John Feldt ERPA CPC QPA

Right, you don't have to restate. In fact, a mere restatement to a pre-approved plan will not quite get you up-to-date. Your 415 regulations amendment is still required and an amendment for the HEART act (passed in June 2008) is required too. That needed language is not automatically included in the EGTRRA pre-approved documents. If this is a pension plan (money purchase, target, of DB plan), then you may have other amendments to do as well.

He is not eligible to defer unless he receives wages from which the plan allows a deferral to be made. Since the plan does not allow deferrals to be made from commissions, and he receives no other payment, he is not eligible to defer.

That's essentially what Tom said. I agree with that conclusion as well - if he is not eligible to defer, he cannot be in the test. If the result is favorable for the test results and you have concerns, perhaps you could request a ruling from the IRS (but that's expensive).

just for fun http://benefitslink.com/boards/index.php?s...st&p=144094

I'd recommend reading the QDRO again to make sure it does not say something unusual in the case of death. These can be written in ways that may surprise you.

Tales of IRS-exam woe continued: In a recent IRS audit, the agent could not find any problems, except some late deferral deposits. The agent indicated that the plan must go to audit CAP. Hmmm, isn't that under the purview of the DOL? Yes, I had really once thought that late deferrals were a DOL issue, silly me. The agent explained that the plan documents state that "employee contributions must be deposited timely." Thus, the late deferral deposits constituted an operational error. Now, because the deposits were not terribly late, thus making the overall interest due to the plan rather small (a few hundred dollars), the agent agreed that SCP was acceptable, but the audit CAP agent had to review the case and agree with that before they could release the case. yee ha Edited to add a question: Did Kahn tell you what they did with that one egregious case? Did they turn it over to the IRS audit team for an exam?

Yes, we were very careful when sending out letters to those reported on that report as deceased. It appeared that some of the oldest participants'/pensioners' spouses did not have a unique SSN, so when they died, they got on the deceased report file as the pensioner instead of as their spouse (and vice-versa for survivors of pensioners). However, that report was also valuable in its ability to catch a long-deceased pensioner whose life annuity was still being paid. First-time users of the report are often amazed to find that type of fraud, but it does happen.

You're probably okay. You are saying the D letter does not cover the EGTRRA amendment. Plan's are generally not required to request an IRS D letter at all. You should check for all other IRS-required interim amendments too, such as the 401(a)(31)(B) amendment if applicable. You'll need to adopt the 415/PFEA amendment soon. Cycle E is for individually designed plans, not prototypes, and it ends 1/31/2011. So you have until then to restate your plan in its entirety, restating it based on the LRMs in place at the end of 2009 (or whenever the IRS issues those LRMs, could be early 2010 if they get delayed some). You will then be on the 5-year restatement cycle instead of the 6-year. Would the plan fit into a prototype perhaps?

Did the plan adopt an EGTRRA good faith amendment in 2003 (or sometime thereabout)?

http://benefitslink.com/boards/index.php?s...st&p=162517

I think the deposits for the prevailing wage contributions must be at least quarterly. True salary deferrals are due as as soon as possible.

Yes. 410(b) needs to pass for deferrals (based on eligibility to defer), 410(b) needs to pass for match (based on the ability to get a match if the election to defer had been made), and 410(b) needs to pass for the nonelective. You can provide differing names for the various nonelectives, but it's all one batch (Employer nonelective).

Thanks John!

And interestingly, the proposed regulation 1.414(m)-2©(3) states "Services will be considered of a type historically performed by employees in a particular service field if it was not unusual for the services to be performed by employees of organizations in that service field (in the United States) on December 13, 1980." What if the hospital is not the FSO, but the corporation is - would that change anything?

The old tack on amendments are now part of the EGTRRA plan adoption agreement and basic document. When you restate to the EGTRRA document, you do not need to attach the old final 401(k)/401(m) tack-on, the mandatory rollover 401(a)(31)(B) tack-on, the post-EGTRRA tack-on, etc.

It could be a 3% nonelective Safe Harbor also. For some reason we find many plan sponsors referring to their 3% Safe Harbor nonelective contribution as a match, even though it is not tied to the participant making a deferral.

http://benefitslink.com/boards/index.php?s...st&p=163596

So, if a plan does not exclude bonuses, and a participant just now receives their 2007 bonus (cash flow issues), and they entered the plan only recently (July 1, 2008), would they be able to defer? Remember, the "payroll period" for which the work was done was long ago - 12/31/2007. I would argue that they can defer now on that bonus. What about back-pay (assume the plan does not exclude it from its definitaion of compensation). Also, if the "first few weeks" rule is applied to the plan, would that change the answer? (the Final 415 regs had something in there about using comp paid during the first few weeks following the end of the plan year - a nightmare for administrators, I know).

Plans that are not using a proapproved document are required to be restated according to the 5-year restatement cycle based on the last digit of their EIN. If your plan is not eligible for the 6-year cycle (prototype or volume submitter), then the restatement was required by January 31, 2007. There was some relief granted for certain circumstances, but I think that may have now expired too. There some other exceptions to the EIN deadline thing for government plans, church plans, etc. - you can read about that in Revenue Procedure 2007-44. Now, if the plan of which you ask is a prototype, then the EGTRRA restatement is April 30, 2010. I assume you already knew that (because if you did not, then perhaps continuing in the plan document business should be reassessed).

Do the safe harbor provisions currently say age 21, 1 yr and semi annual entry? Yes, so it is not the latter, but the former. The safe harbor eligibility provisions are not tied to any of the deferral eligibility/entry dates. Is it considered an amendment to the safe harbor provisions under the regs if it changes the plan language, but keeps the safe harbor eligibility requirements the same? If if does not affect the decision to defer (like adding a match or removing a match), then I'd say "maybe", but I'm in really in the "probably not" group.

No. The eligibility for the safe harbor would remain unchanged at age 21, 1year, semiannual entry.

A client (about a hundred employees) wants to allow participants to defer into the plan earlier. This affects no HCEs and does not affect any testing (the employer contributions do not need 401(a)(4) testing due to the design). The plan is not even close to top heavy. However, the plan is a calendar year safe harbor plan. Currently the eligibility for deferrals and matching are the same (one year, age 21, semi-annual entry). Starting September 1, they want to allow recent hires to defer after 6 months, age 21 with monthly entry dates for deferrals with no changes to the eligibility requirements for safe harbor contributions. They currently foresee no HCEs ever being in this early group, so the "Otherwise Excludable" rule makes that group okay (as far as I can tell). I know the IRS received comments regarding the types of changes (amendments) that should be alright to do mid-year for a safe harbor plan. Any problems with doing the above? Any grapevine comments from the IRS about allowable mid-year SH plan amendments?

W-4P?

PPA indicates amendments are not required until the end of the 2009 plan year, or the last day of 2011 for a government plan. The IRS hasn't issued guidance related to 457(b) plans since the time they released the final 457(b) regulations. Without any additional guidance, I'd recommend at least the 2009/2011 deadlines.

The Pension Protection Act of 2006 (and other changes in law). Some of these provisions are optional, some are not. 1. Any 457(b): Change in definition of unforeseeable emergency, deferring from post-termination pay, QDRO 2. Gov 457(b): Direct rollover to Roth, 402(f) notice timing changes to 180 days, direct rollover for non-spouse beneficiary, health and long-term care distributions, hurricane relief.