BG5150

Wait. You said the gross refund was $200 LESS (from 4,600 to 4,400), but with earnings it came out to $250 MORE (net from 5,100 to 5,350). Sounds like you didn't refund enough money....

To me, the bottom line is: Is the loan still being carried as an asset? Deemed. Is the loan no longer being carried as an asset? Distribution.

Since the correction would involve some sort of QNEC, the NHCE's who were not deferring (at least those still employed) would get an allocation which would be more than the zero SHMAC they would get otherwise.

Most, if not all, the plans serviced by Pru have a Financial Advisor or Agent assigned tot he plan. Check your statement for his or her number. Give them a call and see what they have to say. Many (not all) experts say not to mess with your retirement assets by trying to time the market to squeeze the ultimate performance out of the funds. One or two bad trades can wreak havoc on the account for years. Talk to an investment professionsal (either the one assigned to the plan or your own) and see what type of investment mix is best for you in the long run.

Has anyone taken flack from the IRS or an auditor by using Relius's aggressive rate banding mid-point selection?

...for every year any of the other seven people were deemed eligible under the plan.

I say $4,000; send a letter to the guy to have the money returned to him out of the IRA and make sure the proper 1099's are issued from the plan. (BTW: I asked about earnings because the OP said "total" ROE's.)

Does your total include earnings? The amount that goes on the 5330 is the GROSS amount, exclusive of earnings...

From what I understand, he's not even eligible yet, so he isn't even excludable. He simply isn't in the plan.

The only thing I can find is making this election with respect to a CODA, not the entire plan. All the cites I'm getting are part of Treas Reg 1.401(k). Is there any place that discusses the Profit Sharing piece?

I saw in ERISA Outline where a person can make an irrevocable waiver of the right to make deferrals before she is eligible, and she wouldn't be in the ADP test. I couldn't find anywhere if she would also not partake in the ER portion. ALso, would the revocation of rights apply tot he entire plan year, or just the plan year going forward?

How much did he roll over, and what was the account worth at the end of 2007? If it's over $100,000 I think you HAVE to file a 5500 instead of an EZ. (I ask this because you said the rollover was a "very large amount.")

I always thought: old money stays on the old schedule and new money goes on the new schedule for the newer ee's, and people w/ three or more years get to pick which vesting sked to stay in.

But if you are doing the dollar-leveling method, the test may not pass using what's left for the HCE's. So can you do the beg, borrow and steal still? Do you assume that after the refunds the test passes "on the number"?

On line 4a of Schedule H/I you would "enter the aggregate amount of all late contributions for the year." It is only referencing Form 5330 in the following context, "If such a nonexempt prohibited transaction occurred with respect to a disqualified person (see Code section 4975(e)(2)), file Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, with the IRS to pay any applicable excise tax on the transaction." My bad. I don't know where I got the part about the 5330. I think it comes from an old questionnaire one of my former employers used when asking the clients.

We took the aggressive approach and included him in the test. Reasoning: 1. He was eligible to defer. 2. Definition of ADR is deferrals divided by comp used in ADP test. For the ADP test, we used full comp for everyone.

I have someone with a loan whose pay schedule is going from bi-weekly to monthly. Does she have to fill out a new agreement? Or is just furnishing a new amortization schedule good enough?

So on the Schedule H/I would you put -0- on the line where is asks about late deposits? I would think so because it is referencing the filing of a 5330.

That's the way we do it. We create a source called "Current year PS" (or something like that). That source is 0% vested. If and when a participant terminates, that money gets put in the forfeiture account. But the plans we do this for have a last day rule. So early in the next plan year, we transfer all the money from the "current year PS" to the regular PS source that is on the proper vesting schedule.

Thing he IS eligible to defer. It's just that he has nothing to defer from. Is this what they call a paradox?

Well, fortunately, I don't have to worry about this any more. The prior record keeper did not send us his original employment dates, and it turns out he was 100% vested anyway.

I have a situation where a participant was granted a loan based on 50% of his total account balance, rather than 50% of his vested account balance. It turns out the amount granted was more than half of the vested balance. So, I now have a prohibited transaction. How do I correct this? I think I would just issue a 1099-R for the amount over the 50% vested balance. Then have the ER pay the excise tax on 5330. Anything else?

Plan says ADP test is done using 414(s) comp. Person IS HCE (so him being in the test helps a lot). Plan passes 414(s) test with exclusion of commissions. So, to me, it really comes down to this: Regs say he must be eligible to make a deferral election to be in test. He has been with the company for many years and has long satisfied the service and entry date requirements. So, you would think he is eligible. However, since he is a "commission only" employee and will not get any "regular" salary, and it is explained in the SPD that commissions are excluded for deferral purposes, did he have any real case to make a deferral election? I know it is better to err on the side of caution, especially since he is an HCE, but I want to get this right, because it affects a failing 2006 test and QNECs and/or refunds amounts are on the line, adding up to potentially thousands of dollars. (It affects 2007 testing, too, but just the refunds.)

I am leaning toward INCLUDING him in the test for these reasons: The definition of an eligible EE for the puposes of the ADP test (1.401(k)-6) is someone who is eligible to defer a portion of his compensation for all or a portion of the year. "Eligible employee —(1) General rule . Eligible employee means an employee who is directly or indirectly eligible to make a cash or deferred election under the plan for all or a portion of the plan year." The person in question here was elgiible to make a deferral if he had a regular paycheck (instead of a commissions paycheck). And furthermore, from 1.401(k)-2, the employee's ADR is the employee's elective contribution (plus QNEC's, etc.) "divided by the employee’s compensation taken into account for the year" So, I think I could use his 414(s) compensation (which includes the commissions) with a zero deferral because it says "compensation taken into account," and not just the compensation that was eligible to be deferred. Once again, your thoughts are appreciated.

I have a plan that disregards commissions as compensation for plan purposes. There is one person who has satisfied the eligibility requirements and continues to earn service under the plan, but gets paid 100% on commission. Is he in the ADP test with a zero salary? Or not in ADP test at all?