12AX7

Rev. Proc. 2008-50 has guidance with regard to excess amounts allocated to participant accounts. I believe it's in Section 6.

Yes, I agree that doing it the way QNPG suggests is correct. I was perhaps leaving open the possibility that the allocation of employer match would be something different at the end of year, when it should have been determined. Having an ongoing discretionary match based on annual comp can present it's problems which is evident in this situation.

Traditional (k) Plan. No compensation exclusions for deferral, match and profit sharing. No accrual provisions for either match or profit sharing. I will hold to the theory that I cannot amend the definition of comp for match or profit sharing for the current plan year. However, is it possible to amend the comp definition for the salary deferral contributions during this plan year? Bonuses are paid to the employees at the end of the year, and the client for whatever reason would like to exclude the 2011 year-end bonuses from the deferral portion of the plan. Can this be done, or is the right to defer on the entire gross wages a protected benefit in the plan? Thanks.

I would suggest that any true-up after the end of the year that would bring all contributing participants up to same level of match, however that level is determined, would be a reasonable approach. I'm not necessarily in favor of reducing the match of the one NHCE that received a 3% match, but it perhaps could be argued that it would be necessary (if not paid out at this point) to bring all participants to the same level.

If the parents work and have compensation from their children's company or the children work and have compensation from their parent's company, then the family attribution rules of Sec. 318 take effect.

There is where I go when I'm not on BenefitsLink: http://www.asppa.org/Main-Menu/edpubs/Publ...utlinebook.aspx

Austin, there is a similar thread here: http://benefitslink.com/boards/index.php?showtopic=48098

John, I'm in agreement on both points. We've gone through this exercise a few times and the IRS has commented on this issue at an ASPPA Q & A. I don't believe that the IRS wanted to make this process too easy.

That answers the question. Thanks!

Can this perhaps be interpreted to mean that the plan would need to offer "partial lump sums" that would be at least equal to the installment amount in effect, or would just a lump sum (entire balance) cover the replaced provision?

I've taken over several plans in that condition. Sometimes there was a plan drafting issue (limited prototype language) that prevented having one plan and other times it was just plain ignorance. Where there has been the opportunity, I just merged the plans if there was no objection from the plan sponsor.

Elang, perhaps you're thinking of the election for testing (ADP/ACP). If you're using a pre-approved plan, you would not have the ability to make that election for HCE determination. Or, perhaps you're thinking of the calendar year election for determining HCEs, if the plan year is not a calendar year.

I will study like a good pension admin, but as long as I pass, even with the lowest passing score, I will be happy. Since the test scores are not revealed, I'll be fine with that as well.

Unless the Trustee is lost in space, then anyone can be located on this planet in 2011. I'll be taking the ERPA exams this year, but working with plan documents I may know a little about the RAP (I hope). Congrats on passing! The last exams I sat for were for QPA, but that was back in 1993.

I'm in agreement with Tom. I'm missing the connection with the RAP and the 12/31/10 deadline, but these are perhpas moot issues at this point.

HB - I would be careful with a Partnership. You may run into a Deemed CODA if each partner were to elect the amount of employer contribution to receive for the plan year. If the employer is a C or S Corp and you're using the term "partner" to only identify the owners than you should not have this concern.

Take a look at these links: http://www.relius.net/News/TechnicalUpdates.aspx?ID=555 http://www.relius.net/News/TechnicalUpdates.aspx?ID=557

After reading the other thread I see that those who are wiser (than me) have come up with the same split decision that we struggled over yesterday. I would hate to think that I need to further prove that (a)(4) must be satisfied further after the component plans pass coverage. If true, then my fee schedule needs to be adjusted and I could lose a client. I know for certain that some bundled providers are not taking these factors into consideration, but that certainly doesn't make it right even if the client is happy.

I understand your point, but if you take it further and look at the availability of the rates allocated to HCEs, and it those should fail, the next step would be perhaps cross-testing, but he doesn't imply it would be necessary under those circumstances. Perhaps the lesson learned in all this is not to have last day/1000 hours with these types of plans. If you should fail coverage for Plan 1, then amending the plan may be more cost effective than all the testing alternatives. Just a thought...

It seems that Sal did not dissect the allocations further in the example in 2.3.1)a). If I read it correctly, if Plan 1 satisfies coverage, then it also satisfies the designed based SH with respect to the NEC.

I hear ya. Take a look at page 11.516 of the 2009 ERISA Outline Book, or the corresponding pages in the 2010 version. The example in the book is similar to yours where the two component groups are: 1) employees who qualify for an allocation of both the SHNEC and the additional NEC 2) employees who qualify for an allocation of only the SHNEC Going back to your OP, each component plan must satisfy 410(b) and no employee may be in both groups, obviously. I would think that Group 2 in this example would always pass, so you may have trouble with Group 1 depending on how many NHCEs received the NEC.

I don't see how the design is doomed for failure. Disregarding 410(b) for the moment, a SH/PS design that you are describing exists on most Standardized Plans. Where the PS contribution does have accrual requirements, I can understand that coverage issues may come up, but I'm not sure if that's what you talking about anymore.

I'm trying to avoid being dense, but if you have a designed-based safe harbor, how would coverage become an issue?

I know I should be giving you a cite from 410(b), but when I restructure it's along the lines of Age and/or Service (statutory 410(a) requirements). That could put someone not benefitting in Plan 1 or visa versa. Maybe you are thinking of the excludable employees for testing purposes?

I would look at Revenue Ruling 89-87: Whether a distribution is made as soon as administratively feasible is to be determined under all the facts and circumstances of the given case but, generally, a distribution which is not completed within one year following the date of plan termination specified by the employer will be presumed not to have been made as soon as administratively feasible. A plan under which all assets are not distributed as soon as administratively feasible is an ongoing plan and must meet the requirements of section 401(a) of the Code, in order to continue its qualified status. Such a plan remains subject to the minimum funding requirements of section 412, where applicable. Also, in any year in which the trust assets have not been distributed, the plan is subject to the information reporting requirements of sections 6057 and 6058 and, in the case of a defined benefit plan, the actuarial reporting requirements of section 6059. I'm not aware of any updated guidance.