Richard Anderson

Thanks, But our document says little about 401(a)(4) testing, and nothing as to a definition of average comp.

We are using high 3 average compensation to test in a cross tested plan. Plan Specs: YOS for eligibility, dual entry, 1/1 and 7/1. Comp from entry for contribution calculation. A participant hired on 5/1/07 had the following data: 2007 total annual compensation = $20,000. 2008 total annual compensation = $30,000. 2008 compensation from 7/1/08 entry date = $15,000. What compensation is used for testing? In other words, what is the "high 3 average" for this participant?

I think I read somewhere that for plan years 2008 and later, both the refund and gains are taxed in the year distributed, even if distributed by 3/15. Is this correct? I searched, but can't find where I read this (if indeed, I did read it). Thanks.

Are the affected participants NHCE? If so, then it should be OK for the plan to be amended retrocatively to say Participant A and Participant B only can defer XX%.

The company owner "borrowed" $100,000 from the plan a few years ago. He has been paying 8% interest on the loan to the plan, but no principal payments. Line 4d of Schedule I asks if during the year were there any nonexempt transactions with a party in interest. The original transaction occured in a prior year. For excise tax purposes on the prohited transaction, I know each year that it is not corrected it is considered a new loan for calculating the tax. Would this "loan" be put on line 4d each year until it is corrected, or would it be put on line 4d only in the year that the original tranaction took place. Thanks.

The plan meets ADP and ACP safe harbor with 3% non-elective safe harbor contribution. The plan also has a mandatory 15% match on the 1st 6% deferred. Can this match have a last day requirement and still meet ACP safe harbor with the 3% non-elective contribution. Thanks.

Can PBGC Form 500 be filed before the proposed plan termination date. Example; Proposed termination date of 3/31/2007. Notice of intent to terminate is given to participants on 1/15/2007 Form 500 filed on 1/31/2007. Thanks.

Is there a more recent Minimum Distribution amendment for Defined Benefit plans, issued after the one in Rev Proc. 2002-29? Thanks.

Plan was cash balance Defined Benefit with a GUST determination letter. This plan was restated on July 2006 to a non cash balance plan using a GUST volume submitter. The employer EIN ends in 6, so my question is: Since cycle A for individually designed plans is from 2/1/06 to 1/31/07, should this plan have been amended for EGTRRA before being amended onto the volume submitter document? Thanks

Can an amendment eliminating forced distributions from the plan be made effective 3/28/05, same as the automatic rollover amendments? If not, then must the plan sponsor adopt the auto rollover amendment effective 3/28/05 and then adopt the no forced distribution amendment effective on signing of amendment. Plan sponsor has never done any forced distributions even though document language says cash out distributions will be done as soon as is administratively feasible. Thanks

Admittedly, we are slackers with respect to this issue. There will be quite a few mandatory distributions that we should be doing automatic rollover to IRAs for, but we got started late. This post is not related to the issue of not amending; assume that the amendment is done by 12/31/2005 for a calendar year plan. I have several questions regarding this: 1). Are we the only ones who aren't going to be distributing by 12/31/05? 2). What is the correction for not following the terms of the document? We should have done automatic RO distributions by 12/31/05? 3). I think we can self correct as an insignificant failure and distribute in Jan or Feb of 06. Assuming the self correction is done properly; does anyone see much risk in doing this? Different, but somewhat related situation: Assume "Good Faith" amendment is timely done and automatic RO done before 12/31/05 for a participant. But, this participant terminated in 2003 and per plan document should have had a mandatory distribution prior to 2005. Am I correct in that the IRS relief for automatic ROs done by 12/31/2005, is only relief for distributions that should have been done some time after 3/28/05? What would you do in this case?: 4). EPCRS self correction? 5). Nothing, other than the distribution 6). Something else Second different, but somewhat related situation: We took over a plan recently that had already done an amendment lowering the mandatory threshold from $5,000 to $1,000. But, this plan has several participants who have balances between 1,000 and 5,000 that should have had mandatory distributions in prior years based on the plan document in effect in prior years. 7). Is there a correction for this? The plan no longer allows mandatory distributions on balances over $1,000. Thanks

We have a several clients with 401(k) plans that have pooled investments. We usually try to make distributions soon after an annual valuation. Our document provides for annual valuations and interim valuations if the plan administrator sees fit to do so. Because of the new automatic rollover rules on mandatory distributions, we will be making quite a few distributions late this year. I would think that there may be a few others in the same situation. If you are in the same situation; which of the following are you doing?: 1). Distribution based on 12/31/2004 valuation. 2). Distribution based on an interim valuation. 3). Something else (please specify) Thanks

I would like the opinion of others. We have made a few typo corrections to our volume submitter and I think that is OK and not concidered a change from the specimen language. Do you think that it is OK to make minor changes to the speciment language and still expect reliance as a word for word document? For example: The specimen plan has several vesting options, but it does not have the particular option of 1 year cliff vesting that the client wants. Do you think we can change the 2 year cliff vesting language to 1 year and assume that the change is too minor to really be called a change in the specimen language? Thanks.

This has not come up at our firm before. I think I know the answer, but would like to hear from others. Someone with a low salary deferred about 96% of salary. After allocation of match and profit sharing, the total annual addition will exceed 100% of compensation. Can the excess above 100% be reclassified as catch-up. The excess is a total of about $75. Thanks.

Plan Year was 2/1 - 1/31. Compensation is defined as calendar year ending with or within the Plan year. Limitation Year is defined as calendar year ending on or within the Plan Year. The Plan Year was amended to calendar year, with a short Plan Year of 2/1/04 to 12/31/04. The definition of compensation and the Limitation Year are unchanged, both remaining as calendar year. Should any limits be pro-rated? It seems that they would not, since the compensation period and the Limitation Year have not changed. Also, this is the second year that the plan has allowed salary deferral contributions. It was a profit sharing plan prior to that. The first year of being a 401(k) (the 2/1/03 to 1/31/04 plan year) was not Safe Harbor. For the second year of being 401(k) (the short plan year of 2/1/04 to 12/31/04) a Safe Harbor Notice was distributed telling particiapants that for the 2/1/04 to 12/31/04 Plan Year the Plan will be Safe Harbor and will make the 3% non-elective contribution. Any thoughts on the short Plan Year Safe Harbor? Thanks.

This is a new plan with over 100 participants. At the end of the first plan year (12/31/04) the only plan asset will be the employer contribution receivable. Will an audit be required? This first plan year is not a short year. Thanks.

Thanks.

The plan uses prior year testing. For the 2002 plan year, one low paid NHCE deferred a large dollar amount. The 2002 definition of comp for testing is less deferrals. For all other years the definition of compensation will not be reduced for deferrals. My question is: For what year is compensation for HCEs likewise reduced by deferrals? 1. Reduce HCE 2003 comp for deferrals, since this is the HCE data that will be tested against the 2002 NHCE data? 2. Reduce 2002 HCE comp for deferrals, even though the 2002 HCE data is tested against 2001 NHCE data? Thanks for your help. Richard

Thanks Archimage. But, Bfree asked the same question and you had a different answer. At least I think it was the same question.

I have the same question as BFree. We have a 401(k) plan that is new for 2001. The 2001 ADP test was done using current year testing. All employees were hired in 2001. All HCHs (2 owners) were first employed on 6/2000. Using current year testing and excluding all without a YOS leaves only HCEs in the test. The 2001 ADP has no non-excludible NHCEs. The question now is: When doing 2002 ADP testing using prior year testing; do we again have no NHCEs in the test since in the prior year all NHCEs were excludible? Our office is divided on the answer to this question.

Tom, I don't think the valuation date has to be the last day of the plan year. PYE = 12/31 Annual valuation date = 6/30 In such a case, a contribution deposited after 6/30, but before 12/31, will be a contribution deposited after the valuation date, but, before the determination date. Such a contribution is included in account for TH determination.

The plan was originally effective 1/1/2000; adopted (signed) 10/28/2000. GUST restatement signed 10/7/2002, effective 1/1/2002. This is the first request for a determination letter for this plan. On line 3a: We enter 1 for Initial Qualification. For "Date plan signed" what do they want? The date the original document was signed? Or the date the GUST restated document was signed? I think that they want the date the original was signed, but I'm not sure. Thanks.

On the Form 5307, if line 2 is filled out, does that mean that a 2848 power of attorney is not necessary? Also, for line 3a, the first 2 check boxes ask for dates. The first check box: "Enter 1 for initial Qualification - Date plan signed..." Do they want the date the restated document is signed or the date the original was signed. Line 7d asks " Are there any "Other" boxes selected in the adoption agreement?" How should this be answered for a Volume Submitter document? The instructions say not to use N/A. Thanks

We don't handle section 125 plans, but a client asked us some questions and we would like to also know the answers. 1) Are there any special rules for shareholders of a S Corp that participate in a Section 125 plan? 2) Does the rule that more than 2% shareholders are taxed on their fringe benefits apply to 125 plans? Thanks

We are a small TPA firm (6 employees) and our group medical insurance seems way to expensive. Does anyone know if any professional organizations (such as ASPA or NIPA) offers group insurance for its members.