Gadgetfreak

That would be discriminatory.

Thanks for the reply. We typically charge the fee to the account but not as part of the loan. So, if someone wanted a $1,000 loan, they would get a check for $1,000 (and need to pay back based on a $1,000 loan) but an additional $100 would be assessed as a fee (not part of the loan). This is based on the Loan Policy from the Accudraft EGTRRA Docs: LOAN AMOUNT ● Maximum Permissible Loan. In general, the maximum amount that can be borrowed is the lesser of 50% of a Participant's Vested Interest or $50,000. If the applicant has any existing loans, the $50,000 amount will be reduced by the excess (if any) of his or her highest outstanding aggregate loan balance during the 1-year period ending the day before this loan is made, over his or her outstanding aggregate loan balance on the day this loan is made. ● Minimum Allowable Loan. Loans that are less than $1,000 will not be granted. PROCESSING AND MAINTENANCE FEES ● Processing Fees. The applicant will be charged a fee of $175 to process each loan application. ● Maintenance Fees. There are no annual maintenance fees on loans. ● Source of Fees. Fees the applicant does not pay directly will be deducted from his or her Account. LOANS MUST BE SECURED Each loan must be secured, including a loan for a residential mortgage (as described below in the section Loan Payments), with an irrevocable pledge and assignment of the applicant's Vested Interest. The applicant can also post any other security or substitute collateral the Administrator finds acceptable. So, do you think I can process the loan now for $1,046 and THEN assess the $100 fee? Or, knowing that there will be a $100 fee immediately which will bring the remaining balanced to less than 50% of the loan fee, means that I should NOT process the loan?

Daily val 401k Plan. Participant has a vested balance of $2,093. Plan's loan policy has a $1,000 minimum loan amount. There is a loan set-up fee of $100. Can loan be processed? If we say that, at the time of loan request, there was over $2k, then the answer would be yes. On the other hand, we KNOW that the loan will trigger a $100 fee which would mean there was less than 50% in the account. I know that subsequent distributions (and losses) have no bearing on the loan amounts. But, in this case, we know right away that the fee will bring down the amount used as security. What does everyone think? I couldn't find anything on these boards or in the EOB. Thanks.

You know I tried searching when I am adding to a thread that has been dormant since 2007 . Client just informed me that they did NOT stop deferrals for 6 months after a hardship as we instructed. I see someone posted that we should return all ineligible deferrals with earnings. I assume the 1099 would be issued for the year of deferral which is fine but what about the ADP tests? Also, what 1099 codes should be used? Finally, does anyone have any direct reference from IRS/DOL that this is the proper correction method? Thanks.

I don't want to put the reason in a public post that will remain a permanent record. They say they are continuously improving the system so it may come. My needs may not be so important to everyone and that is why I recommended you do a full demo and testing on your own. Historical data is important but I think the comfort is what is holding the actuaries back. And I agree - I don't blame them. The majority of my office is under 40 with just the actuaries and a few others over 50. If Datair, Blaze, etc. don't step up their game, I really wonder if the new generation will stick with them when these younger employees take over and get to make the decisions. FTW seems to see this trend and is addressing it.

We use FTW for govt forms and Docs. We use Blaze for annual/quarterly admin (recordkeeping and testing) for both DB and DC. My (old-time) actuaries would never give up Blaze so FTW for my DC work (with my younger staff) would have just been an additional expense. However, I looked into FTW for DC admin anyway if it would make our lives easier. There is a lot to like about it. Aside from web-based (which is the future IMHO), their support is phenomenal and everything will integrate very nicely with your existing Doc work. In the end, FTW would not do one thing I needed so it didn't work out. I look at our industry as being mostly people from the baby boom and generation X. For these types, Blaze, Datair, etc. is what we are comfortable using and many are resistant to change. However, gen Y is going to want the updated web-based systems like FTW and, although I am seeing a small change in Blaze, it is not anywhere close to what the next gen will be looking for. Simple example: Blaze sends out updates nearly every week to their software which must be applied to every machine that uses it. It is a pain. A web-based system doesn't have that issue. But my actuaries swear by Blaze for DB and we still find them to be extremely comprehensive (albeit not as user friendly) for DC. Their support is very knowledgeable and friendly but even their support system is archaic. Up until a few years ago, we would receive support answers over fax. Now they e-mail the fax to us but the history of the ticket doesn't show up. Assuming you won't save any money for leaving Datair for DC, if you are ready to spend extra to use FTW for DC, I recommend you demi their systems. Janice at FTW is so nice and knowledgeable with the admin stuff you will surely get all your questions answered. PS - I remain concerned that something bad will happen to FTW now that they were bought by WK. I had a bad experience when Accudraft was bought by Thompson. But they have swore to me that they are keeping FTW as it was and so far they have kept that promise. I hope this helps. Good luck.

Yes, that is an excellent point about being allowed to make IRA contributions and the contributions being deductible. Thanks for clearing that up. So this leaves two additional questions: 1) Are you saying the making of 401k contributions is what deems the IRA contributions as ineligible for deductions? I always thought it was the "eligibility" to make the 401k contributions. 2) If the reference point is at any time during the year, my original example leads me to question what happens if the guy contributes beginning on 7/1? Are all of his IRA contributions from the beginning of the year ineligible for deduction? Can he put some money into the 401k but not exceed his 402g limit? Thx.

1) Where is the rule that states if you are offered a 401k through your company (and are eligible), you may not contribute to an IRS? 2) If someone is unemployed in the first half of the year and contributed the max to an IRA and then he is hired and immediately eligible for the 401k in the same year, is he allowed to contribute? If so, would it be the difference between the limit and what he contributed to the IRA?

For those of you who use the online edition of the EOB, are you happy with the changes they just made? Although it seems "prettier", I find the navigation much more difficult than before. Does anyone know of alternative reference manuals (online) to which I can subscribe? Thx.

We use Blaze. Very detailed and not so user friendly but we are used to it. I would love to switch to FTW for testing but they will not calculate a QNEC using dissaggregation with a failed ADP test. They are saying no one else is asking for it so it is not on their radar. Why doesn't anyone else want this? Blaze does this and it seems helpful to me.

The CPC, QPA, QKA, etc are ASPPA credentials which are not well known to sponsors outside our industry. The ERPA is an IRS credential and therefore, in my opinion, even more valuable to outsider (though the ASPPA credentials mean more to those in our industry and offer better education).

I must echo Bird's comments EXACTLY. We switched to FTW first for their 5500 in 2009 when online submissions were required. We liked it so much, we switched to them for 1099 that same year. Then came our conversion to their Doc software for which we are thrilled. Switching admin has been researched and we hope there will be a time for that too but it is just too difficult to leave our current system now. Their support is phenomenal. So far, their acquisition by WK has not negatively impacted their service at all.

Great! Thank you so much for the quick response. I suspected he was allowed to do it but thanks for the reminder about RMD.

Here is an interesting question: A key employee age 72 wants to take $1 million out of his account. The Plan allows for this in-service distribution so that is not a problem. If he gets a direct distribution, taxes are withheld but he has 60 days to rollover to an eligible recipient Plan (i.e. IRA, other Plan, etc.). Can he change his mind and roll it back into the original Plan??? He can't take a loan because the limit is $50k. He actually wants to use the funds for a bridge loan. I can't find anything to say that he can or can't. I can see arguments either way. Any ideas? Thanks.

Thanks. That is the same language many of the CPAs we work with use. But do you think everyone in the TPA Firm should be using it, or just the ERPAs?

Wouldn't this be different in an S-Corp or vs. a K-1 situation? I can see an S-corp where 0 comp means you are not included in the tests. But if there is a positive K-1 at all, wouldn't that mean there IS comp from the company and therefore he SHOULD be included in the test?

Do you have sample disclaimer language you are using as an ERPA? Do you think it only applies to the actual ERPA or any employees within the ERPA's firm (if the ERPA is the owner of said firm)?

I am glad to have sparked such a lively dialogue and appreciate that I was able to get this TH issue off my chest. I agree with what was said here. It is some of these ludicrous laws that keep us all in business. But there is ludicrous and there is preposterous . I often have sponsors arguing with me about why they need to have HCE refunds just because no one is deferring. They are offering it, it is not their fault that no one is utilizing. I see that as a valid argument from the point of view of the layman. Anyway, its nice to know I am not alone in my views and I am happy to have a community like this to discuss them.

Well we have a daily val platform and I do not perform the TH test on the first day of the year. It is simply not practical for every client. While I agree that proper consulting should alleviate this situation in the majority of cases (with proper consultants who advise potential TH Plans on how to prepare), it is just not possible in all situations - esp one like this where there is a takeover. And again, I will not badmouth the prior TPA since I don't have both sides of the story. I am not debating the theory behind TH. I just think the application of the rule with no way to correct seems problematic. Look at the ADP test (if using current year testing). You have options to correct after year-end that don't cost the owners a cent out of pocket. IMHO, the TH should have the same 2.5 months to return key deferrals if they don't want to do a TH contribution. Thanks for letting me vent .

Thanks for all the options. In this case, they are going to make the contribution. But it just brought up a generic situation that I am not comfortable with - the whole concept of doing a TH test in Q1 of a year based on beginning of year assets and then triggering a TH contribution with no way around it just seems very foolish.

No. Plan was NOT top-heavy for 2010. Old TPA didn't warn client that they were getting close and to hold key deferrals for 2011. Client allowed keys to defer in 2011. We took over early 2012 and said we would do 2011 year-end work. We reviewed (well, redid) the top-heavy test (based on 1/1/11 assets) and determined Plan WAS TH for 2011. Technically, Plan must make a TH contribution for 2011 as the keys deferred. I just find it unbelievable that if a Company truly can't afford the TH contribution (and will need to go out of business and lay off all employees) they really have no choice. I do not see any correction options available (SCP, VCP, etc) for this scenario and I can't believe this is the spirit of the law. It seems logical that the keys should take their money back (with interest and maybe penalties) so that the NHCEs don't suffer. But there is nothing that I found in the guidance to suggest that.

Plan is NOT an SH Plan at all and has a 401k feature with a pro-rata disc PS design (not used) and a discretionary match which is not being made. A Top-Heavy test is performed in Q1 2011 which shows that the Plan IS Top-Heavy for 2011 (based on 12/31/10 assets). By this time, keys have already deferred triggering the need for a 3% TH contribution which will be around $30k. Company says straight out they cannot afford it. What are their options at that time (Q1 2011)? Can key deferrals be returned at that time? What if they thought they WOULD be able to afford it in Q1 2011 but, by Q1 2012 (when final tests are done), they can't anymore? I know that all regs say "tough luck" but it just seems so wrong. I am puzzled that there is really no other alternative. What if the company is faced with a HUGE TH requirement and the only alternative is to shut down the company? I simply can't believe the DOL/IRS (which is usually there to protect employees/participants) would rather this contribution be made and everyone lose their job than find a way to "correct" the situation. Anyone have additional thoughts?

John (who is under 50) worked for ABC Company from 1/1/09-2/28/09 and deferred $5,000. He was then hired by DEF Company on 4/1/09 and worked for them though 12/31/09. He deferred $15,000. He terminated with them on 1/2/10. DEF did all their testing and closed filed their 5500 on time. John calls up DEF on 11/3/11 (over a year later) and tells them that he exceeded his 415 limit (according to his CPA). He still has a balance in the DEF Plan. What does DEF do? Would it be any different if we were speaking about the 2010 Plan Year? What about the 2008 Plan Year (as it would be over two years)? Thank you.

From an Accudraft SPD (volume submitter): After your initial election, you can change your Salary Deferral Agreement by filing a new agreement with the Administrator at any time during the Plan Year. You can also cancel your deferral agreement at any time by giving written notice (not to exceed 30 days) to the Administrator. If you do cancel your agreement, you will not be permitted to make a new election until the first available date that you would otherwise be entitled to change an existing agreement as described in the preceding sentence. The Administrator from time to time may establish additional administrative procedures (or change existing procedures) concerning deferral elections, in which case you will be appropriately notified. Are there any regs to support the "You can also cancel your deferral agreement at any time by giving written notice (not to exceed 30 days) to the Administrator."? Or do you think it is just built into the Doc and it is not a standard rule? And what do you think the "not to exceed 30 days" mean?

I spent nearly an hour searching here and the ERISA Outline Book. Can anyone point me to the regs that discuss that a participant can cease their elective deferrals at any time during the year and doesn't need to wait until the election change period specified in the Document? I am specifically looking for something that says whether the employer must cease them immediately (next payroll), within 30 days, or as soon as administratively feasible. Thanks.