BG5150

It should be okay. 1/3 of 13% is 4.33% Make sure that the SH is coded as an EMPLOYER source. It will test with the rest of the PS.

Doesn't the resolution to terminate the plan say all contributions to the plan will cease as of x/y/zz?

As for the deferrals: Will a lot of them be making deferrals? And at what percentage. My experience with part-time or seasonal workers is that they generally put little if any money away for retirement. This will affect the ADP test.

From the EOB:

I think it is an operational issue--failure to adhere to the terms of the plan document.

I'm guessing that "we ALWAYS use the method that benefits the testing" isn't considered ok even though it reasonable (it's an easy distinction), nondiscriminatory (it doesn't discriminate against HCE's) and consistent (it's always done).

How does the plan pass then? Basically, you are taking what would have been refunds in a failing test and calling them something else (catch-ups). If you had an ACP test that failed, but the match to be refunded was forfeited instead, would you say the ACP test passes?

I often get plans that fail the ADP test, but there are no refunds because of catch-ups. If this happens to one of your plans, to you tell the ER the test fails but there is no refund? Or do you just say the plan passes?

We, as TPA, work with different investment providers. Some track loans, some just invest loan repayments when told to do so. What happens if someone pays off a loan, but the ER still send in payments every week and the money is invested in the trust? Could that liberally be though of as a Mistake of Fact, and the money returned to the ER to then be given tot he participant? Or, should the money be forfeited and the ER pays the participant outside the plan?

If the deferrals are to two different plans, which ER is responsible for the 1099?

Does being a "former key employee" affect anything other than excluding that person's balance from the Top Heavy test?

I guess. But what happens if a Doctor leaves, or if one joins? Would you have to amend the plan each time? Or is "Each doctor in his or her own class" sufficient?

What are the Hardship requirements under the plan? Safe Harbor? Facts & Circumstances? Under Safe Harbor, they are pretty clear. Under F & C, I seem to have read that the participant must exhaust all available funding including any brokerage accounts or other liquid assets. From 1.104(k)-1(d)(3)(iv)B However, the ER can rely on a written statement that (Same code section, but C instead of B)

It says in the EOB that no more than 50% of the vested account balance can be used to secure a participant loan. If other security is obtained, could there be a participant loan that exceeds 50% of the vested account balance and not be considered a prohibited transaction? (And, in any case, no more than $50,000)

Send them a list of bad things that will happen if the plan gets disqualified. If they feel the need to ignore you and continue with doing this, I would fire this client.

Never mind my other reply. I was thinking that the owners wanted to put something in, and wasn't thinking about forfeitures. It's Tuesday , but if really feels like a Monday.

Well, the owners can put all the money they want into the plan. Keeping the plan qualified is another matter.

I want to be an owner who works less than 1000 hrs a year!

3/31. It's a 401(k) plan if that matters any.

Plan has a termination date of 3/31/10. It is considered Top Heavy for 2010. The company has not closed down, so, most everyone was still employed on the Plan Term Date. Do I use comp through 3/31 for all those employed on that date? (There were a few people who left the company in Jan & Feb.)

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We've structured plans with classes like: Employees hired in 1992 born after 1958 and before 1960. So, maybe classifying the doctors like that would be okay, rather than by name. However, you'd have to amend the plan every time a new doctor was hired.

But those are only the initial %'s. Participants can lessen the deferral if they wants, can't they? In the OP's situation, it would be only 3 or higher.

This answered my problem EXACTLY! Thanks David!

Why do termianting plans have to restate for EGTRRA? If they have a vaild GUST doc and all of the pretinent amendments, I don't see why they would have to do a full restatement--I would think they are already operating under the proper rules & regs. Any idea why the IRS wants these restated? Is it a money thing; do they want the Determination Letter fees?