Kimberly S

If your 5 owners are getting W-2s they have 5 emplolyees not no employees.

As I understand it, in-service distribution options are a protected benefit that cannot be removed upon plan restatement. Salary deferrals cannot be withdrawn until age 59 1/2 per IRC. When restating a document in a take over situation, how do I reconcile those statements with the exisiting document's provision allowing in-service distributions from all money types at age 55?

Of course, if you are excluding 90% of the work force, you're not likely to pass coverage unless a significant number of the excluded employees are HCEs.

Since they have already been rehired, their window of opportunity to take the withdrawal appears to have closed before the the distributions were processed. They're back to not being able to take a distribution while they are employed (or re-employed in this case).

The question is how show our managers that there is any potential liability.

Yes it is cost related -- the fund company is afraid that potential clients won't want to pay a lawyer. We charge a flat fee to provide a document (about 10% of fees I've seen for similar services elsewhere) with no way to add on any additional charges for paying our attorney to assist with the determination. We are uncomfortable because in most cases we don't have enough information. The information that we do get is generally provided by the company's broker, who is unlikely to understand the issue. The biggest issue for us is companies whose common ownership falls below the requirements for a controlled group, but might meet the facts and circumstances test for an affiliated service group.

The TPA for whom I work is a tiny division of a much larger company. Management (comprised of people without backgrounds in the TPA world) is being asked by a mutual fund client to have our administrators take on the responsibility of determining new plan sponsors' status as a controlled group or affiliate service group instead of our current practice of requiring them to have their attorney or CPA make that determination for them. The administrators are not comfortble with this. Several of us have ASPPA designations, one is a CPA, one is CEBS, one is an attorney, several others have no industry designations. We are looking for some published guidance to show management why it is NOT in our company's best interest to honor this request from an important client that they are anxious to accomodate. Does anyone have any suggested resources?

How is Roth not subject to matching? It is my understanding that if you match, it must apply to all elective deferrals -- regular or Roth. Unfortunately, our programming people can't wait until the final regs to start putting this into place if it is going to be ready for our clients January 1, 2008.

With the new QACA plans that will be available next year, is it possible to have the automatic deferral enrollments go in as Roth deferrals? (I'm not asking if it's a good idea, just if it's possible.)

If a participant receives a contribution (even top heavy minimum) it triggers the need for the gateway.

Also a classic example of you get what you pay for. John Doe doesn't have any idea what it means, but probably isn't willing to pay for someone who does.

It is required that you follow the terms of the document. The document could be written to exclude the HCEs from the SH contribution entirely.

If the deceased participant was married, it is probably the spouse who will get hit with the income tax.

I don't know to what level I would make an issue of it - That's for you to decide. Do you like the company? Is the employer good to work with under most other circumsances? Your employer's actions are not defendable, but I think I know why he did it. HE's GREEDY! : ) I'm the employer's TPA, not an employee. My impression is that they aren't greedy, just clueless.

Employer set up a new enhanced safe harbor match 401(k) plan in April with a July 31 plan year end. Enrollment forms were distributed and returned in May. With the opportunity to defer in May, June and July, we're good so far. Payroll person fails to begin withholding for NHCEs until June 30, but does deposit $15,500 each in deferrals for the owner and his wife in May. So HCEs have three months to defer but NHCEs effectively have only one month plus one pay period to make deferrals in the first year of the plan. I've seen other threads that debate whether or not the EPCRS correction for excluding an employee applies when the employer failed to act on the deferral election. I didn't see any that addressed the safe harbor match that would have been due, had the election been followed. I also didn't see anything relative to the safe harbor requirement that employees have at least 3 months to defer in the first plan year. The consensus among my co-workers is that the client has not met the safe harbor for this first year and should be subject to ADP/ACP testing, but we aren't able to find anything to support that conclusion. Any suggestions about where to look?

Or are you really talking about Roth?

True, but if the discretionary match calls for allocations to all participants, then the only discretion is to make a contribution or not and how much, rather than who gets it. There are many clients who don't understand that distinction, nor do they understand the fact that someone who has elected zero deferrals is still a "participant."

Thanks. At this point we don't know if there was a match, or the HCE deferral rate. The issue came up as the client was explaining why they didn't think they needed a black out notice and that there was no prior year testing or 5500 to give us. In this situation, we will require that the prior TPA do the correction and just ask for a copy before we accept the assets. But I wanted to have some idea what that correction should be before they sent us anything.

Does the partnership agreement name officers or otherwise spell out any authority for minority partners?

I am looking at a possible takeover plan that calls for immediate entry for all employees who are at least 21 when they are hired. The plan was established in 2005 with no employees. In 2006 they hired several employees, but did not offer them the option to defer because they thought they had an "owner only" plan that did not allow employees. The EPCRS correction calls for making a corrective contribution based on the average deferrals of the NHCE group for a non safe harbor plan. Since no NHCEs have ever been permitted to make deferrals, how would that percentage be calculated?

I also still have a MPP (because Vanguard wouldn ot permit me to restate it as a PS when we did the GUST restatement). My self-employment income has mostly been eliminated for a number of years. But by retaining one or two clients, I've had SE income and made contributions each year avoiding most of the issues raised here. Granted a tax preparation business is a great deal less regulated than a physician, but keeping a little bit of SE income would seem to solve his problem.

I've been doing something similar for years. Our documents usually have separate allocation groups for HCEs and NHCEs. We typically did the 3% SHNE for NHCEs and a regular non elective of more than 3% for the HCEs.

I have never heard of a "disregarded LLC" but I do know that an LLC can choose whether they are taxed as a corporation or a partnership. Perhaps that is why they are saying to treat it as a corporation.

The number here at DST is 888-445-0031, option 3. Feel free to ask for me and I'll walk you through it. I will need your plan number to look up the provisions in your document.

I'm told by people in the education field that MBAs are a dime a dozen these days. Not sure exactly what that means for job opportunities, but it doesn't sound real positive. It has been my experience that a QPA is a good way to get a foot in the door in the retirement business and possibly also a higher salary. But it's quite a bit of work and if you're not sure about staying in the field it might not be worth it.