justatester

Here is the language from the document: Section 4.03: Employer Matching Contribution. The governing body of XXX may elect to contribute a matching contribution for its Participants who are employed on the last day of th Plan Year in such amounts or amounts as it may, in its sole discretion, determine proper. Each participating employer/division has its own language. I guess my thinking was they determined the benefit of "zero". So, if we treat Division 3 as non benefiting, the plan fails coverage. If we also remove them from the ACP Test, the ACP test fails. Let's say we do that, for BRF, should Div 3 employees be counted in the denominator of the test? Additional thoughts?

OK...Here is the situation. I have a plan that has 3 divisions. The Match is discretionary. Div 1 match is 50% up to 6, Div 2 match is 100% up to 4%, and Div 3 has no match for this year. For the purposes of coverage and ACP testing, would I count Div 3 participants as benefiting or not? My thought is since the match is discretionary, they are benefiting at a 0% rate for this year. I understand I will need BRF testing since the match is different by division. Any thoughts/comments. Thank You!

So, I have a plan that has two locations in it. One location receives a match and the other does not. The plan also allows for after-tax contributions. Since the plan passes coverage due to the after-tax component, do they need BRF since the "levels" of match are different? Any thought would be appreicated!

Here is the situation: The profit sharing component of a 401(k) Plan is not passing the ratio test for coverage. The Main populations ratio is 68% and the "otherwise excludables" ratio is 3.25%. Average Benefits would help the main group, but obviously not the "otherwise excludable" group. My question is, can we run the Average Benefits tests not disaggregated for the sole purpose of running the ratio test for the profit sharing piece not disaggregated? Or if we run the Average Benefits test not disaggregated, does that mean we now need to run all testing not disaggregated? Any thoughts would greatly be appreciated!

I was just about to post a question about this same topic...so here goes my question... Company A is owned by two brothers 50% each. Company B is owned by one brother 100% Company C is owned by the other brother 100% Plan A consists of Company A and Company B as a participanting employer. I am assuming the 2 brothers would be considered HCEs based on Ownership. No other HCEs based on comp limit. BTW, Plan A is Safe Harbor as of 1-1-09. Plan B consists only of Company C employees. No other participanting employers. Plan B is NOT Safe Harbor. We have received direction from the client to test Company A's employees in both Plan A and Plan B. They do this beacause company A performs payroll, billing, bookkeeping, accounting, etc services for both Company B & C. In the past neither brother contributed to either plan therefore since they were the only potential HCEs. Plans passed ADP testing. Since Plan A is now Safe Harbor, both brothers put in $16,500. If I am required to test Company A ees in Plan B, since they are the only HCEs, the plan fails miserably. HCE Average = 20% NHCE Average is 2.5%. The brother ony earn about $80,000. Does it make sense to test only Company A's employees in both Plans? Should we be treating these plans as a controlled group? Just not sure what to do...any help would be greatly appreciated!

I have 11/1/07-10/31/08-2 plans. 1/1/08-12/31/08 For the general test, it is done on a controlled group basis? By which I mean, the total ee count is in the denominator and the numerator would be only those receiving the point based contrib.

In the plan receiving the point base allocation, it is only anyone hired after 11/1/07 that is receiving this allocation. There is another ps contribution in a separate plan that everyone gets (including those on the point base allocation)-They are all in Group A. Group B & C are receiving ps under a separate plan. So, Group A has k&M, along with this point base ps contrib all going into plan 1. Group A also has a separate % based ps contrib going into plan 2. Group B has one plan for the k&m, and a separate plan for the PS. Group C has the same thing. So we essentially have 6 plans with 3 employers under a controlled group. For coverage, can I treat each PS piece as separate (of course counting the other ees as non excludable, not benefiting) OR must I aggregate all ps contributions under the ratio test and treat as one?

Here is the situation: 3 plans are members of the controlled group. 2 of the plans are 10/31 PYE- 1 12/31 PYE. Effective 11/1/07, the plan froze their DB contributions to new employees and added a profit sharing contribution that is a point based allocation formula. For the 2007 plan year there are no HCEs receiving this contribution. The other 2 plans have profit sharing as well however they are a % of compensation allocation. Since one of the contributions is not a uniform rate, we feel general testing is required. The question is how to run the general test or is it even required for the 07 time period since there are no HCEs. If testing is required, and this contribution passes on its own, would you only use that population in the general test and treat all others as nonexcludable not benefiting? Which actually brings up another question...Can each profit sharing contribution be treated separately if it passes coverage separately? For example, Group A treats only group A employees as benefiting, but treats Group B & C employees as non excludable not benifiting. Any thoughtw would be greatly appreciated...

What if it is a safe harbor match that was contributed for 6 months? Do you only use the compensation from those 6 months or can you use full year compensation for the ACP test?

This may be a silly question, but... A plan has 25% deferral limit and 25% after tax limit with a combined 25% limit for both sources. If the person goes over the combined limit, can pretax money then be reclassified to become catchup to bring them below the 25% combined limit?

When breaking down the groups, are you looking at the overall total match received vs the actual formula? For example, the 50% to 5% (2.5% total) vs the 100% on 1%, 50% on 2&3, and 25% on 4&5 (2.5% total): If a person defers 1% they are getting different levels one being 100% the other being 50%. Can you test them in one group as equal formulas? Or since the participant has the availability to receive the match at a total of 2.5% make them "equal"?

We have a client that requires BRF Testing. Here is a breakdown of the formulas: 50% to 4% (A) 50% to 5% (B) 75% to 6% © 100 % of 1, plus 50% on 2&3, Plus 25% on 4&5 (D) For my testing groups breakdowns: Test 1: Group A, B, C Test 2: Group B, C Test 3: Group C Test 4: Group D Is this correct?

For plan purposes.

Question: An Employee works for Company A and contributes $10,500. He leaves that company and goes to work for an unrelated employer (Co. B) and contributes another $10,000. Would the entrie $10,000 contributed at Co. B be considered regular deferrals or would $5000 be considered regular deferrals and $5000 be considered catch up. Your thoughts would be greatly appreciated!

I have a plan that excludes a group of hourly people-they are not part of a union. With these exclusions, they do not pass the ratio test. This group of ees participate in SEP IRAs. Under normal circumstances, I would perform an Average Benefits test. How would that work with the SEP IRAs? If I can't run an ABT test, what are my correction options. Any help would be greatly appreciated!

I have a plan that was 100% vested for the match & profit sharing. They have amended their plan to now have a vesting schedule for anyone hired after 1/1/08. The new vesting is a 2 year cliff. Would a BRF test be required? Another BRF question, distribution options: 1) a group of employees within a plan are allowed in-service withdrawals prior to age 59 1/2. (5 years of participation and contribs must be in plan for 2 yrs) This is a protected benefit only allowed to a small group of ees. Does the plan need to do a BRF test since this option is not available to all?

The 2007 ADP/ACP test needed to be redone. The original tst did not include some pretax and matching contributions. The plan uses the prior year testing method. For the 2007 test, I know I use the 2006 averages. Can I use the disaggregated numbers? In other words, my 2006 test had two group the "otherwise excludable" and all others. Or do I need to revise my numbers to have one subgroup?

Ok, I have another question. If the plan has a 3% SHNEC and a additional 6% contribution to only those with 1000 hours and employed on the last day of the year. Since not everyone is getting the additional 6%, would rate group testing be required? Do you have the option of testing the two contributions separately for coverage? Another situation: Plan has a 3% SHNEC, they are/want to be a new comp plan and give an additional 6% contribution only to the HCEs, is this ok?

Ok one additional question, if the SH QNEC and the reg NEC are based on a reduced definition of compensation that passes 414(s), would you use total compensation (415 Gross) to determine the rate groups?

So one coverage and one rate group test?

So when calculating the "rates" some employees will have only the SH contribution and some with have both the SH and the regular contribution. Is that ok?

I have a plan that provides for a 3% SH Profit Sharing contribution to all employees. In addition, they provide for an additional ps contribution that has 1000 hours/last day requirement. Based on their formula, General Testing is required. My question is when performing the rate group test, do I include both contributions or just he additional contribution? Also, since the additional contribution requires a last day/hours requirement, must it pass coverage separately or can it be aggregated with the SH Contribution? Any help would be greatly appreciated!

I have a plan that have several US citizens who work and live in Canada. They are employed by a US company and are participants in the US DC plan. They are paid in Canadian dollars. Question: I assume they need to be tested in the US plan since they are participating. Do I convert their Canadian salary to US dollars? Also, are there any special Canadian rules that need to be followed? Similar to PR participants.

Thanks for the feedback. Now that A&B are together, they now easily pass coverage on the pretax side. However, on the match side, the "otherwise excludable" group does not pass. Company A (the larger group) has a 1yos for match. Company B has immediate. So I have a whole bunch of NHCEs that are now nonexcludable, not benefiting. They also have BRF & General testing issues. Basically, the plan design is a mess.

No, this will be the first time they are using it. Originally, when it was just A&B, B always failed coverage. They failed so bad that they did a VCP filing. It took almost 2 year to get an answer, which was basically there is no way to fix the past, just fix it going forward. That covered Co. B through 2007. The VCP Filing did not include the fact that Company C existed. So I just thought of something...your thoughts would be appreciated. In 2006, Company A & B were not permissely aggregated. For 2008, Company A & B are permissively aggregated for at least pretax and match....which to me indicates they can not rely on the 2006 coverage results. For the profit sharing, do they need to permissively aggregate since the pretax and match are?