BG5150

I have a plan that is terminating that is a wait-and-see Safe Harbor plan. They dutifully gave the notice in November that they MIGHT make the 3% non-elective. I'm pretty sure they have to follow up with one that states that they won't be doing it for 2010. Does it have to be a stand alone notice? Or can they just put it in the notice they are giving everyone that the plan is terminating?

I have a plan that is terminating. And I understand that a successor plan cannot be in place for at least a year after the assets of the first plan have been distributed. However, what type(s) of plan might a successor plan be? Just a 401(k)? Could they put in place a PS plan? SIMPLE? SEP? SEP IRA?

Assuming the HCE made more than the TWB.

Depending on how many NHCE and HCE are participating vs not participating, the amount for the HCE's to pass the test can be more, the same or less, depending on the populations.

And, to me, once it's in the trust it should stay in the trust; I'm not a big fan of the "mistake of fact" rationale to get money out.

I have a plan that has 1 year of service, date-of-event entry dates for deferral & Safe Harbor. For Profit Sharing it is 1 YOS and semi-annual entry date. Compensation used for each source is that earned while a participant in that source. So, I will be having different compensations for SH and PS. My question is, which comp do I use in my gateway and average benefit tests? Say, for example person makes $60,000 in the year. She enters the plan for SH on 4/1, and makes $45,000 from then, and $30,000 after 7/1, when she was eligible for the PS. Her SH will be 1,350 and her PS will be 450 (gateway is 4.5%). But when I run my tests, what comp should be in there? Her 401(a) allocation % would be 4% using the 4/1 comp, and 6% using the 7/1 comp.

So, I'd amend the plan for 2010 to add the owner-by-attribution class. It should be okay as long as no one has already earned the PS for 2010 yet.

Get a job with another company that offers a SH match?

How much was the refund? Many places won't withhold on anything less than $200.

If an account was established in the first plan for the AP, then it would be QDRO money. But in the second plan, it becomes merely rollover money, and thus subject to the withdrawal penalty.

True, but that's not the only way to become an HCE. Plus, the problem states that the person is an HCE. That, and remembert that the compensation test for HCEs is based on the previous year's comp. He or she could have terminated mid year, and that's why the comp is "only" 80k.

But this was in the post: (emphasis mine)

What was the vesting schedule that was in your old plan? Chances are, you were not with the employer long enough to earn the right to the entire matching account (or ANY of the matching account!). It looks like you were 0% vested in the match, so you received only the money you put away. As to why you got a check instead of the direct rollover, you'd have to talk to the IRA custodian for that.

I once worked with a plan document that stated if a plan used the last day rule (and I think hours rule), and any ER contributions (that required the last day rule) were deposited before year end, then the ER was deemed to have waived the last day requirement. At first I thought it was kinda silly, but now I think it's a great way to run a document. No messy forfeitures or participant complaints.

I think the trustee-trustee transfer term here is just the term used in-house to do the movement of the money from American funds to ML. The transaction at American would be coded a trustee-trustee transfer, so the program wouldn't automatically kick out a 1099-R form.

I don't think an accountant (well, most of them, anyway), would be the best person to ask about how to fix a qualified plan. I seem to remember that you can distribute the erroneous elective deferrals directly to the participants, but can't seem to find it in EPCRS at the moment...

I would say no, because the QNEC must be 100% vested and subject tot he same withdrawal rules as elective deferrals.

Does EPCRS have the remedy? I couldn't find it, but that doesn't mean it isn't there...

1. Yes. It's just like the "normal" HCE test. 2. No. 3. The TPG is only for the compensation half of the HCE test. I do this test first, without regard to ownership. When I have that population, I add in any 5% owners who are outside that group.

What about vesting hours? Is it still 1000 hours for my 9-month plan year? Or is it now 750?

I used to have a handy chart on what to prorate (and what not to prorate) for short plan years. I have since lost it. Does anyone have a handy guide that lists what limits get prorated (and don't)?

Maybe call the IRS?

In my example, I should have stated that none of the owners were over 50. Sorry.

In our documents, a lot of times group A is owners, and their group gets a pro rata share for their group. However, that doesn't mean each one has to get the same amount. Example: (all comp at the max) Owner 1: 16,500 deferral and 7,350 SH would get 25,150 in PS Owner 2: 10,000 deferral and 7,350 SH would get 31,650 in PS Owner 3: 0 deferral and 7,350 SH would get 41,650 in PS As a group, the allocation would be 98,450. The document prevents people from going over 415 limit, so Owners 1 & 2's allocation is reduced.

Can't you exclude people who work less than 500 hours from your test?