imchipbrown

I don't know what "no tax implications related to the plan" means.

I've set up a lot of 401(k) Plans that give each participant their own brokerage account, be it Schwab, Morgan Stanley, etc. The accounts are titled in the name of the plan FBO the participant. The participant invests as (s)he sees fit. Monthly statements go to each participant's home, as well as to the trustee and the TPA. I can see some merit in the required DOL safe harbor statement regarding diversification and furnishing the link to their website. I have a big issue with furnishing what is essentially a boiler-plate notice QUARTERLY. It strikes me as entirely paternalistic, time and tree wasting. Change your underwear, don't talk to strangers, look both ways and diversify! QUARTERLY? Does anyone administer this type of arrangement and have an artful way of selling this need to the sponsor (other than the DOL says you have to)? Does anyone stick this stuff on the Summary Annual Report for non-participant-directed plans?

FWIW, FT Williams software does this as well, including adding a copyright indicator. It generates this on amendments and supplemental forms as well.

The prototypes I've dealt with have a checkbox "This IS or IS NOT" a Safe Harbor 401(k). If I were trying to recind a Safe Harbor decision (assuming I could [i haven't read up on this]), I'd be doing resolutions stating that effective such and such a date, checkbox blah, blah, blah is unchecked and the opposite checkbox is selected. I'm not amending a document, just an Adoption Agreement option. I probably would have a replacement page, initialed or signed and dated, showing the new option selected.

Sorry to be so late to the party. A lively thread, for sure. I have an owner and wife (100%) who last took compensation ($45k and $25k) in 2005. No comp since, though still active in the business; hiring, firing, budgeting, etc. One is the Trustee. They've never deferred. Regardless of comp, they're HCEs. But are they in the ADP test? The company has gone from 50+ employees to 4. The remaining HCE (by virtue of 2008 wages) is curious about limitations on her deferrals for 2009 (current year testing). I suppose owners could take a meaningless W2 wage and end the discussion. Whose call is that?

I posted a question yesterday that involved spreadsheet-style data: Name, Comp, Contribution, etc. for two people. I could line the data up into columns using spaces, but "Post Preview" shows all the spaces removed. I tried Tabs, but hitting the tab key kicks me out of the post-box. I tried a fixed font (Courier New), but that didn't help. I could have uploaded a .pdf or .xls, but it wasn't THAT important. Almost drove me crazy, but it wasn't far, so I walked.

Yeah, I haven't seen his Plan Document, but I've never seen an approved (I assume) prototype that doesn't tie compensation, for allocation purposes, to 401(a)(17). So, disqualified for not following the terms of the Plan, you think?

A potential new client contacted me. His accountant has informed him that, because of amendments to Section 415, his contribution allocations starting 2008 have changed. I received an allocation report for 2007 and the proposed 2008 report. Without getting too specific, it's an Integrated MP Plan, 8% base plus 13.4% over TWB of $97,500. Here are some 2007 numbers the accountant provided: Gross Comp to TWB Excess Comp Base Cont Excess Cont Total Doc 345,000 97,500 247,500 7,800 33,165 40,965 Other EE 15,024 15,024 0 1,202 0 1,202 Straight Profit-Sharing was used to get Doc to $45,000 I have two problems with this. 1) I would have started the calc with Gross at $225,000. Excess Comp would be $127,500. So Base = 7,800 (same), Excess is 17,085, Total = 24,885. 2) Why 5.4% of TWB? I'm used to 5.7% of TWB, or 5.4% of (80% TWB +$1) The accountant believes that prior to 2008, the above calc is OK. I think 401(a)(17) always controlled, regardless that 415 now refers to 401(a)(17) comp. He would apply the 2008 comp limit of $230,000 - 102,000 TWB as the Excess Comp. I don't want to get into a pi**ing contest. Maybe I'm missing something?

Can I beat a dead horse? ADP test and ACP test failing. If I first shift a bit of NHCE deferral over to ACP, I can pass this and the HCEs avoid forfeitures of the match. Then do the ADP and refunds.

I'm rowing the same boat with you. In a (un)related thread, I asked about the taxable year of refunds. In addition to the fine answer, I found PPA ’06 § 902(e)(3) eliminates the gap period income rule for excess contributions in § 401(k)(8)(A)(i). (New). I would assume, then, that there is no Gap-period loss. Maybe my uneducated answer will move your question back to the top of the queue.

Thanks, everyone, for all the help. Hope this thread is useful for someone else.

Wait. It's exactly the same result as the first attempt.

That is quite a different result. Of course, that's only because I'm comparing apples (wrong) to oranges (right). Here is the re-re-recalculted result. I'd upload the actual spreadsheet for the general good, but its a real mess. Lots of hidden columns. Really "Goal-seek" dependent. 08Refund_try_3.pdf

I'm still confused as I allocate the amount dictated by Step 1. I think the attached looks OK, but now I'm gun-shy. Can someone take another look? I can't find a cite after Notice 97-2 that illustrates the handling of the catch-up. 08Refund_try_2.pdf

OK. So it looks like ADP for the Highly Comp'd drops to 12.06%. Calculated total reduction dollars drops by $5,000. Now, do you start reducing HCE 3's deferrals down from $20,500 or $15,500, to the next highest person's dollar amount, etc.?

So, start the ADP ignoring what you can by statutory limit. Brilliant. Thanks very much. I'll run off and see what that makes things look like.

Plan doc (or AA) should spell out the ordering. I have to image a strange circumstance where 415 is exceeded. Really generous match? Really high deferral/comp ratio?

Thanks, people. Did anyone look at the attached .pdf to see if it looks right?

Can anyone put an extra eyeball on this one. My understanding is: Do ADP test - fail Adjust deferral % for HCEs. Tally a dollar amount based on adjustment Spread the dollar amount to reduce deferral dollars Then, consider what is a catch-up I haven't put a pen to it, but I'd love to say ADP fails Hack out $5,000 catch-ups Test again It may actually come out worse that way. adp_test.pdf

Don't know if it'll work on your machine, but try www.peregrinepensions.com/dc_keogh.xls You should only Input items on Row 8, and maybe non-owner employee comps

My document provider, FT Williams, has a nice list. I don't know if I'm allowed to cut and paste it here.

I believe all this to be true, but would love a cite, if anyone has one handy.

That's what my Actuary says; proposed is proposed. Follow the current law.

You either hand print it, or buy some software. benefitslink sponsor ftwilliam has software that will produce .pdf 5500s to email for signature. Believe the price to be $250 unlimited 5500s per year. Cool thing is that they'll import a prior filing into the current year form. Also checks Business Code for recent changes. Don't work for them, but use their software. Not the greatest user interface, nor the worst. Very responsive to "wish-list" type requests.

How many hours of service does this Trust have? What age is it?