John Feldt ERPA CPC QPA

Agreed. Use this link from the IRS site, they update it fairly timely: http://www.irs.gov/retirement/article/0,,id=96450,00.html

We have also filed the 500 before the termination date successfully. In one instance, we filed the 500, provided the Notice of Plan Benefits, and provided the intent to terminate all at the same time, then provided the distribution forms to the participants 60 days later, and the plan was paid out approx 30 days after that. A bit stressful, but do-able.

We started using the CCH online version of the answer books last year. We don't subscribe to all of the answer books online, just a dozen, but that keeps us up-to-date at a much lower price than buying hardbacks. I especially like the hyperlinks embedded in their answers, so I can read the code or reg myself by just clicking on the link. We still subscribe to the ERISA outline as well (books and the CD).

Mike, In this example the original plan effective date is 1-1-2003 (as shown in the original post). Based on that, I still believe the restatement deadline is 01/31/2007, not 2012. I think paperchase is confusing the restatement effective date with the plan's original effective date. The orginal effective date of the plan is 1-1-2003, will the restatement effective date be 1-1-2006?

No replies? Well, I'm going to guess that it should be effective at the beginning of the 2006 plan year, but I'm concerned that the EGTRRA restatement portion has the RMD rules for DB plans perhaps should be effective earlier than that? Maybe someone will take a stab at this question now?

As for the IRS, whenever we include a contribution receivable on the Form 5310, we attach an explanation stating that the plan was underfunded by this amount as of the date shown on the 5310 and that the plan sponsor has made a commitment to contribute whatever amount is necessary to satisfy all plan liabilities at the time actual distributions occur, should the plan still be under funded at that time. We’ve had no problems with the IRS on that so far.

Yes, I was not specific enough - A target plan that does not use a target safe harbor formula is not eligible for the 6-year cycle. But, you are correct that the target plans that use the target safe harbor formulas can and will be done (if any still exist) in a pre-approved prototype, thus using the 6-year cycle. Yes, it does appear to lock you into that provider's document, hopefully you've chosen wisely when you switched to their pre-approved plan. - Thanks!

I enjoyed the arguments about the lookback year for compensation for determining who's an HCE in the next year, I thought it provided lot's of laughs! Started by non-tax pro on March 23, 2006 and had 8 pages and ended in July. http://benefitslink.com/boards/index.php?s...l=lookback+year

Such a simple question... We recommend that you sign the form; it is only helpful to do so. Unless you are eligible for the 6-year cycle, your plan document must be restated for EGTRRA by the deadline imposed by the 5-year cycle deadline. The 5-year cycle deadlines are as follows: Sponsor's EIN ends in 1 or 6, cycle A, restatement deadline = 01/31/2007 Sponsor's EIN ends in 2 or 7, cycle A, restatement deadline = 01/31/2008 Sponsor's EIN ends in 3 or 8, cycle A, restatement deadline = 01/31/2009 Sponsor's EIN ends in 4 or 9, cycle A, restatement deadline = 01/31/2010 Sponsor's EIN ends in 5 or 0, cycle A, restatement deadline = 01/31/2011 You would then have to restate every 5 years, unless you become eligible for the 6-year cycle The 6 year cycle: 1. The Form 8905 means you intend to adopt a "pre-approved" (a prototype or a volume submitter plan) plan when you restate your plan document for EGTRRA. By signing this form, your plan would be on the 6-year restatement cycle. Your next plan document restatement (for EGTRRA) would likely by required in 2009 or 2010, maybe as late as 2011 (the IRS will announce that final deadline when they are good and ready). You will then be required to restate your document every 6 years as long as your plan continues as a pre-approved plan. 2. If your plan document is already on a pre-approved plan and that plan document was adopted (signed) before February 17, 2005 (with an effective date that is before 2-17-2005), then you are considered a "prior adopter" and you are not required to sign the Form 8905. However, for convenience, the Form 8905 makes it easy for you to prove to the IRS (if they ever ask) that you are entitled to the extended plan document restatement deadline. It is only one page long. If you are ever asked to prove that you are a "prior adopted" without the Form 8905, you would probably have to submit your entire plan document. 3. If your EIN ends in a 1 or 6 and you are not on a pre-approved plan now, you could restate to a pre-approved plan by January 31, 2007 and be considered a "new adopter". This would also entitle you to the extended restatement deadline, unless your plan was originally adopted (signed) after February 16, 2005 as mentioned earlier. Similarly for 2 or 7 with a 01/31/2008 deadline and so on. If your EIN ends in a 5 or a zero, you really don't need to sign the Form 8905 for purposes of extending your deadline, but only as a matter of convenience (mentioned earlier). The six year cycle allows pre-approved plan sponsors to restate their document in 2009/2010/2011 (the IRS will announce the deadline) and the next restatement deadline will be sometime in 2015/2016/2017. Of course, certain plan features will not allow your plan to be on the 6-year cycle, such as ESOP provisions as one example. So if you have one of those features (or add them) you are no longer on the 6 year cycle and thus the Form 8905 is meaningless. Also, if you are a cash balance plan, a non-electing church plan, a multiemployer union plan, a 412(i) plan, or a Target Benefit plan, then you are in the 5-year cycle.

This client adopted a new cash balance plan 1-1-2003. Their EIN ends in 6. Is January 31, 2007 the deadline for signing an EGTRRA restated document (I presume yes). Is the Deadline for submitting the EGTRRA restated document for a determination letter also January 31, 2007 (I presume yes). What is the retroactive effective date supposed to be for this restatement?

Is Sungard aware? What section is it in?

Yikes! Sorry mjb, that was posted for levity sake only, my apologies to you. (obviously a benefits board like this needs no disclosure)

According to the IRS, yes - including extensions to the tax return - as long as a deferral election is in place by the end of the year. BUT, if the plan is subject to ERISA, then according to the DOL, the deposit must be made as soon as the amount can be reasonably segregated from the assets. For example (I'll use a partnership), the DOL feels that a Partner's deferral election should be done by the end of January (if it's a calendar year tax year). In the preamble to 29 CFR Part 2510 they stated that in their view, the partners' deferrals become plan assets at the earliest date they can be segregated from general assets after those amounts would have otherwise been distributed to the partner. It seems possible that a partner's or sole proprietor's deferrals could be deposited at the same time the tax return is filed, but I've seen no official statement from the DOL for that. NOTICE: Any tax advice expressed in this communication is not intended to be used, and cannot be used, for the purpose of avoiding penalties imposed on the taxpayer by any government taxing authority or agency. If any such tax advice is made available to any person or party other than the party to whom the advice was originally directed, then such advice is to be considered as being delivered to support the promotion or marketing of the transaction or matter discussed or referenced. Each taxpayer should seek specific tax advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Yes, it is correct. The top paid 25 HCEs of all time (must be HCE).

Being considered an employee is dependent on the relationship with the Employer. If the Employer-Employee relationship has truly ended in 2006, then you are required begin making RMD's by April 1, 2007. Perhaps the employer can keep him "employed" on some sort of "leave" and not sever the relationship with a hard date of termination.

ok, the original question is looking at 1.401(a)(26)-5(a)(2)(iii)(2) which says, - - "The employees who benefit under the formula being tested also benefit under the other plan on a reasonable and uniform basis." My question is what is uniform and does it mean all employees must benefit under the other plan? Good Example: 2 HCEs and 5 NHCEs. HCE 1 and all NHCEs accrue 2% of pay in Plan 1. In Plan 2, HCE 1 accrues 3.4% of pay and all NHCEs accrue 2% of pay - and all benefits in Plan 2 are offset by the accruals in plan 1 (retirement ages are the same as well as other features in this example). All employees benefit under the other plan and on a uniform basis - so not a problem. Questionable Example: 2 HCEs and 5 NHCEs. HCE 1 and all NHCEs accrue 2% of pay in Plan 1, but HCE 1 has his benefit offset by his accruals in Plan 2. In plan 2 HCE 1 accrues 3.4% of pay and all NHCEs accrue 2% of pay - and the benefits of only the NHCEs are offset by the accruals in plan 1. The employees benefiting in plan 1 are not accruing on a uniform basis- so this is a potential problem, according to how I think this regulation reads.

I'd say it's a Brother-Sister Relationship and that it's a controlled group. Owner A alone meets the 80% common ownership test and also the 50% identical ownership test. Owner B is ignored in the 50% test because they have no common ownership - since they own none of A. "Am I correct that both plans have to be tested as 1 employer for plan testing purposes?" --Based on the information shown, Yes. "If so, would it be true that X could not provide a high allocation to the owner and spouse, while providing for only a 3% safe harbor contribution in the Y Plan?" --Not necessarily. If the plan passes average benefits testing, then it's ok (assumes your documents allow for this). Nondiscrimination does not imply a straight uniform allocation formula is required.

That's correct. This is what will go on the Schedule P as the Trust ID#. Well, that is if the plan ever has to file a schedule P - this schedule will be going away. It will also be used for distribution reporting - I think this number is used for remitting any taxes withheld from the distribution to the revenue agencies.

If the plan termination date (normally established by the resolution to terminate) falls after the end of the plan's 2005 plan year-end, then the Final 401(k)/401(m) regulations amendment is required.

Pension Nerd, Yes, I believe that is correct.

PMC, you are referring to the rules that now apply under the final 401(k) / 401(m) regulations. Please correct me if this is in error, but I think the answer will depend on the language in the final 401(k) / 401(m) regulations amendment itself as adopted by the plan. The plan can choose to maintain the allocation conditions for the non-Safe Harbor match, but by doing so, ACP testing will be required (but no ADP test needed, right?) Not that anyone would want to do that with a Safe Harbor match plan, but I think that it is possible?

To be brief (for me): You essentially have two matching formulas. One is an Enhanced Safe Harbor Match, dollar for dollar on the first 4 percent. This is 100% vested and has no allocation conditions. The second is a matching formula that matches zero percent on the first 4 percent, then 100% on the next 2 percent. This you intend to apply vesting to, and you could apply allocation conditions as well. However, it will be subject to ACP testing. Do you think it will pass? I'm sure additional commentators will have plenty to say about this. As a more seasoned DB person myself, I'm curious to hear what the more seasoned DC folks will say.

Also, I think you will be allowed to word the amendment such that it also only applies to the contributions attributed to plan years starting after the 2006 plan year (and resulting account balances thereof). So far, none of our clients wanted to do that, though. One is still considering.

Of course, if your using a prototype and it somehow requires you to use the same schedule for both, then that may also dictate the direction you take. It is certainly easier for the participants if they only need to know one vesting schedule.

Under 1.401(k)-3(d)(3)(i), --- "The timing requirement of this paragraph (d)(3) is satisfied if the notice is provided within a reasonable period before the beginning of the plan year ..." "The determination of whether a notice satisfies the timing requirement of this paragraph (d)(3) is based on all of the relative facts and circumstances." That is your technical deadline for the Safe Harbor Notice - a reasonable period before the plan year beginning. Now, if you want to make sure the IRS does not have any room to question whether or not you gave the notice "within a reasonable period before the beginning of the plan year", then you want to satisfy the next paragrph, 1.401(k)-3(d)(3)(ii), --- "The timing requirement of this paragraph (d)(3) is deemed to be satisfied if at least 30 days (and no more than 90 days) before the beginning of the plan year, the notice is given..." The word "deemed" means the IRS can't throw the timing issue in as questionable. We make sure we meet the 30 days with existing Safe Harbor 401(k) plans. But for new plans and plans that want to become Safe Harbor, we sometimes have to ask the client to make a judgement call regarding what they believe a "reasonable period" would be.