Kevin01

Thank you for your posts! This really helped.

Most of our defined contribution plans have Total Participant Directed accounts. For Plans where participants fail to make an Investment election, we place their (the Participant's) Investment in a Money Market. We describe this as the default investment option. I'm curious as to whether we should mark off code 2T on the 5500 SF, Section 9a? I wasn't sure what others are doing with similar default options...leaving this blank because this isn't a QDIA or if they're adding 2T to this section? Any guidance would be appreciated!

We're inheriting a 401k/Profit Sharing Plan that implemented the QACA provision beginning 1/1/08 (calendar year Plan) as they were failing ADP in prior plan years and the Plan is also Top Heavy. The 401k Plan has been in place for over 10 Years. Their automatic enrollment feature enrolls participants at a rate of 3% of Comp for the 1st and 2nd Applicable Plan Year, 4% for the 3rd, 5% for the 4th, and caps at 6% for the 5th and any subsequent Plan Year. The QACA match is the Basic Match that provides a match of 100% up to the first 1% and 50% of the next 5% contributed (max match of 3.5%). However, the Annual Notice states that "No matching contribution will be made on any deferral contributions that exceed 3% of Compensation in the first and second years, 4% in the third year, 5% in the fourth year, and 6% in the fifth and subsequent years." The match limit described here seems consistent with the match that would be associated with the automatic enrollment step-up feature as described in the paragraph above (i.e. the max match would be 2% of Pay for the first and second Plan year where a participant was enrolled at 3% of their Pay). The question I have is if someone made an affirmative election to defer 6% of their Pay during their first year of participation, based on the match described above, would they be entitled to a 3.5% match or just a 2% Match? The research I've done seems to indicate it would be 3.5%. However, it's our client's understanding that the maximum exposure the Sponsor has for the match for the 2008 and 2009 Plan Year is 2% of Pay, and then this increases .50% for each additional year thereafter (for a cap of 3.5%). They base this on the sentence that I described in quotes in the paragraph above. I can't find anything that says their understanding is wrong, but based on what I've researched, this only applies to those that are automatically enrolled; everyone else that makes an affirmative election would be eligible for the entire match of up to 3.5%. Can someone please clarify this for me? Thanks!

We have several clients with DC plans that have terminated participants (with account balances less than $5k but more than $1k), which they would like to force these individuals out of their plans. We were thinking about creating a Group IRA Trust account to handle these balances and I was wondering if any other RIA/TPA firms have created a similar account for automatic rollovers? If so, what concerns or challenges have you faced?

We have several clients with DC plans that have terminated participants (with account balances less than $5k but more than $1k), which they would like to force these individuals out of their plans. We were thinking about creating a Group IRA Trust account to handle these balances and I was wondering if any other RIA/TPA firms have created a similar account for automatic rollovers? If so, what concerns or challenges have you faced?