BG5150

Wait. You said that some people decided to make Roth deferrals. But they want it changed because there was NO mistake? If they want something changed, there had to be a mistake somewhere....

For the purposes of the "ADP" test, what does ADP stand for? Is it "Actual" Deferral Percentage? Or is it "Average" Deferral Percentage?

Too late for 2007, tho' For a tie-breaker, have them all come in and and do a rock-paper-scissors contest. They may be able to glean some tips from the World RPS (Rock-Paper-Scissors) website. (Yes there is one!) http://www.worldrps.com/

It's however you want to do it, as long as it is fair, consistent and non-discriminatory.

Can he just re-characterize them for '08?

In the plans I have taken the time to notice, the remedy to fix a 415 excess seems to be to refund deferrals first, the ER contributions such as match then Profit Sharing (assume no voluntary contribs). Why is this? It seems to penalize the employee (higher taxable income) for the employer's generosity (a big match, PS, what have you). Is there any rationale as to why deferrals are commonly taken first?

You can certainly have ER contributions that are receivabe for multilple years. Sure the ER is supposed to pay everything on time. But if they don't, it is still considered a receivable, still owed to the plan. An example would be a 1 to 1 QNEC that needed to be made due to a failed ADP test. That money is owed until it is deposited and should be carried as a receivable unitl it is deposited (for an accrual-based filing)

Are you doing current for ADP and prior for ACP? I'm fuzzy on how a prior year test would work with a QMAC. For a 2006 test, would you take the ADR's from 2005 and add to it the 2006 QMAC?

Please don't edit out your original question. It may be of help to others.

Are there any NHCE's coming to this plan from that other employer? If not, what's stopping an amendment allowing past service with the other ER? Then do another amendment 1 mos down the line rescinding it. Something like: Amendment 1: Effective 4/1/08 (date this new person is hired), all service with XYZ company shall be credited. Amendment 2: Effective 5/1/08, EE's hired after effective date service with XYZ company shall not be considered. Shouldn't be a problem if they aren't considering hiring any NCHE's from XYZ for a while.

Hasn't the person already suffered the one-year hold out rule the first time he was employed?

For what it's worth, Relius uses two entry dates when testing the otherwise excludables.

Didn't the person get a check stub or some other correcspondence showing what the withholding was? If so, why wasn't this caught timely? I'm thinking if he did, the onus was on the participant to get this cleaned up.

So if I have 10 NHCE's, and 6 of them are terminated, I cannot do a bottom-up since less than half of the NHCE's that are eligible for the ADP test are not receiving an allocation?

I'm doing a QNEC allocation and I was looking at the slides from ASPPA's webcast "401(k) Testing for 2006". My question has to do with "50% of the eligible NHCEs": Is that 50% of the NHCEs who are eligible to receive a QNEC, of 50% of those who are eligible in the ADP test? In this case, there is a last-day rule for a QNEC to satisfy ADP test.

In my past life of providing "excellent customer service" for plan sponsors, we [my company] required something from the landlord or mortgage company indicating an eviction or forclosure would happen or is happening unless X$ past due were paid. Then a hardship could be taken for up to the amount on the letter and no more; but the amount could be grossed up to include taxes and the 10% penalty tax for early withdrawal.

I would think that anyone who was making at least $155,000 could defer $20,500: $15,500 is 10% plan max and then $5,000 catch-up. Catch-up is allowed when a participant hists one of three "limits": 1) 402(g) limit; 2) if deferrals are limited due to ADP test; 3) a plan-imposed limit on % of pay.

Does this plan even allow for catch-up for other employees? I didn't think it was mandatory for a plan to have that feature.

$112 in earnings for 3500 people? How late was the contribution? Two hours?

In my experience, the Federal withholding portion is correct. I am not sure about State.

From the IRS website: http://www.irs.gov/irb/2007-49_IRB/ar15.html (emphasis mine)It seems that the notice only go to those who are affected, which to me, means people who have not made an affirmative election and those people who are deferring less than the minimum amount at the time the provision starts. (I think the plan can "bump up" those who aren't deferring the auto-enroll minimum, but I could be wrong.)

I say the gov't makes a rule dis-allowing catchups for non-calendar year plans. Maybe this way, they will all amend to be calendar year plans and make life a lot easier for me.

"Immediately" would imply as of right now and doesn't address the past deferrals.

Was the guy in any other plans, or did he have an IRA? I think you can consolidate accounts from a balance perspective and withdraw the aggregate amount from just one account, if I'm not mistaken.

What about the top-heavy concerns now? It sounds kinda fishy if the plans would have been TH if the contribs were made in the past years but they weren't. Now all of a sudden you want to put that money in, effectively bypassing the TH rules for those prior years. (Assuming that putting in the money now wouldn't make the plan TH.)