BG5150

For the plansI am submitting for determination letters for the EGTRRA restatements, how far back is the IRS looking for documentation? For plans that have a GUST-related DL, I understand it will stop there. But we have a bunch of plans that were on a GUST prototype, and most only have the opinion letter. (And many are on Non-Standardized docs.) We are now putting them on a VS and want the DL. I seem to remember the folks on the IRS panel at the ASPPA conference webcast saying they are only looking back to GUST docs, and that a plan would only need the opinion letter (and not the DL) because that was part of the reason to have opinion letters in the first place. I know that those types of events are not the official IRS stance, but has there been any other guidance on the issue?

...but probably create problems we couldn't ever dream about before...

The DRO may say the ex is due money from the plan, however, the order cannot be qualified. Therefore, I would think, the ex is NOT entitled to anything from the plan, and taking a loan from the plan to pay the ex would be a side deal between the two, not addressed in the DRO.

Is a loan a good option? What if the participant takes a $20,000 loan and pays the proceeds the ex. Then, three months later, the participant gets downsized? Now the outstanding loan amount is taxable to the participant. Talk about rubbing salt in the wound: paying the taxes on money you pay the ex! (On a side note, what would be the taxation on the money paid to the ex? There are no tax forms generated for a loan.)

For plan purposes or the person's purposes?

If a person who made more than the HCE limit (and is not a 5% owner) is eliminated from the HCE group due to the top paid group election, he or she is then tested as an NCHE; he or she is not removed from the test. A quick example: (H = HCE, N = NHCE) ADP test 1: H1: 10% H2: 8% H3: 0% HCE avg: 6% N1: 4% N2: 4% N3: 4% NHCE avg: 4%; test passes ADP test 2: say H3 is not in top 20%, test becomes: H1: 10% H2: 8% HCE avg: 9% N1: 4% N2: 4% N3: 4% H3: 0% NCHE avg: 3% test fails So, here you can see where a top paid group election would not be beneficial. But note, that H3 gets moved from the HCE group to the NHCE group; H3 is not removed from the test altogether.

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I thought that using the Top Paid group, you would have to apply that HCE definition to all other plans of the Employer, too. Also, a negative could be if those people who are highly paid but are not considered HCE do not have a deferral, your test could be worse off. And switching from one mode to another does require a plan amendment, so there is time and effort and (probably) money involved. (Plus the time and effort of distributing the SMM's.)

I agree. I light of the recent airline case, I would be wary of plan administrators trying to use motive, rather than the black-letter documents in order to approve or disapprove a benefit.

As far as I know, the "limit" is still $5,000. However, any "force-outs" that are not rolled over by the participant must be placed in an IRA for the benefit of that employee if the amount is over $1,000. You client should be careful what it wishes for.

It sounds like the ER wants to put money into the plan over time and then allocate it to the participants. I've always advised against that, because, once in the trust, they money should stay in the trust. What if over the year business conditions turn unfavorable, and the ER no longer wants to make (or can afford to make) the PS contribution? Its hands are tied if the money is in the trust. What I usually suggest is to take the money that would have gone into the plan and put it into a separate retail account (bank or brokerage). When it comes time to allocate the money, the ER has the opportunity to liquidate some or all of that account to fund it. And as for pre-funding individual accounts if there is an hours or last day requirement, check the document. A volume submitter I have worked with in the past says that if there is an hours/employment stipulation, then all the money needs to be deposited after the end of the plan year. If even a dime goes in before the end of the year, then the allocation conditions are waived, and everyone gets a piece, regardless of service or employment status at the end of the year.

Nope. No safe harbor. Tiered allocation, but there would be no contribution for the short plan year.

If I recall, you would keep everyone else in the group at 5% and give mid-year entrants an additional contribution to get them up to the 3% of total comp. I don't remember if I had to do an 11g amendment to accomplish that (I don't think so, becasue the amount above and beyond the allocation group is a required contribution, not discretionary.)

Does it HAVE to say it in the plan? Or can it be an administrative procedure?

And what if someone refuses to sign such an amendment? You can't cancel the loan on them. Would it be a problem for the Employer to pick up the tab for the existing loans, and all new loan be subject to the fee? Or maybe negotiate w/ Nationwide to waive the fee for existing loans?

I have a plan that has an 11/1 --> 10/31 plan year. For whatever reason, they set it up that way long ago. It's a pain for them (and us) to administer it that way, given their fiscal year is also the calendar year. Is it too late to do a short plan year for 11/1 --> 12/31 and to switch to calendar starting 1/1/10?

Be sure to give those shops some information on your stolen stuff so they can be on the lookout for it. maybe even make a flier with the info and a picture.

I didn't think a plan HAD to shift to the plan year after the first year of employment? I am working on a document right now that says the eligibility period is from hire date to anniversary date, and further periods are anniv date to anniv date.

I was just trying to make sure that a DOH of 1/2 and a plan entry of 1/1 (the next year) would be okay. The plan sponsor only has one person whose DOH is even near one of the entry dates, and so far, has not had to address the situation.

So are we in agreement? You could interpret being hired on Jan 2, the year of service would be satisfied on Jan 1. And if the entry dates are "coincident with," then the person enters Jan 1. Absent of the "coincident" phrase, it would be July 1 (or the next date available under the plan. However, we should check with the employer to make sure how it was done and it was done consisitently. BTW: what setting in Relius would yield a DOH of 1/2 would result in entry on 1/1 the next year?

Can she give herself a $11,500 "bonus" and defer 100% of that?

You mean I can't allow the owner's daughter in on Jan 1 and keep the Yankee fan out until July 1?

Do you also presume they accrue hours for Jan 1, the non-business day?

Plan has semi-annual entry dates (1/1 and 7/1), and a 1 year of service (1000 hrs) requirement. Entry date is following or coincident with satifying the requirements. If a person was hired on January 2, 2009 and worked more than 1000 hrs in 2009, when would she enter the plan? I would contend that the one year of service is satisfied on Jan 1, which is coincident with an entry date. Is that correct?

I got an ad for Viagra (of Cialis, or some other crap) today via PM. I did not notice a "report" button. Is there one? Can there be? I did try to "block" any future PM's from this "person," but the account was no longer active.