BG5150

Check the plan document. I used to work with one that had a provision that if there was an hours or last day rule for an allocation and even a dollar was contributed before year-end, then the hours or last day rule was considered waived for that year.

If you never file an 8955-SSA ever, they'll never know. Just sayin'

The prior poster said the amount might be too much because you mentioned a down payment of $200,000. Given the document provisions you stated, I see nothing that would preclude giving this person the loan. Unless there is something in the underlying document that hasn't been shared with the group.

I don't think the "minimum" down payment makes a difference here. He is purchasing a principal residence. He could pay for the house entirely via a hardship (or in this case a loan). There's nothing that says he must only take a little bit and have a mortgage on the rest...

Forgetting about the amount for a moment...the terms of the plan say that a loan can be granted for any of the "safe harbor" hardship reasons only. Does the loan program also restrict the amounts like a hardship? Read the plan carefully to see what exactly the conditions are. If the guy can produce paperwork that says the down payment for a house is $X and he puts in writing he intends for this to be his principal residence, he has satisfied the safe harbor reason criterion. Done. Now, he's limited in how much he can take. Unless the loan program or plan say he cannot take more than the need, he is generally limited to the $50,000/50% rule. Done. Because the "safe harbor" rules are being referenced, and if granting a loan can be extrapolated to being tantamount to a hardship that's paid back, it doesn't matter if they guy has a million bucks in the bank. Safe harbor rules don't care. And neither should you. Let me ask this: if he asked for a loan for funeral expenses for his mother, would you be asking if he had money in the bank to first cover it?

I've always done my Top Heavy calcs on a cash basis, with the exception of the first year. In the case of the initial year, we use receivables. The EOB suggests that deferrals that are within the 7 business days safe harbor that have not been deposited before the determination date do not have to be counted (because they don't HAVE to be in the trust until some time the next year). Deferrals that are "late" should be counted.

The OP said "safe harbor hardship rules." In order to satisfy the safe harbor hardship, the distribution must be because of: Immediate and heavy financial need. The distribution will be deemed a heavy and immediate need if it is for one of the six allowable reasons (I'm sure we're all familiar with them--I won't enumerate). The hardship distribution must be necessary to satisfy that need. How do we know? You can use the other piece of "safe harbor" definition of hardships. The distribution is deemed to be necessary if: 1) the amount is not for more than the need (plus grossing up for taxes & penatlies) 2) all loans and distributions under all plans of the employer must be taken first. (Except when a loan itself increases the need) 3) 401(k) deferrals must be suspended for at least at least 6 mos (up to a year for non-Safe Harbor 401(k) plans) That's it. Though the plan administrator should get verification of the need. There is no mention of other resources the participant might have at his disposal. Has the plan not stipulated "safe harbor hardship," the discussions above make valid points. Or, am I all turned around on this?

And hook up that 5 1/4" floppy drive and break out that old copy of "Oregon Trail" you haven't played since 1985.

Plan has written loan procedures as a supplement to the plan document. The SPD says the administrator "may adopt any administrative rules or procedures that it deems necessary or appropriate with respect to the granting and administering of loans." So, what are the requirements for furnishing the written procedures? 1. Give it to everyone with the SPD? 2. Give it to anyone requesting a loan? 3. Give it to anyone who asks for it?

Your obligations? What is your role to the plan/sponsor? I would suggest getting new loan agreements. Otherwise, unless the record keeping system is really robust, you will have problems down the line.

Amend the plan to allow HCE deferrals up to $1. After that, they are over the plan-imposed lint and can put in an additional $5,500. The test might fail, but any refunds would be offset by the c/u.

The Plan Document, as it is now, dictates what happens. I would never let the record keeper dictate to me (as Sponsor) or one of my clients what amendments must be made to a plan. To me, if a record keeper cannot administer the plan as written, especially with no off-the-wall provisions, they should no longer have our business. It's pretty much "take the damned money and do with it what we tell you unless it is a blatant violation of statute." And are reallocate and offset really different? To the plan not really. To the employer, yes. Kinda. To me, it's semantics, really.

I'm not an attorney, but I played one at Mock Trial in 11th grade...

The SAR can be sent electronically as long as it adheres the the DoL safe harbor conditions. Return-receipt of the e-mail is one. The ERISA Outline Book has a little rundown. Chap 13A, Section IV Part G.3.

How did they not know about (the possibility) of a match? If it is a stated match, it should be right there in the SPD or SMM. If it's discretionary, then it's usually not declared until late in the year or even after the plan year is over.

For short periods: There must be at least 9 months left in the plan year for the participant to make up the difference. (But the ER still has to make the match)

If FaceBook share price gains 23 cents per day for the rest of 2012, that will be a 12/31/2012 price that is ~90% higher than the opening price of $38. Not bad. I think you have to caveat the $0.23 gain with "past results do not guarantee future performance."

Do a full plan year. Just so happens no one got paid after April.

If the company is out of business and there are no employees, what is in question?

However, if the test fails, an HCE can have all or a portion of the deferrals classified as a catch-up to offset a refund to that person. It doesn't help the test, but it does mitigate the amount of the refund.

I got mine yesterday. Thanks, Dave!

So, HCE's over 50 can put in the full $22,500? Or are you trying to limit the HCE's to just catch-ups?

^ I would say yes to both. Unless the participant is not employed on the last day of the year, and the plan says people not employed on the last day of the year do not get top heavy.

Would a loan be option for this participant?

And when you say the owners "do not participate" in the second plan, what do you mean? They don't make 401(k) deferrals? Or are they explicitly excluded from the plan?