Chippy

the year of allocation was 2013, but they were not transferred to the participants accounts.

I have a 401 (k) profit sharing plan, where the forfeitures are reallocated. For 2013, the forfeitures did not get transferred out of the forfeiture account and into the participants accounts. The transfer is going to be made now. It's not a lot of money, the top earning participants got about $650. For 2014, do those amounts have to be included in the 415 test?

Yes, we do have enrolled Actuaries, but currently only spreadsheets that we do the non-discrimination testing on. We currently only have one cash balance plan, but potential for more. Before we start promoting cash balance plans, we would like some sort of software to back up our spreadsheets and to provide clients better reports.

Understood. We currently do the testing on a spreadsheet, we only have 1 current DB/DC combo. Just thought if we were going to do more, it would be more efficient to have software to do the testing and prepare the reports. We use FT William and I'm fairly sure they do not have a product. Who do you use?

We have a few clients that are considering adding a Cash Balance Plan to go along with their current DC plan. Is there software available to do the combined testing?

If the plan passes the 414s comp test, and it will, can I test on the allocation comp even though the document does not exclude bonuses in the definition of comp? I didn't think I could, but thought I'd ask to be sure. thanks for you help

I have a plan that is written as cross tested with everyone in their own group. The company refers to their non-elective contribution as a "Year of Service" contribution, meaning that they allocate it based on years of service as follows: (company allocates) 0 -9 years - 3% of base salary 10 - 19 years - 4% of base salary 20 - 29 years - 5% of base salary 30 and over - 6% of base salary I believe that the formula that they use should exempt them from gateway, but here may be the problem. For the basis of the Year of Service contribution they exclude bonus, cell phone and car allowances. The plan document does not exclude anything in the definition of compensation. Comp def says wages within the meaning of 3401 (a) including any amount includable in the gross income under section 125, 402 and so on.... Also in document, Compensation shall include only that compensation which is actually paid to the participant by the company during the Plan Year or such other period used to determine Comp for allocation purposes. All participants receive the contribution based on the full year comp. Based on the document, is this allowed to allocate the contribution on this comp? Can I test gateway, average benefits and general test using the comp used to allocate the contribution? Would it have to pass the 414s comp test first? thank you for your help.

thank you. Thankfully the QNEC was only $21,000 and their share was so small it only changed their comp by $50 and did not change the ADP results. Yeah, something goes in my favor!

I have a 401(k) Plan with 3 partners below the 260,000 comp limit for 2014. I calculated their self employment earnings for the plan and ran the adp test. The adp test is failing, and they are going to put in a QNEC to pass the test. Do I have to recalculate their earnings after the QNEC? And then rerun the ADP test with the adjusted compensation, which may not pass with the adjusted comp and then require an additional QNEC. seems like this would be a never ending process. Or maybe I'm just not thinking straight?

Thanks Tom.

New Comp Profit Sharing Plan, contribution elig. is 1000 hours and employed on plan year end. Plan has 2 HCE's and 2 NHCEs. 1 NHCE terminated and is not benefiting. Plan is failing Ratio Percentage test at 50% Document is marked fail-safe provisions do NOT apply. Plan is passing Rate Group test at midpoint and the average benefits % test is passing. Are there any other tests I must run to pass coverage?

Are there any articles out there to help explain this?

Does anyone know of any articles that describes how the individual groups should be chosen. I'm searching for an article to share with a client. The document states "the amount allocated to one group need not bear any relationship to amounts allocated to any other group." I was always told that even when the document was written for individual groups, that the participants should still be "grouped", Ie: secretaries, clerks, accounting and so on. Is there anything written anywhere that I can share. I tried the treas. regs, but I really couldn't find anything pertaining to the grouping the employees.

Thanks Tom. Merry Christmas

Plan year amended from 2/28 plan year end to 12/31 plan year end. Short plan year from 3/1/2014 to 12/31/2014. Adoption agreement states entry dates are the first day of plan year, fourth, seventh and tenth month of the Plan year. So for this short plan year, would the entry dates be 3/1, 6/1, 9/1 and 12/1? I was thinking the entry dates would be 3/1, 4/1, 7/1 and 10/1 based on the calender year, but rereading it, that does not appear to be correct. As an example, someone hired 9/23/2013 would enter on 12/1/2014 and would they also be statutory excludable for testing at 12/31/2014? thanks for your help!

So it sounds like the non-equity partners will have no choice but to continue to put an ER discretionary contribution into the plan. Not what they wanted to hear.......... How about zero to highly compensated non-equity partners, and the minimum for NHCE non-equity partners?

Tom, The document is written that each person is in their own group. For the allocations, the participants were grouped for the percentage of contribution allocated. That way there could be no cash or deferred arrangement and for the past 8 years it has worked. This year, some of the younger non-equity partners are saying they do not want to put in the maximum %. I had read somewhere that with a partnership, each partner could determine what % of contribution they wanted to make, and if someone wanted to not make a contribution that it was ok not to. Are there any problems if they do that? There are 10 non-equity partners, could they each do their own thing when it comes to the employer discretionary contribution? When would they have to determine the amount that they would like to put into the plan?

In a Law Firm, document is written that each participant is in their own group The plan has always been run grouping the participants into groups and then allocating the same percentage to each group. Group one is equity partners, group two is non-equity partners earning over 260,000, group 3 is non-equity partners earning less than 260,000. Group 4 is all other employees. The first two groups receive the max, the second two groups, the minimum to pass testing. The plan is changing in that the non-equity partners are getting younger and do not want to contribute a large contribution to the plan. They receive their income on a K-1. From what I've read, the equity and non-equity partners can decide individually on what percentage they put in the plan. Has there been any problems with this in an audit? Non-equity partners that are not considered HCEs still must receive the minimum to pass gateway, correct? (this is a Safe Harbor Plan and uses top paid group). If they would switch their payroll in that the non-equity partners would receive a W-2 instead of the K-1, would that change anything? Any helpful hints on running a new comp plan for partnerships would be appreciated. Thank you.

thank you very much. I didn't realize that they were no longer excepting applications on the 5307 if no changes were made. I have a bunch of clients that have gotten a letter at each restatement since the beginning of their plan and they think they have to continue. I knew it wasn't needed or required but I was struggling with a good reason not to submit. Rev. Proc 2012-6 just what I needed. thanks again for responding....

If a plan sponsor adopts an approved volume submitter or volume submitter prototype document, with no special language added, is there any benefit in applying for a determination letter in the name of the plan instead of relying in the approved document's letter? Does anyone apply for determination letters in the name of the plan anymore if using an already approved document?

No, it wasn't.

Plan is failing ADP test. One participant has 27,096 in deferrals. 6,616 is from 10/1/2013 to 12/31/2013 - he deferred a total of 23,000 for 2013. 20,480 is from 1/1/2014 to 9/30/2014 Can I use 8,480 as the catch up for the 9/30/2014 test? 5,500 from 2013 plus 2,980 for 2014?

This is a Volume Submitter plan document. The company has two plans, one for Senior partners, junior partners, and staff and one for associate attorneys and contract attorneys. They are amending the one for Senior partners to include senior contract partners. ( a former partner that no longer holds any ownership or voting interest) They had an attorney do the amendment, and it only has room for one signature. Would the amendment suffice if all the partners signed it?

A law firm recently amended their plan to allow for retired partners to participate in the plan. They had an attorney draw up the amendment but they did not prepare a Formal Record of Action of the Partners (Partnership) or a SMM. I told them they needed both and prepared the forms for them. They do not want to sign the Formal Record of Action of the Partners nor distribute the SMM. Can they adopt the amendment without signing the Formal Record of Action of the Partners? I've never prepared an amendment with out it or a Corporate Resolution.

thank you. Plan does not allow for forfeitures to pay fees, but I may suggest that for the next restatement. That is so much better to allocate to the Profit Sharing source. It will eliminate the small balance in the MP source. Guess I never realized that forfeitures could be reallocated to another source. that's perfect and what I wanted to do.