ERISAnut

Column A = Compensation Column B = Deferrals for the Year Column C = B/A This will Express Deferrals as a percentage of compensation Column D = =IF(C6>=0.05,0.04*A6,IF(C6<=0.03,B6,(A6*0.03)+((B6-(A6*0.03))/2))) Be sure the Compensation entered in Column A has already been limited to the 401(a)(17) limit. Hope this helps.

I see your point. If you look at the $80,000 limit in 1997, that limit applied to 1998. From the onset, it was $80,000 for a while. So it never jumped. When you see the 100,000 for 1996, that was for the 1996 determination. It was then the law changed to use the lookback year (SBA '96). So, 1996 would look like 100,000/80,000 where 100,000 was used for the 1996 determination and 80,000 was used for the 1997 determination. But that 80,000 was in effect for several years afterward.

Yes.

The lookback year is the 12 month period immediately preceding the first day of the new plan year. The limit that would apply would be the limit in place on the 1st day of the lookback year. Hence, in any plan year that begins in 2006, the 1st day of the lookback period would have began back in 2005. The limit for 2005 is $95,000. When you apply this same concept to the 2007 plan year, the 2006 limit will be $100,000. Is it getting simple to you yet?

Semantics on an otherwise simple issue. Amazing. The case being discussed here is an individual who has met the age and service requirements for participants in a 401(k) plan; but is excluded by class. This individual is not "benefiting" from the 401(k) arrangement since he is not "eligible" to defer. Hence, the plan does not afford the individual the right to defer since he is a member of a class. That, to me, is safe harbor. So any mention of the "general test" is confusing a simple issue.

My point is that the answer is so simple and never presented itself as a problem to me. Everyone has a choice as to whether things will be easy; or real easy. I didn't put too much into answering the question as we are looking a over 3 pages of information on one of the simplest topics in the pension industry.

But to apply your own definition to monthly which is obviously different from the definintion meant by the person asking the question creates a useless debate. By monthly, I assumed it was implied that within each month (perhaps even the same day) and then answered the question that was being asked. The person asking the question confirmed that the term monthly was not the issue. You are concluding from his statements that the deferrals aren't being separated on the same day they are being withheld from participants' compensation. I did not make that assumption as the comment was a pure lead-in to a good question. That question was, can you distinguish between segregating assets and investing assets. The answer to that question is Yes. Segregating assets is a different function than investing asset and different sets of facts and circumstances apply to each. How can you not understand this?

So are we talking about my character now? It's always the weakest among us start this nonsense.

I've often wondered about the difference between humor and sarcasm. Another useless debate

Again, The useless debate on simple principles that are understood; but irrelevant. Amazing. Good versus Great, how interesting And by the way, my post is meant to imply that I feel great about my abilities as a consultant; semantics aside

The term "government involvement" would seem to endorse a concept based primarily on rhetoric; not reality. The rules aren't complicated; but detailed. Algebra used to be difficult; until I learned it. This same concept applies to any craft. Pension plans are not an exception. Try taking a little time to piece the rules together.

It seems you are talking about a DB plan. You follow the terms of the plan. The plan should have language of what you do upon plan termination. You follow those rules. Involuntary cashouts are an option for vested balances that do not exceed $5,000. If you fail to elect that option, then you would treat a balance between $1K and $5K the same as you would treat balances between $100K and $500K. Nothing is arbitrary. You follow the plan.

In order to be successful in any operation, you must have a process by which potentially complicated issues are made simple. It this forum, it seems as if a rather simple issue has been made complicated. In any HCE determination, you must first define the significance of a "Lookback Year" and how it is used in making the determination. The "Lookback Year" is simply the 12 calendar months prior to the 1st day of the plan year. Secondly, you must define what the requirements are for the "Lookback Year" (in the case of compensation or ownership) and the Current Year (in the case of ownership). All amounts from the $80,000 to the currently indexed amount of $100,000 applies to when that year is the "Lookback Year". How is this complicated?

This order was issued by the court back in 1989, presumably when the participant was still employed. The immediate payment comment was that in the event no other distributable event exists under the plan, a distribution pursuant to a QDRO (provided the plan allows) will not cause the plan to fail to qualify.

You know, the key to being a good consultant is knowing what question is being asked. His question was not about debating the timing of deposits; but merely to determine if deposit timing and investment timing were synonymous. THEY ARE NOT. It was even reiterated that his ASAP/15 business day comment was merely a lead-in to the more important question; and not to open a debate about what ASAP/15 business days means. What now, you we debate what question could be "more important" than the ASAP/15 business day question?

The Publication 590 should clear most of this up. There are two separte transactions for which one of them may be okay. We know the Roth Conversion is an issue since your Modified AGI exceeded $100,000. The actual contribution of $1000 may not be an issue depending on where your income fell between $150,000 and $160,000. The fact that you had a failed conversion that was not corrected by the tax filing deadline for 2005 was serve to treat the entire $2,500 as a contribution to the Roth. Depending on where your compensation is between $150K and $160K, you may have an excess. We know automatically that the 10% excise penalty on early distributions will apply to the $2,500 as this will be treated as a distribution and not a conversion (since the failed conversion was not corrected). Also, an additional 6% penalty will apply to all amounts consider excess of your Roth Contribution Limit for each year this excess isn't corrected. Sounds like an amended tax return is coming. You should note that THE DEADLINE FOR CORRECTING A FAILED CONVERSATION IS THE EXTENDED TAX FILING DEADLINE. You may be in good shape if your tax return is on extension. But based on your question, this doesn't appear to be the case.

Who is in control of each contract? Is it the participant or the employer? In many 403(b) arrangements, the participant selects the custodian for his/her individual account. Yet, in others, the employer selects a designated service provider for the entire employee base. Both are options but it often helps to define this arrangement up front. In any event, it would not hurt the employer to simply begin funding the plan, prospectively, to the new accounts established with the new provider. From here, there is not need to pay any surrender charges and each partipant will be able to transfer the account once the surrender period expires.

When you say "general" testing, you are seeming to imply the general nondiscrimination under 401(a)(4). When you are running the average benefits test, you must include all non-excludable employees under all plans. Apples and Oranges. When you pass 410(b) using the coverage ratio test, there is no need for the "general test" that you are referring to. One of the most difficult areas in the pension industry is semantics. Starting out, nothing is what it seems. You read one thing, and then read something stating the total opposite. The key is the learn the "phrases" that have particular meaning and use this knowledge to put things in the proper context.

Not sure if I remember this correctly since this is new, but I am under the impression that the new automatic rollover rules may apply to terminating plans. When the plan is terminating and a participant is missing, it would stand to reason that these same principles would be used to house the funds. The ultimate key to remember is that a participant is not "missing" until he is required to receive a payment under from the plan. In plan termination, since the assets would have to be paid out within 12 months, all participants are required a payment. Hence, the automatic rollover for missing participants would apply.

I would not agree with that based on the fact that the 415 limit is applied to treat all related employers as a single employer. This is a subject of debate among many practitioners. Some practitioners try to treat the negative income from one company as a zero, and then add it to the income of the other company. I think that is wishful thinking.

Good point, but that gets debatable. When two companies enter controlled group status by merger, the transition period treats them as if no merger has taken place. Hence, the entire purpose of the transition period is to prevent companies from getting burned because they are not considered "related members of a controlled group". But, it does make sense to always consider these impacts prior to merging new companies. This is where an effective Board Resolution stating the intent with respect to the plans will come into play.

In this case, it would appear that there was never a QDRO, but merely a DRO that was never qualified by the Plan Administrator. An actual QDRO would place to onus on the Plan Administrator to track and enforce the rights of the Alternate payee. While the QDRO cannot require a plan offer options to the Alternate payee that are not allowable under the terms of the plan, an immediate distribution pursuant to a QDRO would not cause the plan to fail to qualify. Hence, it's always good for the Plan Administrator to have an elaborate set of QDRO procedures.

Yes, but only with respect to Company C. The transition period between A & B is set through the end of 2006. This does not change. When B purchased C, then another transition period through 2007 was initiated with respect to C. This does not impact A & B since there was not change in coverage with respect to those two companies. The transition period was set to expire at the end of 2006. That didn't change. Try not to overread it. It'll drive you nutz.

Will the custodian redeposit the check? If so, then it would appear to be a non-issue.

Yes. I am a candidate in May. Not excited about it and looking forward to the retake in November. Trying not to get my hopes up.