12AX7

Lou, I agree with you and was looking something that said it. It makes sense on every level to me. To perhaps take this example one step further. Would you exclude the same person if you were general testing nonelective contributions?

Can someone point me in the direction of where I may find commentary regarding a participant (HCE) that has service, but no compensation in 2011. I feel as though I should not include that participant in the ADP/ACP test, but I can't remember where I read or heard that. Thanks !

ETK, are you saying the regs in 401(a)(9)-8 are disregarded for determining if the RMD requirements for each plan have been met? I don't necessarily feel comfortable with the current non-RMD status, unless the rules of the 242 (b) election are preserved since the "5% owner" is working for a related entity.

Participant was a 5% owner and there were no other participants in that plan. 5% owner's company is purchased and the (old) plan continues to exist for more than 30 years. 5% owner provides services for the parent company. Old plan has a TEFRA 242(b) election in place for the 5% owner. Is the election still valid with the "5% owner" as long as he is an employee of the parent company, or should the election have become invalid when he went to work for the parent company. Thanks.

Also, what does the Plan Document say about such matters?

Ok, I get it now. It's the overall Coverage Test, rather than each Rate Group passing the General Test. It seems that's where the thread started, but took a turn into this direction. Thanks for your patience with me.

I am looking at this from a coverage perspective and this is perhaps where I'm having difficulty with this. Suppose there are two HCEs (each getting a different allocation) and the first HCE (group) passes rate group testing with the RPT. The second HCE rate group is subject to the ABT. All eligible employees are in their own allocation group. Each rate group must pass coverage, no?

Am I understanding this correctly (or perhaps incorrectly) that I'm never able to use the Nondiscriminatory Classification Test if I have all participants in their own allocation group even if the plan has last day/1000 hours requirements for an allocation? Then rate group testing can only be satisfied by the Ratio Percentage Test?

I would rather not use the words "discminiate against", however a plan may be setup to exclude certain groups from getting the employer match. In the case of having HCEs excluded from the Employer Match, this will not be a 410(b) testing issue and will help your ACP test (assuming a traditional (k) plan exists). However, if the plan is Top Heavy, and the excluded HCEs are non-Key Employees, then a TH allocation may need to be applied to the group. You indicated that the client is using a Proto Document. If using a Non-Std Proto, you should be able to use class exclusion language for the HCE group the client wishes to not allocate the match to.

If the client adopted our VS document, the prevailing wage contribution could offset any type of SH contribution, among other employer contributions.

If it's just profit sharing source money in her account, then the plan could allow for in-service distributions at her current age. When she adopts the new plan, just include the in-service provision.

ETK: You don't need a definition of compensation to be "non-discriminatory" for "allocation purposes". For testing purposes, the definition does have to meet 414(s) or be "non-discriminatory". In other words, they do not need to be the same.

Unless there is constructive ownership through family attribution, I don't see a controlled group in this situation.

Let's not leave out some of the DC TH rules !

As Dr. Evil would say, "Why must I be surrounded by frickin' idiots?"

I reluctantly agree with you. I'm not sure if the IRS cruises these boards or not, so I will reserve my answer to your question.

If you are using Relius Goverment Forms, the SAR module makes this easy by clicking the Small Plan Audit Waiver tab and entering the vendor holding the assets and the amount. For other vendors, I would imagine something similar accomodates this task.

I'm familiar with the rules regarding excess aggregate contributions. However, if the match is not allocated until after the end of the plan year, is there some way in the regs that would allow the employer to only allocate an amount not to exceed the ACP test limit? I understand following the terms of the plan, but it seems like a silly exercise to knowingly allocate the excess match to only have to prepare paperwork to immediately distribute the excess to the the HCE. Anyone have a creative way around this? Thanks.

I'm always arriving late to the party, including yours, Grumpy. Does your document have a Frozen Plan election, with a line for the Freeze Date? That's what I do with mine, but I don't know any better way.

Why couldn't a plan sponsor adopt a plan retoactively, even if before it existed? I believe there's an example in the ERISA Outline Book. You could always file for an FDL if not certain. I never liked short initial plan years because of the prorated limitations.

Yeah, more like the Tower of Terror !

I understand what you are saying. It's like a homecoming for me. I was fortunate to attend this year after changing jobs and not knowing if I would ever attend again.

You can remind Lorraine of the little gnome that approached her at the end of her session on Wednesday morning. The message was along the lines that all the gnomes of the Kalto Provence missed your presence at ASPPA this year.

Would not the regular deferral be $9,832.50? This amount, plus the PS contribution of $3,277.50 would equal $13,110, which is assumed to be 415 Comp? Not that it really matters that much in the end, if I'm looking at this correctly.

John, were you at the IRS Q & A yesterday at the ASPPA conference? In the same vein as your questions, the panel asked the IRS about amendments that would have no effect on the annual notice and/or the potential to reduce benefits in the plan. Tom, did Lorraine convey my message to you? I suspect I was not the only one.