BG5150

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?

Have you contacted the document provider to see what they have to say about it?

Does anyone have a quick "reference guide" as to how to derive gross comp from W2's? For example, for NJ W2's it is Box 16 (state wages) plus Box 12, code D (401(k)). Anyone have a shortcut for the other states?

Example: I have an amortization schedule that call for $100 on the first of every month. (Participant gets paid on the first of every month) If the money comes out of his paycheck for the 1st, but does not get deposited in the the trust until the 5th, does the loan have 5 days of extra accrued interest?

Catch-ups can occur when a participant hits a limit--ADP test, 402(g), 415, plan-imposed. Doesn't matter which one.

Is the HCE terminated?

Distribute the (currently) vested dollars, but leave the unvested money in the accounts. later, if you have to, do the residual distribs from the accounts. If not, just "push a button on the computer" and move it to the forfeiture account where the employer can make full use of it. basically, don't put anything into the forf account until you have to.

I always wondered why the correction of 415 excesses start with deferrals. It seems like it's punishing the participant and helping the employer. 1) It is increasing the participant's taxable income for the year. 2) It takes out fully vested money and leaves in partially vested money. 3) It allows the employer to take a larger deduction Any ideas why they made it that way?

Let their attorney tell you.

For match: $5,000 deferrals on $100,000 match comp = 5%. match should be $2,500. So, yes, the $1,000 true-up is needed. (IMHO)

This sounds like a stretch, because you quoted her as saying that you If she thought you didn't deserve the 401(k), why would she think you deserve part of the IRA? Best of luck, though. I'm rooting for ya!

You calculate the match every paycheck. It's not a yearly calculation (according to the OP). So, if bonuses are excluded for deferrals, they are also, in practice, excluded for match. There is no true-up. And also, from the original scenario, if match was calculated on a yearly basis: $50,000 comp for deferrals. $3,000 = 6% match = 50% of that--$1,500 $100,000 comp for match. $3,000 deferral is 3% of match comp, so, match would be 1.5% or $1,500. amirite?

But the 402(f) notice must be provided before they are cashed out. A new one must be given if they had a prior distribution more than 180 days before you do a subsequent distribution.

The instructions for VCP (11.01 of EPCRS) says the request "consists of a letter from the Plan Sponsor...that contains..." descriptions of the failure(s) and correction(s), etc. It later states that Appendix D can be used as a format. Do I have to do a letter and then attach Appendix D, too? (We cannot use the streamlined submission under Appendix F in this case)

I don't believe that you can require more than 1000 hours to get a contribution or level of contribution. You are doing that with your formula. If a participant works 20-30 hours a week, they are worked more than 1000 hours. Even someone who works 20 hrs a week gets 1,000 hours. Could you word the document as "Those scheduled to work..." and then just have to pass coverage?

What does the plan's QDRO procedures say about the matter? Does the Plan Administrator freeze an account when it learns of a QDRO? Or actually receives a QDRO?

Where it gets ambiguous, I guess, is the wording "a failure to file a timely annual report..." Does that mean for a particular year? Or, is it once they catch you for, say, 2009, are you're outta luck for any other years, too?

It's not clear in the FAQ on the EBSA site. Did you call the DoL?

Bird, why would an 11-g amendment be needed? The document has in it that anyone getting an ER contribution will get the gateway. So it's built in right there. Even though the gateway is a moving target. I think if you leave the HCE's at 15+%, then you can give the two the extra 2% and be fine with no amendment needed. If the plan is otherwise failing after just giving them the gateway, and they wanted to bump those one or two people up, then the amendment would be needed.

"Automatic enrollment" plans are plans that require someone to make a prescribed salary deferral unless they expressly elect not to do so. It will have no bearing on the number of "Active" participants for 5500 count purposes. Also, be careful of rehires. Many times, they are eligible for the plan as soon as they return back to work, rather than wait for some time and re-enter on the next plan entry date. Read the plan document carefully to see when rehires can re-enter the plan. I always disliked the term "Active" pertaining to the 5500. To me, it fosters confusion with people who are actively contributing to the plan. And it seems counter-intuitive that an "active" participant could be someone who terminated 9 years ago, but still has a balance in the plan. But I doubt they'll change the terminology any time soon just to suit me and my tastes.

In the ERISA Outline Book (on-line version), there is a side note in the Hardship Withdrawal Section that says:

Belgarath, How could he take the money and then roll it back into the plan? A plan would have provisions to accept r/o's from IRA's or other plans, but not money that went to the participant but was otherwise eligible for rollover. You have to roll over from an approved vehicle. His pocket (I would thins) isn't one of them.