PensionPro

A disclaimer of opinion is issued when a limited scope audit is performed. A qualified opinion is issued when certain issues are not in full conformity with GAAP or OCBOA.

I hope I can clarify your question without adding confusion. The 403(b) regs say that match contributions to a 403(b) plan must meet the requirements of section 401(m). So you can utilize the safe harbor approach or the ACP testing approach to meet the requirements of section 401(m). If utilizing the safe harbor approach, you must meet the requirements for the ACP safe harbor. As you pointed out, the ADP safe harbor requirements are not relevant. You can use the statutory exclusion rule as long as your otherwise excludible employees group passes the ACP test -- either because there are no HCEs, or because the numbers work out. Otherwise you will need to correct the ACP failure. You are not testing the deferrals (either through the ADP test or through the ADP safe harbor), but you are testing the match under 401(m). I have seen documents (I think it was a Corbel VS) that state that only those who meet the statutory requirements will/may be eligible for the safe harbor match contributions. I think most pre-approved documents will have similar language.

I can't think of any reason. If there are less than 25 participants you MAY be eligible for PPA-simplified reporting that includes limited Schedule A filing.

Yes, you can use the statutory exclusions and provide the safe harbor match to the nonexcludible employees. However, I do not think the OP was asking about statutory exclusions. If not using statutory exclusions, the plan must meet the requirements of §1.401(m)-3(d)(4). I agree with this statement made by the OP: "if you are eligibile to defer you are eligible for the safe harbor match unless you are utilizing the statutory exclusions."

See §1.401(m)-3(d)(4). I believe the answer is no.

I believe model SARSEPs exclude cafeteria contributions from compensation definition. However, cafeteria contributions are included in compensation for determining excludable employees.

Maybe you can clarify your question. I thought employee contributions to an HSA are includible in income as employee wages, and subject to social security and medicare taxes -- unless the contributions are made through a cafeteria plan.

Mark Box A(3) of Form 5500 for a multiple employer plan, and file only one return.

From IRS Notice 98-4 Q. B-4: Are tax-exempt employers and governmental entities permitted to maintain SIMPLE IRA Plans? A. B-4: Yes. Excludable contributions may be made to the SIMPLE IRA of employees of tax-exempt employers and governmental entities on the same basis as contributions may be made to employees of other eligible employers.

Yes. I don't understand why switching custodians would make a difference though. http://benefitslink.com/boards/index.php?s...c=43414&hl=

The participant should not be able to elect to default on the loan by stopping payroll deductions. Does the loan agreement provide for this?

You may expenses from the plan assets but the participant must be paid $1,000.

More information here: http://benefitslink.com/boards/index.php?showtopic=40920

My understanding is that Employer B can not deduct contributions it makes on behalf of employees of Employer A because it would not be considered ordinary and necessary business expenses, but check with the CPA. "Section 404 provides that if amounts contributed to a qualified plan providing deferred compensation for employees are ordinary and necessary within the meaning of section 162 or section 212 of the Code, the employer may deduct those amounts under section 404 within certain limits. Section 1.404(a)-1(b) of the regulations and Rev. Rul. 67-341, 1967-2 C.B. 156, provide that contributions may be deducted under section 404(a) only to the extent that they are ordinary and necessary expenses and are expenses incurred for reasonable compensation for personal services actually rendered. Cases interpreting section 162 have consistently applied the common law rules regarding employer-employee relationship in determining the deductibility of reasonable compensation. In addition, deductions are permitted only to the employer for whom the services were actually rendered. Young & Rubicam, Inc. v. U.S., 410 F. 2d 1233 (1969))." G.C.M. 39208, December 28, 1983.

Here is what the IRS Web site has to say: How does a participant show that he or she is experiencing a hardship? Generally, if a 401(k) plan provides for hardship distributions, the plan will specify what information must be provided to the employer to demonstrate a hardship. Most 401(k) plans use the "deemed necessary" rules, so that inquiry into the employee's financial status is not required. In other cases, an employer may generally rely on the employee's representation that he or she is experiencing an immediate and heavy financial need that cannot be relieved from other resources. However, an employer cannot rely on an employee's representation if the employer has actual knowledge that the employee's need can be relieved: (1) through reimbursement or compensation by insurance; (2) by liquidation of the employee's assets; (3) by stopping elective contributions or employee contributions under the plan; (4) by other currently available distributions (such as plan loans) under plans maintained by the employer or by any other employer; or (5) by borrowing from commercial sources. (Reg. §1.401(k)-1(d)(3)(iv)©) However, an employee is not required to take counterproductive actions. For example, the need for funds to purchase a principal residence cannot reasonably be relieved by a plan loan if the loan would disqualify the employee from obtaining other necessary financing. (Reg. §1.401(k)-1(d)(3)(iv)(D))

If your participant count on 1/1/2010 is below 120 and you filed as a small plan for 2009, you can file as a small plan for 2010. Remember to count all the employees who enter the plan on 1/1/2010.

Even though there is no tax consequence, the employer should rightly abstain from being a party to the "sham transaction" designed to circumvent the rules. Impermissible distributions even if they are rolled over can jeopardize the whole plan. An IRS auditor or a court may not agree with the IRS agent you talked to on the phone.

Using compensation for the calendar year ending in the plan year meets the requirement of 414(s).

The plan's vesting schedule applies to benefits accrued after rehire.

The CPA might have or should have followed the instructions. The 2008 Form 1040 instructions say if the total amount you deferred for 2008 under all plans was more than $15,500 (excluding catchup), include the excess on line 7, which is wages, salaries, tips, etc. This would only leave the issue of the excess deferrals being taxed again at distribution. I don't see how this would be a qualification issue for the plan(s) yet since the plan(s) were not informed of the excess deferrals.

You mandatorily disaggregate for coverage per 1.410(b)-7©. All statutorily includible NHCEs must be covered under one of the safe harbor formulas. I have not been able to find objections to your proposed arrangement. If there are any problems with it, the brilliant minds on this forum will identify them.

At the very least the match and nonelective would have to pass coverage testing.

Unless the plan meets an exception described in the instructions, Schedule H filing is required. The lack of transactions would not be a determining factor.

Are the in-service and hardship withdrawals subject to the 2 year seasoning/5 year participation rule?

No. Catch-up contributions with respect to the current plan year are not taken into account for purposes of section 416. However, catch-up contributions for prior years are taken into account for purposes of section 416. Thus, catch-up contributions for prior years are included in the account balances that are used in determining whether the plan is top-heavy under section 416(g). 1.414(v)-1.