Lou S.

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)).

If the plan allows in plan rollovers there is no limit on the types and amounts that can be converted within a 401(k) plan. Beyond the participant's ability to pay the tax hit that is. http://www.irs.gov/Retirement-Plans/In-Plan-Roth-Rollovers-Expanded Opens up some interesting planning opportunities for self employed with varying income that is sometimes negative in some years.

Yes and no. I believe the formula he has satisfies ADP but ACP still needs to be tested.

Isn't that the basic match? Did you mean to put a different formula down?

The IRS position is that Safe Harbor contributions must be 100% vested when funded. Since forfeitures arise from contributions that were not 100% vested when funded they can't be used to satisfy safe harbor contributions. At least that's my understanding of their position. I have no idea why they took this position it seems to me a more reasonable approach would have been to say safe harbor contributions are 100% vested when allocated to a participant's account. I'm also not sure what authority they have to support the position but unless someone is willing to challenge the position I think that is the rule we have in place.

The IRS position whether we like it or not is pretty clear that you cannot use forfeitures to fund any safe-harbor contributions (match or non-elective) and it is my understanding that language to prevent such "reallocation" had to be in PPA approved documents so after the effective date of your PPA restatements you can't do what you want. In pre-PPA documents it is more of a gray area though your position may or may not hold up if a plan is audited. If anyone had something more substantial to add I'd be curious though if you do a search on this topic I think you will find a number of past threads discussing just this.

You can purchase a deferred annuity (likely at a premium) provided it retains the distribution options available under the plan. Good luck.

Forfeiture if allowed in Plan Documents which it probably is. Restore the $250 in unlikely event that beneficiary shows up at later time.

I agree with you.