K2retire

I agree with Larry - especially on the separate source because of the different vesting. I have heard others who seem to think that you can have a single plan with some participants who are QACA, others who are EACA, some who are both, and still others who are neither. It has not been explained to my satisfaction, but I gather it would involve component plans for testing (or not).

That's the question that makes this all even more terrifying!

Mike Conger at Polsinelli and Al Martin at Lathrop & Gage are also fine choices.

The 5500EZ is a one page form that is easy to complete. The IRS website has forms that can be viewed, downloaded or printed as well as instructions. http://www.irs.gov/formspubs/index.html?portlet=3

Wouldn't that be either (a) contrary to the allocation formula in many documents or (b) discriminatory? I've calculated cross tested contributions that way, but without a separate allocation group to permit it, it seems problematic.

George is not the first person I've heard expressing these concerns. Apparently the publicity for this proposal is growing. Thanks for the link to the initial article.

The question the fiduciaries should be asking themselves is how they justify (in court if it comes to that) continuing to do business with a TPA that has told them they will not be responsible for the accuracy of the work they do.

In most cases money purchase plans are not permitted to include salary deferrals. With no deferrals, there is nothing to match.

LLCs have a choice to be taxed as either a corporation (in which case your owners should have W-2 wages) or partnerships (in which case your owners would effectively be self employed). In most cases the monthly draw is irrelevant to the calculation of their income. Even if they are withdrawing $60,000 a year, if there is a net loss, they have no earned income from which to make deferrals.

Is the attorney an ERISA specialist, or a corporate guru? My guess is that he or she is looking at the total number of participants compared to the 3 in question saying that the percentage is too small to be a partial termination. I am not an attorney, nor do I ordinarily work with multiple employer plans. However, when I have dealt with an employer ceasing to participate in a plan, the ERISA attorneys with whom I have consulted have always said that it was a partial termination as to the employees of the withdrawing employer.

Is there an hours requirement associated with your six month period? I've never had a problem with the situation you describe, but when using a period of less than 1 Year of Service we do not use an hours requirement.

Are you saying that the company is issuing the warrants directly to the IRA, not the employee? Wouldn't that imply that the company was making a contribution directly to the IRA? How is there a contribution by the employer to the IRA if the issuer allows the IRA to purchase the stock as allowed in Ancira? The employer can allow the warrants to be exercised by more than one entity. Why cant the IRA purchase the stock directly from the issuer if the stock purchase plan allows warrants to be exercised by the employee or a trust which is controlled by the employee? Again where is the PT violation? Everything that I know about Ancira is what you have typed above. I am neither agreeing nor disagreeing, but rather trying to understand. I've simply never heard of a warrant being exercisable by anyone other than the person to whom it was granted and I'm struggling to understand how or why the company would grant a warrant to an IRA without it being considered to be a contribution to the IRA.

Are you saying that the company is issuing the warrants directly to the IRA, not the employee? Wouldn't that imply that the company was making a contribution directly to the IRA?

It is an option in the document. It is a very common option, but not a requirement.

If there is no transfer of value, what is the point of the transfer? I find it hard to believe that the individual would go to the trouble unless there was some value -- which is exactly what would make it a prohibited transaction.

I agree with both statements above. But I've attended some discussions with folks who work elsewhere who are firmly of the opinion that a plan can have some participants who are covered by EACA but not QACA, others who are covered by QACA but not EACA, and still others who are covered by both. Why anyone would even consider establishing such a situation (if it is truly allowed) is beyond my comprehension!

Thanks. I agree they shouldn't have set it up. Many of our clients (and the brokers who sell our plans) don't seem to comprehend that they are signing a legal document that obligates them to do certain things within a prescribed time frame. Sadly, these are usually the same ones who don't bother to read the information that we send on that subject.

I'm back at work, but it appears that my brain may still be snorkeling in Hawaii.... (Couldn't find Blinky, though.) Plan sponsor signed documents mid-September for a new calendar year safe harbor plan effective in 2008. Deferral election forms were submitted by several employees before 9-30. Client has now decided that there is no way he can begin deferrals before 11-30 for anyone. Upon hearing that was not a viable option, he would like to "amend" the plan to become effective 1-1-09. I'm thinking that they currently owe QNECs for the deferrals that didn't get made, and I've already nixed the proposed "amendment". What am I missing?

The firm where I used to work had about exclusively balance forward and DB plans. It was a small firm with about 800 DC plans, I think about 60% of them were DC plans.

Love it!

We inform them of this possibility at the time we send them the termination resolution and encourage them to complete the testing BEFORE making the distributions.

With a true discretionary match, the decision to match is often not be made until after the end of the year. Consequently, it would be difficult to give any sort of notice mid year. If the document says that the match is made on a per plan year basis, then it must be done based on the whole year's compensation. So you adjust -- since it is discretionary, you may end up matching the first 2% of pay for the whole year instead of the first 4% for the first half of the year, for example. Yes, this will potentially change who gets how much, but should keep the total dollars about the same.

So you are saying that a participant with an account balance is no longer a party in interest when he or she terminates employment? I always understood that anyone with money in the plan was a party in interest.

Unless there is some other definition of comp somewhere, I think you have to use 12 month comp for the match. Our clients do it all the time.

It is one of the questions on the Corbel prototype document, but it appears in an employer administrative elections appendix, not the main document. I'm not sure if it can be left blank. By the way, I believe the provision reads that the plan is INTENDED to be a 404© plan, not that it actually meets that definition. (Since we all know that an effective litigator can change the reality to be different from the intention.) TPAs who write their own documents get to decide what type of provisions they are willing to support. Clients who want different provisions can either negotiate that with the TPA or go elsewhere. That is not an unusual way to do business. I can't imagine why the TPA is taking the position that it must be marked as a non-404© plan, but it probably has something to do with how they operate their business.