12AX7

Not on the 5500 or auditor's report. A number of years ago, we had to report the coverage test, but that went away I believe with EFAST1.

Maybe I'm not looking at it correctly. Let's say the participant has a $15,500 excess 415 allocation. If I attribute $5,500 of that to a catch-up for the plan year ending 6/30/13, would that not reduce the deferral the participant could make for the 2013 tax year to $17,500. Add that back to the $5,500 catch-up from the 415 excess and you get $23,000. Otherwise, it seems I would be attributing 2 catch-up amounts of $5,500 for the 2013 tax year.

Employer Sponsors ESOP and (k). For the plan year ending 6/30/13, a participant hit the 415 limit and some of this excess allocation attributed to salary deferral was recharacterized as a catch-up contribution for the 2013 tax year. This participant has also deferred $23,000 for 2013, which means there is now an excess deferral for the 2013 tax year. Because the plan year ends 6/30, it seems the excess deferral would get distributed by 4/15/14, even though it's an off-calendar year? Or, is there another deadline for doing this?

Thanks, ETK.

Does the allocation of a forfeiture follow the same deadline as a regular contribution to the plan? Seems it should...

Me thinks he means "Plan Sponsor" that acquired another company. I only answered in the context of transferring loans into the plan. I didn't feel like sorting out the other issues that you have brought up. Expert guidance is required in this situtation.

OK to transfer the existing loans into the plan. You'll have to see how the Plan Document wouid facilitate the process and not allow new loans to be taken. If the Plan Document is perhaps silent on the issue, then the Plan Administrator can write up a procedure.

As long as it's not a SHMAC, it's ok. Kinda makes things a little more difficult to admin and provides less incentive for participants within their first year of eligibility. I've never suggested it to a client, but perhaps in some situation it makes sense. edit: makes me wonder if anyone has ever setup an EACA with a 2 year eligibility on the match.

Yes, you have to stay with entry date rules in 410(a) regardles of the eligibility provisions.

Eligibility is not a protected right in a plan. You can change it.

Yes.

I have forms that a participant must sign indicating the same.

I agree with the analysis others have given you. One other aspect of all this to consider is if the employee would have otherwise satisfied the eliibility requirments had the plan been in place at the time employee terminated service. For example, if the eligibility requirements were 21/1, and the employee never completed a year of service for eligibility purposes, this person would not be a participant upon rehire.

Gateway only needs to be satisfied once for the plan year taking into consideration all allocations. Do you have access to the ERISA Outline Book? The information you're looking for can be found there and will give you a great understanding through examples.

The plan has eligibility provisions. Therefore, the employer allowed two employees to defer before they satisfied the eligibility provisions, not the plan . Most effective way to correct the operational error is to have the employer amend the plan allowing the two employees early entry, provided they are not both HCEs. Take a look at EPCRS.

These questions go back to the intent of the employer and how the provisions of the plan document are interpreted on a consistant basis each year. Because the definition of Owner was not drafted as clear as it could have been, I would suggest that the resolution for the 2012 contribution is drafted with clarification to the restrictions of which participant(s) get grouped in the Owner category. If not too late, amend the plan for 2013.

Has any part of the loan procedures changed after 1/1/2007? If not, I see no reason to update the policy provided that nothing in it goes afoul of 72(p) or the current plan document.

Agree with Bill to have everyone in their own group, however there is no mention of 318 or other attribution in the definition of the Owner Group. Does the plan doc have a definition of "Owner?" How was the plan operated in this respect during prior plan years?

Was the plan communicated to eligible employees via SPD or enrollment forms? Is a do-over possible for a SHNEC under these circumstances?

Have to go back and look at the regs, but isn't there something about a controlled group issue if both employers existed within the same plan year? This seems more like a successor employer, if anything.

I think I was confused by the OP and took it to mean that the plan was already in existence when the S Corp adopted it in December. You are correct Bill under the assumption that the plan was not implemented before 12/1. Still sounds like there's a controlled group.

It doesn't change my comments. To me it doesn't seem like you have an additional participating employer and why would the LLC need to sign as an additional participating employer if they were the plan sponsor before the company became an S Corp? That part of it seems fine to me. I would not have done it this way, but the end result is that the S Corp is the plan sponsor starting from 12/12. You also need to be mindful of 404 and 415 limits based on compensation for the entire plan year. I'm sure you're aware that the limits are not reset when the company became an S Corp.

There also may be ongoing 5500-EZ requirements until the final plan year (assets >$250K).

It sounds like it's the same employer, with a change in the filing entity status and maybe a change in EIN that Bill asked about? I don't think the plan needed to be adopted retroactive to January 1 if the "successor entity" did not exist at that time. I would have used the December date if this assumption is correct. May not make that much difference in the end. With regard to the "proration" of the contribution, what type of contributions are you referring to (DB or DC)? Also, what type of document are you using? Some pre-approved plans make it easy to identify a successor plan sponsor, but we're not sure yet if this is what you have.

View the section regarding the refinancing of a loan: www.irs.gov/pub/irs-tege/epche12a03.pdf‎