12AX7

Sounds like you got the better part of the deal !

That's generally correct for 404(a)(5) disclosure, but the DOL guidance predates this.

Belgarath, why would there be an issue of deduction for the one person plan in your hypothetical example? Are you perhaps saying that the premium is to be expensed from the plan?

The employer could lose full credit of the David Bacon allocations to the plan if immeidate eligibility and vesting are not plan provisions. I would not necessarily make a recommendation to change those provisions without proper counsel advising the employer. I agree that the plans can be merged mid-year if otherwise not a SH (k). If it is later decided to terminate the (k) plan, I would consider spinning off the D-B assets if not desired to create a distributable event for that source.

You will likely lose the SIMPLE status of the plan if it gets merged into a traditional plan mid-year.

If in the company's email domain you can prove delivery to the account through the server. Now if the participant deletes the email or doesn't read it, that's another mattter. I would still set for return receipt, but I think the job of proving delivery got a little easier.

Not sure how this could get enforced by DOL and what threshold of contact is needed to be "reasonably calculated". However, when I worked for a large company, I recall receiving notification through email how to obtain a copy of the SPD. Because this was through an intranet, perhaps the monitoring of delivery issues went away. You're method seems reasonable in my opinion if working with email addresses outside of the company email domain.

The 401 (k) deferral election for a partner participant must be in effect by the end of the plan that it relates to. That should help in determining to which year the deferral would apply. There have been discussions here on the boards about making these elections.

Kathy, the Plan Document(s) would define the match for each group of participants. If there are no HCEs benefiting in the plan, then rate of match defined for each group is not a discrimination issue.

Mr. Powers. You're probably referring to this section from DOL guidance: Delivery. The plan administrator takes appropriate and necessary measures reasonably calculated to ensure that the electronic delivery system results in actual receipt of transmitted information (e.g., using return receipt or notice of undelivered electronic mail features, conducting periodic reviews or surveys to confirm receipt of transmitted information, etc.). It seems the operative words are "reasonably calculated" which means this is not exact science to prove delivery which makes the process more burdomsome while trying to facilitate distribution by electronic means. Are you emailing the SPDs to the participants or is the client? I'm more inclined to request that the client print copies and distribute to each participant and have them sign for receipt of the document. This process may be more problematic with a large scale workforce, but to me ensures a better percentage of proven delivery.

What a very fortunate set of circumstances if HCEs are class excluded from all plans! You will of course need to monitor if NHCEs should graduate to HCE status and prevent their participation in the plan for future years. That may become an awkward situation if participation should cease for the previous NHCE. Otherwise, you should be good to go.

If the participant was at least 59 1/2 and the plan allowed for in-service distributions, you have to be mindful that the excess amount distributed is an ERD and subject to mandatory withholding. I had that happen last year and recovered the money for the plan and had the vendor correct the 1099-R.

ESOP Guy, I think you would have to first look to see how many years the calc errors go back to. I can perhaps understand that an error was made in the drafting of the current document and you now want to go back to correct it, then VCP may work. What if the error goes back more than one plan document, or to the inception of the plan? Would VCP work in that situation? I don't have that type of experience to provide guidance. Oldman needs to get back to us with additional information.

I would first look to see how distributions (and possibly loans) may have been affected by the vesting calculation error. If there is low impact from the calculation error (e.g. participant not paid-out the full vested benefit), the correction may not be as onerous.

What has been the implication of calculation error? Were participants that had terminated employment perhpas paid-out too much or too little?

Rcline, you are correct but I think that is what Tom is saying. RPT is not a free pass to exlude the 0 benefiting group if the plan is cross-tested.

Top Heavy minimum contributions apply to Non-key employees. An HCE could be Non-key.

It could be, but not likely, a primary residence.

That is perhaps the wrong choice of words from the prior Prototype Sponsor. They can refuse to support the document going forward, but I don't believe they can not sponsor a document that the client has previously adopted. That should not take it out of prototype status. A number of years ago, prototype sponsors had to annually submit lists of adopters of their plans to the IRS. If an employer was no longer an adopter of the plan, we also had to submit this information as well. This is no longer practiced to my knowledge.

The requirements of Section 72(p) need to be met for a participant to take a plan loan. Provided the Plan Document would otherwise not restrict the purpose of a participant loan, purchase of foreign property should not be an issue. Of course, the loan needs to be repaid according to its terms.

I don't think the regs differentiate between business hours or non-business hours for determination of HCE. For that matter, the regulations do not differentiate between time zones. If there is documenation that demonstrates this person was a 5% Owner in 2011, then I would say he is a 5% Owner for plan purposes in 2011.

There is still a QNEC/QMAC option, if cost effective. Otherwise, BG has you covered.

Agreed, but she also has to pay them back !

Tom, isn't there the possibility of having different rates of match in this example? I would perhaps feel more comfortable if the same exclusions applied for deferral and match. I thought there were examples of this in Sal's book. Your thoughts?

Ahh, so you now know what you need to do