003-2 C.B. 294.

Qualified plan, calendar year profit sharing plan. Intends to contribute their profit sharing for 12/31/2008 (by April 15, 2009). Intends to make no further contributions. Has not yet signed a resolution to terminate (nor have they adopted all amendments that would be required to update the plan as of a current plan termination date). Let's assume they adopt a resolution to terminate now (say the plan termination date gets set as April 15, 2009) and they also adopt an amendment to update the plan for all of the recent laws/regulations (HEART, WRERA, etc). Also assume the contribution made on April 15, 2009 is the last contribution, it is allocated in 2008 and no contributions are made or allocated in 2009. Can they now adopt a SIMPLE for 2009?

Maybe this is clearer, could a plan define it as the rate of interest on long-term investment grade corporate bonds (as described in Code Section 412(b)(5)(B)(ii)(II), such code section as it existed prior to amendment by the Pension Protection Act of 2006) determined as of the first day of the Plan Year for which the Interest Credit shall be applied? If it's a calendar year plan, would that be the January rate, or December's?

If the allocation is 'each in their own class' then can the plan actually integrate at a $50,000 level though? The plan can impute disparity, but I thought that required the use of the full taxable wage base. If the plan document does not spell out a taxable wage base of $50,000, then I don't know how that integration level can apply. But if it could, without having it written into the plan, then I would like to know how that is done.

If a new calendar year cash balance plan is established with a 1-1-2009 effective date, can the crediting rate for the cash balance accounts (not the funding rate), use a rate in effect at the beginning of the plan year (such as a rate for the month of January), or must the plan have a 1 month (or more) lookback to get the crediting rate (such as December's rate, or August's rate)?

Clearly. Thanks.

Beginning of year valuation method. Calendar year plan. New plan 1-1-2009 (small: 60 employees). Accruals are based on plan years with 1000 hours of service, but excludes any years of service earned before the plan year that includes the participant's date of entry. As of the 1-1-2009 actuarial valuation date, a half-dozen ineligible employees (all with 1000 hours in 2008) have not yet reached their plan entry dates. Since they were hired early in 2008, the entry dates would be in 2009, such as 2-1-09, 3-1-09, etc. The enrolled actuary would like to include that half-dozen group of employees in the 1-1-2009 valulation for plan contribution purposes, making this an ongoing actuarial assumption. Another enrolled actuary has stated that this is not allowable. Comments?

Yep - thanks for confirming. The 401(k) answer book has it wrong in question 18:54 (I have an on-line version). edited to add: However, question 9:18 has it right.

What about an excess deferral and the April 15 deadline. Taxed in which year and what about the gap period earnings?

http://benefitslink.com/boards/index.php?s...st&p=161125

My misunderstanding. De minimus is not defined, but many practitioners believe that 3% or less is de minimus. However, be careful about this. I'll post a link to another thread where that was discussed.

Also, I would not hold your breath waiting for the IRS 403(b) prototype program to open. It is unlikely that any IRS-approved prototype documents will exist before the end of this year (2009). The IRS spent two years reviewing the EGTRRA DC plans that were submitted before issuing final approvals. That's blazing speed on a geologic time scale.

The W-2 definition for allocation of contributions is deemed to satisfy 414(s). You do not have a 414(s) failure if that is the plan's definition of pay for allocation purposes.

Exactly. If they are not using it now, and their testing is prior year, then the prior year match is 0%. So when they decide in some year to actually contribute a match, passing ACP can become a problem, especially if they do not want to switch to current year testing for some reason. Or if the year has ended already, and they say "Hey, let's make a discretionary match for last year, our document allows that." At that point it is too late to amend to use current year testing.

Does the plan document have a determination letter that covers that language? If so, well, . . . Otherwise, I do not think it is an allowable accrual requirement.

You are correct that a nonelecting church plan has zero D letter reliance unless the plan is submitted to the IRS, even if it uses some sort of a 'pre-approved' plan document. Although it is possible to run such a plan without a D letter, it is best to go get one. We have done an IDP 401(k) plan for an indian tribal government by starting with an IDP 401(k) document and stripping out all of the nonapplicable provisions. It takes some time and intense review, but if you use the merge and compare tools, it makes the review easier at least. If you even a little familiar with drafting documents and have access to IDP document software, you should be able to handle this. We also prepared an government thrift plan, which sounds more complicated, but Corbel had software that included the necessary thrift language, and it was actually a little less work. We have also done this with a nonelecting church DB plan by starting with an IDP DB document and stripping out all of the provisions that are not applicable to a nonelecting plan. The IRS took about 11 months to approved the DB. The tribal plan document is in review with the IRS. The gov. thrift decided to delay to cycle E to submit.

The 401(a)(17) limit applies to the 403(b) plan. 415 limits apply to the 403(b) plan. The 402(g) limit applies to the 403(b) plan. A separate 'annual deferral' limit applies to the 457(b) plan. Two catch-up limits may apply to the 403(b) plan, and a special catch-up may apply the 457(b) plan too, depending on the plan language. If this "business" is also in business with other related organizations, additional issues must be considered. Slight tangent here. Hopefully the plan documents will be kept up-to-date with each new law and regulation that could affect the plan. Also, if the entity is a non-profit company, a one-time filing (a letter) to the DOL regarding the 457(b) plan is recommended (so the plan won't have to file any 5500s). Sometimes plan sponsors think that once the document is done, that they can forget about keeping any engagement with the document drafter. However, each year there are new laws and new regulations that frequently change the language that is required by the IRS - necessary language that stops the IRS from making the plan assets becoming taxable.

I think they are considered a tardy amender forever, unless the amendment is submitted via schedule F under EPCRS, then they are given a pass for being tardy. I'm not sure what you're actually getting at.

That occurs each Nov. 6th, depending on who we've chosen.

A plan with a plan termination date applicable for IRS purposes, and a different plan termination date for PBGC purposes... I'm not buying. For a standard plan termination, I believe there is one date of plan termination, not two.

If Jim Holland had his way, you would have to sign it before the BEGINNING of the plan year. If some other IRS officials had their way, it would not be required in the document, but be an administrative election.

If the 5307 had said "Yes" to "if plans are combined for coverage purposes" then you would not likely have the agent making the statements that are being made. Is it allowable to answer "no" for combining plans for coverage and then still combining plans for non discrimination testing? That would seem to affect the outcome of the determination letter, and would not be recommended. You should be able to amend the question to Yes and that should settle the issue. If you applied for a full scope determination, then you'll need to do Demo 6.

We are going to make the disclosures similar to those described in the proposed regs. We believe the disclosure is a benefit to all parties involved and that it will benefit us to prepare now, giving us a faster turnaround later - to just make any minor modifications (you know, someday, when either the existing proposed regulations are finalized, or new legislation is imposed, or completely new regulations are passed).

Also, would there be a fiduciary issue if, for some reason, a participant clearly picks the less valuable plan - for instance, someone who is very close to the end of their career and yet they pick the enhanced 401(k) plan. Would the fiduciary be liable for having even allowed the participant to make such a decision?