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I would add that this is possible to the extent the Plan would permit this method of distribution. In the Plan Document I mostly use, the unvested portion, with adjustment for earnings, gets forfeited.

You start to get into other issues when you contemplate excluding a group of employees that otherwise would meet the eligibility requirements of the plan. While the previous advice given is correct, it is not likely that interns are HCEs, and if this group of employees would otherwise meet eligibility and/or the statutory requirements for Age/Service, then you need to consider how the exclusion may affect the Coverage Test of the plan. This is just a starting point. Susan, I'm not sure if you are a TPA or work for consulting firm. If you are asking this question as (or for) a Plan Sponsor, then you may want to speak with a consulting firm that is comfortable with this type of work. If you work for a TPA or consulting firm, then please do a little more research for your client before suggesting to incorporate the exclusion into the plan. Lastly, QNECs and Safe Harbor Nonelective contributions are separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC. Please proceed carefully.

What type of document are you using? If you're using a pre-approved document, you would see which provisions are available for crediting past service. My document does not have exactly what you are proposing, but it does allow the waiver of min age/service requirements as of a certain date for specified sources. This may work for your client.

There you go. Gotta love it when IRS gets it right!

BG, I don't remember seeing that in EPCRS, but the method sounds reasonable. I think this was to be one of the expanded provisions in the next version of EPCRS.

I didn't realize that employer provided cellphones was on the list also. What you're describing is the correcton for excess alloatons from EPCRS. You seem to be on the right track.

I've done it several times by starting with #001, or the lowest unused plan number for that sponsor. I've seen others use the plan number and effective date of the MEP. I've not heard any bad news from the other side of the fence and none of my plans have been sidelined for the starting over method. I do recall in the 2009 ERISA Outline Book there was commentary that appeared to support my method. I'll continue with the startover method until there is more specific guidance on this situation.

Thanks Austin, I was aware of that and this is where I'm confused. A One-Person plan covering a C or S Corp owner is not an ERISA plan. A Plan that only covers 2 C or S Corp owners is an ERISA plan?

Austin, are you referring to the instructions on Form 5500-EZ or something else?

This is from the IRS website "Fixing Common Plan Mistakes": Forfeitures must be used or allocated in the plan year incurred. The Code does not authorize forfeiture suspense accounts to hold unallocated monies beyond the plan year in which they arise. Revenue Ruling 80-155 states that a defined contribution plan will not be qualified unless all funds are allocated to participants’ accounts in accordance with a definite formula defined in the plan. This would preclude a plan from carrying over plan forfeitures to subsequent plan years, as doing so would defy the rule requiring all monies in a defined contribution plan to be allocated annually to plan participants. Revenue Ruling 84-156 states that forfeitures may be used to pay for a plan’s administrative expenses and/or to reduce employer contributions. Treasury Regulations §1.401-7(a) notes that forfeitures must be used as soon as possible to reduce employer contributions. There are holes I can punch into some of these points.

I think perhpas the confusion in my mind is that the plan would not initially have the Title 1 exception to filing a Form 5500. But, perhpas that makes no difference.

DC plan covers only two owners (S Corp.) Plan uses DIAs. Is the plan subject to the disclosure regs? I had heard in a webcast that the regs are not applicable to plans covering only owners, but perhaps I'm not seeing that in the regs with respect to this type of situation. Thanks.

BG - me thinks its not worth the risk of filing a Form 5500-SF without bonding info for the sake of saving a few $100 bills. DOL sometimes picks up on these things.

Related group members can adopt the plan. Not sure of the specifics of your situation though.

Safe Harbor Plan uses a non-Safe Harbor definiton of comp for allocation of the SHNEC. The comp ratio tests fails. Can I use Rate Group testing, along with Profit Sharing allocations during the plan year to determine if the allocation(s) would otherwise meet 401(a)(4)? Or, would the definition of comp require an amendment for the SHNEC? Thanks.

There was intention to deliver the disclosures electronically, but that process has gotten out of hand as well. However, on this topic, how do the disclosure exemptions for owner only plans work? For example: 1 Owner 1 Owner and Spouse 2 Owners (incorporated) Law Firm with 10 partners, but not every partner is a 5% Owner Do the exceptions apply in each of these examples?

Many of the platform providers that pay indirect compensation have sample disclosures that you can use/modify, etc. Some however are better than others.

There was not a separate election to not defer on the bonus payroll. It was the payroll company that made the error. I understand and agree on the safe harbor match portion. Thanks for the responses.

Plan definition of comp does not exclude bonuses. Employer missed deferring on bonuses for a recent payroll. Rev. Proc. 2008-50 does not appear to directly address this situation, unless I somehow missed it. It seems that one method of correction would be to have the Employer make a QNEC for 1/2 of the missed deferral , then make the SH Match based on this amount? Am I missing anything? Plan Document does not address this issue. Perhaps just taking the missed deferral from the next payroll? I appreciate any suggestions.

What about a situation where you've taken over a plan and don't have access to prior SSA forms? If an assumption is made that a participant had been reported with a Code A on a prior year's form, when in fact there had been no reporting, is there an implication for reporting a Code D for that participant on a 2011 form? I've never had an SSA rejected in the past, but was wondering if anything is different with the filing of the 8955-SSA.

Tom, let's assume the two 5% Owners that are also officers, have $245,000 of comp. The remaining four officers have comp above the $160,000 limit for 2011: Officer 1 $200,000 Officer 2 $180,000 Officer 3 $175,000 Officer 4 $165,000 So, the answer is 4. Thanks.

Company has 40 employees during the determination year. There are two 5% Owners that are also officers and 4 other employees that have comp over $160,000 that are officers. There are no exclusions that I can use in the determination of Key Employees that would reduce the 10% number of includible officers. Are there 4 or 6 Key Employees in this example? Thanks.

Are you speaking hypothetically or did the plan sponsor receive a letter from the DOL? Most initial letters for late filings come from the IRS. Let us know.

Ok, let's try again at how the ownership breaks down: Company A: Company C - 60% B - 40% Company B: B - 50% G (mother of B) - 50% Company C: B - 22.97% M (father of B) - 41.84% J (daugher of M) - 15.87% K (daugher of B) - 4.83% R (son of B) - 4.83% Je (daugher of J) - 4.83% Ja (son of J) - 4.83 Again, we are assuming that the non-involvement exception does not apply between M and G (currently married). Thanks again for the help.

Testing is getting to the better of me, and I can sure use a little help with this Controlled Group Determination. For this example, assume that the non-involvement exception does not apply between the Wife (of Grand Dad) and Grand Dad for purposes of stock attribution. I hope I've provided enough facts and the family references are not confusing. I appreciate the assistance. Company A Company B Company C Company A 60 0 N/A Son (of Grand Dad) 40 50 22.97 Wife (of Grand Dad) 0 50 0 Grand Dad 0 0 41.84 Daugther (of Grand Dad) 0 0 15.87 Daugther (of Son) 0 0 4.83 Son (of Son) 0 0 4.83 Grand Child (of Grand Dad)0 0 4.83 Grand Child (of Grand Dad)0 0 4.83 Edit - after posting this, I can see that this is not lining up in a grid as I composed this. How do I get this lined up to make it easier to read? HELP !