Lou S.

If it is eligible for rollover, then yes 20% mandatory withholding applies.

I think you folks mean SMM (summary of material modifications) not SAR (summary annual report) but I agree. Amend the plan to vest just those folks who terminated as a result of the business transaction and be done with it. In the future, similar transactions can be done on a case by case basis with nor precedent set by the prior amendment. Each business deal can stand on its own. Maybe as part of this transaction it was agreed that participants involved would be 100% vested. But at any rate I don't see a problem unless nearly all the terms are HCEs.

Yes it is permitted as long as it is not discriminatory.

No haven't had a client do it. Yes it is allowed. I would assume it would be subject to BRF testing.

It is not the question that is the problem with the OP. It is the condescending way in which he asks it.

The OP could just take the EA Exams and self administer the plan. Shouldn't be too hard. I mean all he has to do is take a few easy tests and then push some buttons.

For what it is worth this was addressed on today's IRS webcast. The speaker from the IRS said a person whose last day is 12/31/xx is considered to have separated on that date. Again this is not formal IRS guidance as it is a merely a webcast.

Oh and it will probably taint the plan they are spinning off to as well.

It's a qualification defect.

Out of curiosity is the Plan AE $6K or the 417(e) rates $6K? If the later is it possible that that PVAB will be under $5K next year? If so maybe use that as leverage to get spousal consent to rollover to IRA and have them divide the IRA in the divorce?

What does the Plan Document (or new amendment) say?

based on this I believe the prior year NHCE ADP is SD + PW and current year HCE ADP is current year SD + PW. assuming the deposit timing of PW allows you to use it in Prior year testing. If the QNEC is in your test you can't throw it out for HCEs but include it for NHCEs.

What does the Plan document say. We have very few annually valued plans left but unless the document says different we pay the value on the last valuation for the entire year. So for calendar year plans up until 12/31/xx+1 we pay out 12/31/xx value.

Does your current plan document limit compensation to the 401(a)(17) limit but reference with increases already built in or does the plan document have a compensation limit dollar amount that needs to be amended every time the limit increases? If you have the former you're not amending anything, if you have the later I believe the restriction would apply.

You leave them out of the ADP test as they were excluded from making deferrals.

But the exclusions by Job Title don't sound like a problem at all assuming you pass coverage testing which should be easy since those titles are all probably occupied by HCEs.

I think you might have more problems withe 403(b) exclusions. But I don't really deal with 403(b) so maybe someone else can speak more to that. A better solution might be to make everyone eligible for both plans and just tell the HCEs, make your deferrals to to to 403(b) or you may get refunds. Or make everyone eligible for both but limit HCE deferrals in the 401(k) plan to $0 per year thus forcing them to make deferrals to the 403(b).

I seem to recall around the time of the GUST restatements that you were now allowed to eliminated annuity options in non 412 plans without it being a cut back. There were some employee notice and SPD requirements but it has been a long time since I looked up the rules.

This FAQ from the IRS may be helpful http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions

Were they IRA contributions or SEP contributions? While you can't make pure IRA contributions after age 70 1/2 I'm pretty sure you can continue to make SEP contributions after age 70 1/2 or else you'd run into some ADEA violations so I'm not sure you really have excess contributions for the years in question.

For the 415 limit in plan #2 his 415 limit would be reduced by benefit received in Plan #1 (this should be addressed by Plan document) but for phase in of the 10 year participation limit he would start with the the 3 years of participation in calculating his 415 limit.

Pretty sure the IRS position on this is no pay = no opportunity to deffer = not in ADP test.

Yes. You need an employer identification number.

The RMDs from the 403(b) are not eligible for rollover so the advice to transfer the 403(b) w/o taking RMDs could open the tax payer to further penalties of 6% per year (I think that in the tax rate on ineligible rollovers) for each year the ineligible RMDs remain in the IRA. That would be in addition to the 50% excise tax taht might be imposed for not taking the RMDs in the first place.

The IRS has the authority to waive the 50% excise tax. The best course of action given the size of the penalty is to get a CPA who understands the issues or a tax attorney to give you advice on the best way to correct and get the penalties waived. Very likely the participant will have to take all back RMDs from the 403(b) plan and request a waiver of the 50% excise tax for reasonable cause (in this case bad advice on aggregating RMDs from IRA & 403(b)).