ERISAnut

You know, the interesting thing is that the plan document already includes the language requiring 100% vesting. It is one of the form requirements for plan qualification. So, the facts and circumstances being applied would be to follow the terms of the plan. Just another way of looking at it. But Belgarath actually articulated the fact that a forfeiture event must occur prior to forfeiting an employee's nonvested balance. 411(d)(3) defines the forfeiture event.

It is odd, but this provision is subject to the benefits, rights, and features test. For instance, if all your full time employees are 5% owners while all other employees are temporary, the this would obviously fail the benefits rights and features test.

A company can alway elect to have immediate eligibility which would make the temporary employees eligible to defer on their first day of employment. A company can also provide for different eligibility requirements for different classes of employees (as long as this is done on a nondiscriminatory basis). What a company cannot do is EXCLUDE employees based on a service class definition (i.e. temporary or seasonal or part-time). A service class definition is one where the class is defined based on a customary work schedule; and not necessarily by name alone. Hence, it is a facts and circumstances as opposed to a semantics issue that drives this.

Sure, You can always design a plan to provide more favorable benefits toward NHCE's. The key is being able to map this type of flexibility to the document (i.e. prototype).

They will become 100% vested unless they have received cashout distributions of their accounts.

Do not confuse a loan with a taxable distribution. When an account has withdrawal restrictions, a tax free loan is not considered a withdrawal. This authority is 72(p) which basically states that a tax free loan is not a distribution if the proper conditions are met (i.e. 50% of vested balance).

This shouldn't take long as the employer should have someone to sign and attest to the fact that you have incurred a distributable event (i.e. terminated). Not to do so would constitute a failure to enforce your rights under the arrangement. I would have already called to Department of Labor had it been me. When you have a right to a distribution, nothing should impede that right; unless the proper Sarbanes Oxley notice has been given. Call the DOL.

Yes, Yes, and Yes. The SHNEC have to be a straight 3%, immediately vested, and subject to withdrawal restrictions. The additional profit sharing may have a vesting schedule and less stringent withdrawal restrictions. These amounts are included when testing under age weighted or cross-testing.

Unless something changed recently, I think the criteria of being a fiduciary is providing investment advise for a fee. There are two ways to determine a fiduciary (title and action). For instance, you know the plan sponsor is going to be a fiduciary regardless of any action since they have the title of plan sponsor. Then, regardless of your title, you may be considered a fiduciary by acting in that capacity. This is where there may be language in the plan stating that you are not a fiduciary, but this language gets preempted by the fact that your actions qualify you as a fiduciary. It gets very detailed, and would depend on the facts and circumstances of each case. But, you are right in that sometimes people giving advise will cross the line into being a fiduciary. Not sure if this helps, but I would re-read the Opinion Letter and look for the details of what makes a fiduciary. To make a blanket statement of "anyone" does not appear consistent.

No. They do not currently have a 401(k) arrangement in place so this would be their first arrangement. Therefore, they can start it during the year; as long as the initial year is 3 months long. You would normally be right if the plan currently in place is a 401(k) plan.

Now, we are REALLY on the same page. On his original post, he stated spouse 50% and non-spouse 50%. This sparked the QJSA comment.

Right, but good to know. I usually try not to retain what isn't currently effective. But, it is good to know that this is being contemplated as I was thinking just last week why they would keep the limit at 100,000. Especially not treating Single and Married Filing Jointly differently with respect to the 100,000 limit. It would appear that married filing jointly should receive a higher limit. Wishful thinking.

Okay, We are on the same page.

I was not aware that the AGI limit on Roth Conversions will be repealed. I need to research this one. In responding to your question regarding the Profit Sharing Plan, this provision is quite easy in that it pertains to the "permanency issue". Cannot imagine a plan actually adopting those provisions merely to allow participants access to those Profit Sharing or Matching Contributions; but it could happen. Plan provisions must be currently available and effectively available on a nondiscriminatory basis. The current availabiltiy rule is satisfied in that it will be a plan provision that applies to all participants. The effective availability shouldn't be an issue since all similiarly situated NHCE's have the "right" to inservice withdrawals from the Profit Sharing and Match sources.

All plans must be written in a manner to comply with 401(a)(11). If the plan is subject to QJSA, the the spousal waiver applies to only the portion representing the spouse of the participant (i.e. 50%). Regardless of what the rules are, the document must be written in a manner to conform with those rules. Further, if the plan is a Profit Sharing Plan written to satisfy the exception to the QJSA, then the spouse must be 100% beneficiary under the terms of the plan. Hence, a spousal waiver will be necessary in order to designation any beneficary other than the spouse for any portion of the plan. So, please explain to me again why the plan document or QJSA is irrelevent. Also, you cannot say, read the document but don't read the document. 99.9% of the cases will be resolved through a reasonable interpretation of the plan document. Exceptions are few, but do exist. This does not qualify as one of those exceptions. READ THE DOCUMENT!!!

The plan document will answer this question. It is really contingent upon whether the plan is subjected to the QJSA rules. Always check the plan document FIRST.

If your client is adamant about increasing plan participation for the reason of a failed ADP test, then he may exploit that option and allocation this Matching Contribution as a QMAC. As mentioned by the others, you should verify the language in the document regarding the allocation of QMAC's. If the term "flat dollar of percentage" is used, then you are home free. It helps to try the document FIRST to look for options.

There are two exemptions to the 10% early withdrawal penalty under Section 72(t) of the IRC that you may attempt to use. Based on the facts and circumstances of your case, neither may be applicable. First, is disability under the definition of 72(m)(7). If you are out of work on Social Security Disability, you may have a good case. If you are still working and is just diagnosed with a terminal illness, then you may not meet this condition. Just remember, everything is facts and circumstances. A good argument on this issue may exist even if you are still employed. This brings us to the second test, Medical Expenses that exceed 7.5% of your adjusted gross income. The medical expenses must satisfy a certain definition (I think is section 239 of the IRC or something ). This would appear to be a slam dunk, but the expense amount must be there. Those are the only two exceptions I can think of for an immediate cashout prior to age 59 1/2. I am sorry for your condition and hope you find comfort in the near future.

401(a)(9). Distributions after required beginning date.

None that I could think of. The integrated allocation satisfies the uniform allocation formula. The Safe Harbor should pass 410(b). If there is ever such a time, the attorney (or consultant) who designed the plan should be excommunicated from the pension industry.

Splitting hairs. When designing plans (especially for smaller employers) where the majority of the benefits will be weighted toward the owners, the notion of Safe Harbor Plans being deemed to satisfy Top Heavy is one of your primary considerations. Outside of what you deem appropriate, the rule is there and it should be considered.

Any forceout contributions that exceed $1000 must be automatically rolled into an IRA. You can force out balances that do not exceed $5,000, but if the balance exceeds $1000 then the auto rollover rules apply. Based on what I remember, the automatic rollover rules can be used in the terminating plan since the distribution of plan assets is mandatory. The notion of sending to a last known mailing address does not fly.

They may have to refile their tax return and 5500's to reflect that fact that the funds were not deposited by the tax filing deadline (including extensions).

Every contribution or allocation made to the plan during the year must satisfy the ADP/ACP safe harbors in order for the plan to be deemed to satisfy Top-Heavy for the year. Therefore, when the employer makes an additional employer contribution, they must now test for Top Heavy. Therefore, when designing these plan, but sure that any forfeitures are used to reduced employer contributions so that there is no allocation of funds outside of the Safe Harbor contributions.

Okay, I understand everything you said. It actually makes since. My disconnect is that assuming a maximum 2005 payout of $170,000 per year (divided by 12 for monthly), and multiplying that by the GAM '83 APR @ 5 % (assuming that 5% is greater than the plans assumed rate) should give me the 415 lump sum maximum at ages 62 - 65. From there I would take the GAR '94 APR @ 5.5% for a 62 year old and divide that by the same for a 50 year old. Once I multiply that to the Lump Sum calculated above, shouldn't that provide the figure? The statement that the Hypothetical account balance can actually exceed the 415 limit helps because my next question was going to pertain to what would happen in year one where the participant's one year of participant yields a 415 limit of only $17,000. <Thank's for clearing that up. But back to my problem: I am trying to see how the calculations would derive a Maximum CB allocation of $69,353 for a 40 year old and a $72,821 allocation to a 41 year old. I cannot balance to these amounts under my methodology above. Been tyring to figure this out for months; just can't do it. What am I missing?