BG5150

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.

If you don't want to delete the employer, I'm sure there is an SQL script you can run to get them out of there. Send a ticket to Relius; they'll help you out.

Did you respond? Is she cute?

How do you report spam in a PM? I received a PM that someone saw my profile (which is largely empty) and she she she is "interest in me," and wants me to send her an e-mail. User name: SarahGamu. If there is a "Report Post" button, why isn't there a way to report PM's? Is it an IP Board limitation?

To answer the fist part of your question: I doubt many people who are taking out a loan from their 401(k) plan are really analyzing the precise financial impact for the long run. They need $5,000 now, and want the lowest possible payment. That means the lowest interest rate. That's about it. They are not thinking about the long-term impact on the account balance, be it for better or worse.

How much are you paying? What's your hourly rate?

Just a thought: does the ER have any other plans TPG might affect? Remember, this is an employer-wide decision, not just a plan decision. (Isn't it?)

Do I have to be consistent year-to-year in using participation compensation vs plan year compensation in my prior year ADP testing? Also, do I have to be consistent in the population used? That is, can I pull out excludables one year, then include them them next?

Years ago, the big firms had people doing everything: processing, testing, filings, etc. Then the industry trended toward "functionalizing," the companies creating departments for each type of work. So now people in those firms are exposed to one area of expertise and only a modicum of knowledge in the others.

I'm sure this was considered, but I'll bring it up anyway: the allocation provisions do not waive service and/or hours conditions for retirees?

Fixed. Not all plans allow for refinancing; some specifically disallow it.