BG5150

What does JH do for other distributions? Such as severance of employment? One of the features of the service should be that JH does distributions and 1099's. is this a JH Annuity product?

That's just ludicrous. How did this never come up before? Are you sure you are choosing the correct reason on the form? Excess contribution and not excess annual addition or excess deferral?

No. It should ONLY look at comp. In Relius there are two reports to help you out. Go to the 2011 plan year and run the "Top 20% for next year" report in the ADP testing module. That will show you who it considered when making the determination. Then got to 2012 and run either the "Highly compensated employees" report in the ADP testing module or the "HCE and Key Employee Detail" report in Report Writer (it's in the Miscellaneous tree). Either report will tell you WHY someone was considered an HCE (owner, comp, TPG, etc.) If, after careful consideration, you think it's wrong, you can always manually code someone as an NCHE.

I added something. Also, for a first-year participant, the TH might be more than the gateway, as the GW can be based on participation compensation and TH is based on full-year pay. So, someone might have to get more than the gateway even if they are not getting a PS.

Did I read it or did I dream it? I seem to recall that the first day of a plan year had to be an entry date. I don't remember where I think I got that from. Maybe it was part of an ASPPA-test-studying hallucination. If it's true, where can I find that language? If it's false, feel free to laugh and point...

Kathy, run the HCE/Key EE report in Report Writer (or the one from the ADP test module). It'll tell you there why each person is being considered an HCE. Well, why the system is considering them HCEs at any rate.

You can round any way you want, as long as it's consistent.

Kathy: Two independent parts to HCE determination here. 1) Compensation test. In the top 20% of comp? Then an HCE. If owner didn't make as much as the other two, he (or she) is not in this group. 2) Owner test. Own more than 5% directly or by attribution, and you're in this group. If you are in either one of these groups, you're an HCE. Remember, the TPG only modifies group # 1 and has no bearing on group #2.

Quick aside: if an 11-g type amendment was done for, say 2011, and the plan was taken out of prototype status. Would it get back that status for 2012 since the amendment is no longer effective?

Chip, I certainly do agree. We work with JH, but I haven't had an ACP failure in years, so I wouldn't know about their process re: the refunds.

Well, you don't add an amendment cross testing the plan. An 11-g amendment is to change the allocation conditions slightly in order to avoid a 401 or 410 failure. The correction still has to fit into the plan details. I think if the plan doc calls for a safe harbor discretionary allocation (such as pro rata), you could never do an 11-g amendment, because you'd never come to a point where failure COULD occur.

I don't think it's possible to have a non-safe harbor allocation in a standardized prototype. Is there? Doing an "11-g" would probably take it out of prototype status.

Top paid group doesn't only apply to the 401(k) plan. It applies to all plans of the employer.

But there is nothing saying they can re-amend and put in the clarification.

I think someone is mistaking "return of ERMAT" to be unvested money. That can be paid back tot he trustee, though I don't really see why that would happen. It should go tot he cash account.

The ERISA Outline Book is pretty unambiguous in its opinion that non-electing church plans ARE subject to ADP/ACP: (Chap 1A: Definitions--Church Plans Emphasis added

If his RMD is for $872, he should have $872 in taxable income. (unless there was some basis distributed, and since it wasn't mentioned, I'll assume there was none).

What's the 1099-R gonna say? (it better say $872) I would have w/held 10% on 872. Why wasn't the fee done separately? Basically the owner is paying taxes on the fee.

^^ You must read the part about rehires

Any other thoughts on this? I have a plan that is doing the same thing: moving from group annuities to another investment platform and there are surrender charges involved. The ER wants to make the participatns whole after the transfer. Are the only two options 1) special allocation don by amendment and tested or 2) a "bonus" paid to affected people with the options to fully defer the amounts? And for testing, it probably would have to pass on an allocation basis, right?

Nothing wrong with that, as long as there is a provision that if someone works 1,000 hours in a year's time, they would enter the plan. For example, someone starts in January and works 400 hours by the end of March. He leaves. No 500 hrs in 6 mos. He comes back at the end of April and works another 400 hours by the end of July. He leaves again. No 500 hrs in "6 consecutive months." Then he comes back in October and works another 400 hours by year's end. He's got his 1,000 hours in a year.

I think this is the salient point:

However, the decision to defer must be made by the end of the year in consideration. So, you'd better find that election from the SE individual stating he or she wants to defer $x or y% dated before PYE.

Don't forget PPA restatement in a couple years....

I would say yes. Service spanning rules would have the person satisfying the 6 mos of service on 7/6/08. Assuming they met any age requirement, I believe they would enter the plan on 1/25/2012.