kocak

If this post is re Q47 on the 2009 practice exam, the answer choices are: A. I only B. III only C. I and II only D. II and III only E. I, II and III The answer key indicates B is the correct choice - III is the only true statement. Based on the analysis above, it seems that I is false (refunds total $9,000) II is false (HCE1 excess is $7,000) III is true. I don't see a need for AIRE to post an errata. If you disagree or I'm looking at the wrong question, please let me know. Much appreciated.

Is the plan audit part of the Form 5500 that must be given to a participant upon request? I'm thinking yes - since it is an attachment to the filing - but haven't been able to confirm. Also, since Schedule E and SSA are not part of the public record I'm assuming they are not available to participants upon request. Thanks much. Michele

My understanding - both ways are viable. If you meet coverage requirements testing the statutorily excludable employees separately, you can test them separately for nondiscrimination (ADP/ACP testing). When doing the nondiscrimination testing, we have the option of running it as two tests (same as coverage) or putting all the HCEs into one group and effectively eliminating your second test since it will only include NHCEs.

The plan permits only one loan outstanding at a time. A participant took a loan for the purchase of a primary residence a few years ago. The loan was amortized for more than 5 years. The participant wants to add to the loan amount. Can the new amount be amortized for the remaining payment term of the first loan (more than 5 years left) even though the additional amount is not for the purchase of a primary residence? I would think I could only amortize the additional amount for 5 years but I'm not sure. If I amortize the additional amount for only 5 years, I don't have level payments, but I think that is okay. Note - we won't meet the requirements of 72(p) if I consider both loans outstanding at the same time. Thanks for your comments. Michele

In response to Tom, I see where it may be helpful for a candidate to be able to comment on a question while taking the exam. I'll bring it up to the committee and get their feedback. It seems to me that it should be feasible to have some sort of coding at Prometric, an alert, if you like, that specifically prompts the committee relook at a question. Part of the current process already includes collecting statistics on each exam question and additional reviews and rewrites if the statistics look "off". In response to ERISAgeek - Unfortunately we no longer release exam questions to candidates. I think any old exams that may be floating around out there probably are pre-EGTRRA and would really be more of a hindrance than a help. If you do the reading, review the study guide, practice the questions at the end of each chapter, and then take the sample exam provided with the guide, you will be fine. I think ASPA still offers weekend review courses, if that appeals to you. For those of you who are new to the process, we have truly come a long way with the Prometric. The QPA exams used to be pencil and paper, offered on one day only, and it took FOREVER to get results. One of the compromises to having a truly random exam that is offered in a windowed period with immediate pass/fail feedback is the inability to release these exams for future candidates. Finally, to the candidate, congratulations on your pass mark. If you still don't believe us about the ACP test see the ERISA Outline Book, Chapter 11, Section VII, Part B for a discussion with several helpful examples outlining who is eligible to be included in the ACP test. Michele

I appreciate mkimball response and wanted to respond also in general. As a member of the E&E committee, my role is specifically to assist the committees in their review of exams and study guide materials. His comment that feedback from candidates is invaluable is right on the mark. We do make mistakes and we do need people to point them out so we can avoid those types of mistakes in the future. Also, while not an excuse, remember these books have publishing deadlines, and especially in the case of new legislation, the things we know in June 2003 may not have been as crystal clear in September 2002 when the exam materials are sent to be published. The study guide is not the only resource you are using to learn this information and pass these exams. There is required reading that should help you to understand something that was "summarized" in the study guide. As a reminder to candidates, you are encouraged to email your comments to educaspa@aspa.org We try to address each concern and believe me, the committees do review your comments/suggestions. As a reminder to those of you that have earned your designations, I urge you to volunteer your resources to the ASPA E&E committee if you care about making these exams better. From what I've seen on the board you have some very strong opinions about the quality of these exams. It doesn't necessarily need to be a big time commitment. We are always looking for volunteers to review a study guide chapter or group of questions. And you can get CE credit as well. See the ASPA website for volunteer information. Specifically to the candidate asking these questions on the board, I hope you did well on your exam today, and I'd be happy to address your concerns further (email me at kocak@msn.com) if they were not addressed satisfactorily by the other participants in this thread. Michele Kocak

I think in order to use match to offset top heavy you would have to have your EGTRRA amendment in place. Lots of plans haven't done their EGTRRA amendments yet and I would think if you didn't have it in place, it could be construed as a cutback issue. Any other opinions on this?

I haven't been able to find an answer to this either. I'm thinking if I'm "redoing" the 2001 participant reports I would amend that 5500, if I am just showing the corrections when made in 2003 I would report them in 2003 and not amend.

I would check EPCRS, I think there are suggestions for this type of situation, including reducing the participant's account and adjusting the next payroll, refunding the contributions with earnings, possibly even starting the suspension now. The latest EPCRS procedures are outlined in Rev. Proc. 2003-44.

Thanks for the clarification, I didn't realize the 10% penalty was paid separately. I thought it was just lumped in with your total tax due. mck

my understanding is the 20% mandatory withholding that applies to eligible rollover distributions does not apply to hardship distributions. thus, doesn't the participant get to choose if they want withholding or not and what amount, with a default of 10%. Michele

We have also been marking it yes, even though we were concerned about the 100% vesting issue. Valerie Stevens also addressed this issue in a recent ASPA Webcast. If I remember right, she said she wouldn't go back an amend a plan if it had been marked no, but would probably mark it yes going forward. mck

Assume Plan year 4/1/02-3/31/03 and failure of ADP/ACP testing. Corrective measure is refunding deferrals and matching contributions (excess contributions and excess aggregate contributions, respectively). If correction is made within 2 1/2 months after 3/31/03, the excess contributions refunded are generally taxable in 2002 (assuming participant made deferrals in 2002). The excess aggregate contributions would also be taxable in 2002, even if participant didn't make deferrals until 2003. If the total of excess contributions and excess aggregate contributions is <$100, it is taxable in 2003. Participant will receive a 2003 Form 1099-R (in Jan 2004). If the amounts are taxable in 2003, use code 8. If taxable in 2002, use code P. In my experience off calendar year 401(k) plans with returns, usually make them after the 2 1/2 month period and the employer pays the excise tax. This avoids the HCEs having to amending their personal returns. Michele

I've always thought the reason for the wait on resuming deferrals after a hardship was because if the participant could afford to continue making deferrals you have to ask the question, do they really qualify for a hardship distribution? Michele

My understanding is that generally a qualified plan may not permit the assignment of benefits. 401(a)(13). An exception to this is a QDRO. 414(p) A QDRO provides for a payment of the "participant's" benefit to an alternate payee. I need to verify who is considered a participant. The QDRO Answer Book seems to indicate that it is the participant or the participant's spouse. So I don't think participant in this context includes a beneficiary (unless it is the participant's spouse). Agree? Also, I've been reading that an alternate payee cannot obtain a QDRO after a participant's death. So, if a participant dies and the death benefit is payable to a non-spousal beneficiary then an alternate payee to the participant cannot, after the death of the participant, obtain a QDRO against a the benefit. Is this right? Thanks for your comments. Michele