BG5150

So, git 'er done BEFORE April 1. What's the correction for a missed ACA if there's more than 9 months left?

In the two-step process of correcting an ADP test, you first determine the total dollar amount that needs to be removed from the plan by leveling down the HCE %'s starting with the higher %'s. The second step is to determine the excess contributions by leveling down the HCE's contributions, starting with the highest. It is then you know what each person's excess contribution is and then you can apply any left-over catchup in order to offset any refund. In your case, only the highest-deferring HCE has an excess contribution. And since he is not yet 50, there is nothing to re characterize.

I take it to mean someone who ceased to be employed after reaching NRA (or ERA if applicable) There is a difference between "retirement" and getting to "retirement age."

So, in other words, there isn't a "legally enforceable agreement" that says it's due on termination. Code says that the agreement has to include the "repayment schedule." Would that also mean: if and when the loan would be due and payable (right?)

Was that the loan policy in effect when the loan was taken? Where are the original loan agreements the participant signed?

What does the loan agreement say? Ours usually say that the loan will be due and payable upon termination of service.

If there was a "more than" somewhere in there, the answer might be different.

Sounds like the account was not registered as a plan account, but a regular ol' brokerage account.

If testing and comp and contributions are on a calendar year basis, what's the point of having an off-calendar year plan?

Tom, if you use "calendar year" comp, wouldn't you still use plan year deferrals and other contributions in the testing?

Can you TEST using calendar year data? Or is it just an option for determining the HCEs?

I took the first ERPA test last summer and just took the DB exam last month. I am glad I took the ERPA test first. Or, more accurately, I'm glad I took Derrin Watson's ERPA review class (from Sungard) first. I found that the ERPA test went into more depth in some DB areas (415, permitted disparity, deductions) than did the ASPPA test. The ASPPA test goes into more depth regarding accrual of benefits and distributions. Neither test goes into funding. I feel the ERPA test gave me a head start on the DB exam. Plus, I needed to have the DB exam done as I plan on pursuing the CPC designation.

Is there a way to amend the plan to have withholding from a bonus check optional? Or even an administrative procedure? I take the stance, that if participants can stop and start back up at any time (per administrative procedure), that people can ask for deferrals not be taken from bonuses. the way i see it, the participant is "stopping" for one paycheck and "restarting" right away after that. This way, if someone wants some taken from the bonus check they can, while those who don't want it, don't have to. best of both worlds.

Not to be nosy, but can I ask why you are thinking of doing this? Is it an administrative issue?

Do you have any ASPPA designations? They have a track that will lead you to a Certified Pension Consultant (CPC) credential. Go to their website of give them a call and I'm sure they'll send you their catalog. I am just about to embark on the last phase of obtaining the CPC by doing the advanced modules that cover some of the things you mentioned. You don't have to be in the credentialing program to use the modules either, so, if you don't want to go the credential route, you could just do them and be done with it. [disclaimer] I don't know how much experience you have, not do I know what depth of training you want. Lastly, I haven't gone through any of the modules yet, so I don't know the breadth or depth of them either. That said, my recommendation above is nod an advocation of the material, just a suggestion on a potential path for you. [/disclaimer]

You can use the participant's rate of return during the period. You could use the plan's return during that period, if they are pooled assets. We just usually use the DoL calculator. Or you can use any other reasonable method of determining the interest.

QDROPhile: I don't think people are recommending resigning for liability reasons or ethical reasons. Just the potential headaches down the road.

"Hey, buddy. You have some bad assets. We told you about it and how to fix it. You've chosen not to take our advice. Professional integrity prohibits us (no pun intended) from continuing our business relationship. See ya, wouldn't wanna be ya." In other words, no longer our problem.

You can also make a class of employees ineligible for 401(k) contributions at any time. 401(k) eligibility is not a protected benefit.

If the participant pays it back, does it have basis? Or does his taxes have to be redone?

That's what I was looking for. Got a bit lazy today...

In the case of the OP: the match is CALCULATED on a payroll basis. Unlike deferrals, it doesn't have to be DEPOSITED every paycheck. it can be, though. For example, if my pay is $5,000 a month and I defer $500 a month for the first six months only, I will only be getting $1,200 in match. (200/mo x 6 mos). If it was calculated annually, I would have a 5% deferral rate (3,000 / 60,000), and be eligible for the full 4% match of $2,400 (resulting in a 1,200 true-up) However, if the safe harbor match is calculated on a payroll basis, it must be deposited no later than the end of the calendar quarter following those payrolls. So, at minimum, you have 4 deposits a year. If it is calculated annually, you can deposit it any time during the year, and a true-up due before the end of the year following.

Plan uses SH definition of hardship. Participant has mother who has Alzheimer's, and he is paying the medical bills. Would this qualify under SH hardship?

This freaked me out the first time I came across it. Thought something was wrong with the update.

Do you cross out 2011 and put 2012 (up in the corner) like we did in the old days? (Or, at least, like I did in the old days)