BG5150

The Gateway is not a profit sharing contribution. It is an Employer contribution. So, if you get ANY Employer contribution (Safe Harbor or PS), you must get at least the gateway if the plan is to be cross-tested.

And if the participants are not going to be making up payments themselves over the summer, would the loan even be valid if the Trustee knows that payments will be missed?

Be careful of the loan agreements if you want the people to send in their own checks. Many agreements say $x.yz will be deducted each paycheck, and make no mention of what happens if there is no check. Would doubling up on payments be allowed? That would seem to run afoul of the level amortization rules. If the participants are not sending in their own checks (timely), I think you have three choices: 1) get the loan caught up when they return, 2) reamortize to the end of the original loan or 3) reamortize to the end of 5 years after the loan was taken.

The IRS Commissioner's office isn't in the Pentagon, is it? Besides, the Pentagon in in Arlington, and not DC. (If that what was meant by the "Cherry Tree" reference)

Unless the sponsor makes a declaration that the ER will not assess fees to participant accounts, there still is the possibility of it. So it must be disclosed. Even if the the ER and/or forfeiture account paid for the past 20 years. The disclosure indicates any and all fees that COULD be applied.

I think it can be added at any time. (prospectively, of course.)

So, after this go 'round, when are the next "annual" notices due? What does "annually" mean in this case? Plan year? Calendar year? Would the next one be due by Aug 30, 2013? What if the ER gives them out again in January 2013; would the one after that be due a year from that?

If they didn't do it right the first time, the test isn't failing, it's an invalid test to begin with. Figure out who should have received it using the provisions in the plan document. Anyone missed gets it. Everyone missed gets it. Then run the ratio test.

The loan policy may state that loans may only be granted for reasons that fall under the safe harbor hardship situations. But does it say there is the same burden of proof needed?

What was the allocation formula in place before 1/1/11? The 2010 contribution must be broken up and allocated on the pre- 1/1/11 basis. Starting 1/1/11, they made the allocation formula per capita, with no last day rule or other requirements (such as hours worked). They are stuck with that for 2011, because all the participants on 1/1/11 satisfied the requirements. If the PS ELIGIBILITY requirements (that is, just to be eligible for the PS component of the plan to begin with) are none (no service or hours req'ment and immediate entry), then anyone hired in 2011 would have to get the per capita amount, too. The amendment adding back in the last day requirement would be affective for the 2012 plan year. As for your question about being hired 7/1/11: I would say the person would share in the per capita PS.

The government won't know. Unless the person gets audited. However, isn't it incumbent upon the Plan Administrator to make the RMD (or is it MRD these days? I never remember!) happen? Is in not an operational failure to not distribute the RMD?

ETK: Notice the formula in the OP: 100% up to 4%. 401: You should be fine, I believe.

The contribution amount is determined by the employer, at its discretion (usually). $80,000. 5% of total compensation. $800 per person. Then you take that total dollar amount, and allocate it per the terms of the document. Pro rata, new comp formula, per capita. Sometimes, the allocation must pass the General Nondiscrimination test. The two, contribution amount and allocation can be different numbers. To wit: ER wants to make a 10% of compensation to the PLAN, and the total comp is $1,000,000. It would be a $100,000 contribution and deduction for the ER. But, that doesn't mean everyone must get 10% of his or her compensation for the year. The allocation method could include permitted disparity, wherein the higher paid people would get slightly higher than 10% and others slightly lower than 10%. The total will still be $100,000 though. The allocation method will also tell you the conditions under which someone will get a contribution. Things such as dates of employment (mid-year dates are very odd) like the last day rule, or working a requisite # of hours, etc. The ER will NOT have discretion in the allocation method for a year, once someone has accrued the right to a contribution. He can change it prospectively, for the next year.

Plan had a bunch of people who became eligible in 2007-2009 but were not informed of their ability to make 401(k) contributions. They all terminated in 2009 or '10. In preparation of the 2010 analysis, in 2011, this was realized. Company made the requisite contributions and attendant matches and paid the people out (all were less than $100). So, when are these people considered having account balances, and thus, participants again? When the deposit is made to the accounts (mid 2011)? Do they get "retroactive" account balances back to 2007-2010? This is extremely salient to my open participant count for 2011 form 5500.

And by any chance were these 3 people HCEs or are going to be HCEs?

^^ well, you can't do that. You cannot change allocation conditions in the middle of the year once people have satisfied the original condition. Seems like an odd way to go about giving people such a small contribution to their retirement account. Who is responsible for the plan document? Did they do the amendment themselves?

O, I figured that. The presentation was a bit off, tho'

Correct. But I thought the smiley face was a little mean. Seems like you were happy the person is getting sewer shut off...

They can use any standard they want to break ties. Service. Alphabetical order. Height. (ok. maybe height isn't reasonable) Consistency is the key. Make the deciding factor, "the employee who has the least ownership in the company" as the first tie-breaker.

Agreed.

We TPA a plan that has part of its assets some old annuity contracts. The provider is refusing to provide the investment chart under 401(a)5. What recourse does the sponsor (more specifically, the Trustee) have? Is it similar tot he 408 notice where they can (and must) squeal tot he DoL?

Do the periodic (quarterly) statements have to break down the assets into sources of money? Assume same vesting schedule for ER money. For example, can the statement have: Deferral: $6,345.21 Employer: $49,837.90 Rollover: $19,048.67 Where in the employer bucket there's match & PS money. (Again, on same schedule) Or does it have to be: Deferral: $6,345.21 Profit Sharing: $45,824.89 Match: $4,013.04 Rollover: $19,048.67 (I know the latter is preferable to the participant, but does it HAVE to be broken out like that?)

If it's discretionary and calculated yearly, why can't the ER just adjust future contributions to aim for the funding target? For example, if they were doing 5% and want to do 3%, just put in 1% for a while. Or nothing.

Yes, that's right, but since there is no "fee" it gets transferred to the forfeiture account. It doesn't seem to make sense that we put the $1.37 into somoene's account only pay $1.37 to FundCo as a "bonus". Rather, the money gets transferred to the forfeiture account where it will benefit the remaining participants. Is it a QNEC? Then it's fully vested money. If the person is still employed, it stays. If the person is terminated, it gets distributed as a force-out. However, in this case, there is no distribution, b/c the $1.37 (plus investment experience) is taken to cover the "fee." As long as other, "normal" participants are usually charged a fee.

Does the document call for a fixed contribution already? Or is it discretionary?