BG5150

If by "refers" you mean the plan definition, then yes W-2 includes a cash bonus. As long as that cash bonus is paid on a W2, that it. In a prior position, our bonuses were paid on 1099's. Why, I do not know.

Also, if the plan has less than 25 participants at BOY, and if Part II would be blank, you don't have to file one regardless of any distributions. (p. 9 of 2008 Instructions for Form 5500). I love these new small-small plan filing requirements, or lack thereof.

I have a plan where someone who has irrevocably waived her participation in the plan (and all other plans provided by the Employer). She has otherwise satisfied the eligibility and entry requirements for the plan. Is she considered a participant for testing and 5500 purposes? If so, why? It's not like she is temporarily declining to make a 401 deduction and may decide later to do so. She could not even if she wanted to...even if they terminate this plan and put in another a year from now.

Other functions can include: drafting loan agreements, benefit determinations (70.5, vesting), producing 1099's, plan document work (restatements, IDP's, amendments), plan design studies.

If it sounds too good to be true...

Rounding to hundredths: 60% is 0.60. 60.1% is 0.601. Rounding to hundredths nets 0.60.

I was kidding, hence the " " Is it possible to round the individual account balances to the nearest dollar and do your calculations with whole dollars? And the regs do say "60 percent" not "60.00 percent." Reading that very, very, very (did I say "very") liberally, it seems it's okay to round down. Again: Honestly, though, I think absent a successful amendment of some sort you are in a sucky position.

60.1%? Just round down!

Can an individual have a tax year that is not calendar year? I've never seen it, but is it possible?

Don't forget the gateway. In order to be able to cross-test the allocation, you must provide a gateway for the NHCE's. And, if an NHCE is benefiting in any way (eg SH or Top Heavy), then that NHCE is eligible for the gateway. So your rate would include the SH and the gateway plus any PS. (I'm assuming you are cross-testing using the average benefits test. If you are not, never mind about the gateway)

This sentence cracks me up.

I believe that coverage would be satisfied, because the SH is an employer contribution and you'd have 100% coverage as long as there are no excluded employees. And, I also believe that the rate group test would include both the SH and regular PS. But remember, you cannot impute disparity to the SH portion, if you are testing that way.

I don't see what the problem is for the two or three people. As long as they are participating at the time of the effective date of the new plan they should be okay. Who cares if they start participating on Oct 1 2009 or Oct 1 1999?

I would check the plan document. Some docs specify the compensation to use, but some allow you to test using any compensation that passes 414(s).

I thouhgt those DOL rules applied to depositing the contributions to the trust, not necessarily the participant's accounts. They were put in place to keep the ER from sitting on, and perhaps using for other purposes, the deferrals. I'm assuming all the money made it into the trust, but got put into the wrong accounts. Are the W2's correct for the shorted people? I would take out the money from the over-paid accounts with earnings (as you said). And I would pay into the shorted accounts the proper amount adjusted for earnings, if you can figure that out. If the contribution with earnings is more than what was taken out of the over-paid accounts, then the Employer will make up the difference (maybe recouping it from the payroll company or record-keeper if it was their fault).

I worked with a plan document one time that said, at least for match, that if there was a last day rule (or hours rule), and even a dollar went into anyone's account before year-end, then the last day rule was waived. I don't remember if it was the same for the PS. So check the plan document to see if it address the timing issue.

I am not a big fan of this arrangement. I read somewhere that the DoL is not a big fan of putting money in people's accounts and then taking it away from them either. If the employer wants to have its PS contribution amortized over 26 payments, I'd suggest they take the amount they were going to deposit in participants' accounts and put in it a separate bank account, then allocate it after plan-year end. What happens if Janey Mulroney has $3,000 put in her account during the year, but it's only worth $2,500 at year-end when it gets shared among the eligible participants? Does the Employer want to take the full deduction, even though only $2,500 of it really got allocated to participants' accounts? And how do you figure out the gain or loss in the account if prior years' PS money is in there? Are you time-weighting the returns?

From the first link: It doesn't take into account, however, the 25% of compensation deduction limit that Mike references above. So, in a small plan, a combination of all three limits may come into play.

Could the employer "lend" the employee his commisison check (or a part thereof) early? Say, give him $2,000 up front. Then he can pre-pay a bunch of loan payments and be ahead of the game.

I'd do it, but there would be no guarantee that wouldn't accidentally make everyone 100% vested or delete everyone's birth date by accident (or on purpose )

I would try to do it via DER.

But 5-ton bombs are way cooler!

I think you are okay, since the match itself is under 4%, and you are not matching any deferrals that are more than 6% of pay.

Or you could just hand-do the calculations, subtracting the zero salaries from the participant count. And a corollary to that: you can export the test to Word (or other word processor) and manually delete them. But, you will still have to manually override the calculations.

Do you have a list of the affected people in a spreadsheet? You could export all the participants and their termination in the plan and do some sort of v-lookup with the other list. Then weed those people out, change the termination date to blank and import them. Then import the correct termination dates to over write the blank ones. An eligibility trans action post here, a reversal there, and a repost somewhere else and you'd be good. (I think)