Lou S.

Temporary disability is not a distributable event.

I think there are number of threads on this here if you do a search but what you are describing is not really a problem at at. The catch-up is for any plan limit, including 415, so if the employer allocation puts them over 415 you simply reclassify up to the annual catch-up limit.

Great question. We never use after tax contributions in plans but if what the OP describes is possible we sure might start in 1 man DB/DC combo plans.

I was afraid you were going to say that. Not sure how you get an unfavorable letter in this case. Can you send a supplemental amendment in to IRS terminating the plan and claiming not qualified on non-permanence issues? Not sure how you get around the PBGC though as they are probably going to want premiums for 03 & 04 and a distress termination. No? At a minimum I'm sure you want to freeze before anyone gets 1000 hours in 04 but you've probably already thought of that.

Does this new plan have any hypothetical participants that might be covered by the PBGC?

See page 7 of IRS instructions to Form 1099-R - "Failing the ADP or ACP Test after a Total Distribution" http://www.irs.gov/pub/irs-pdf/i1099r.pdf

^This. That is if the match was "related to deferrals that were refunded" then the match very likely needs to be forfeited under the terms of the document. If your employer won't do a safe-harbor, ask him if he'd consider automatic enrollment (sometimes called negative elections). It won't end refunds but it might reduce them if enough folks fail to turn in a 0% election form and get defaulted in at 3, 4 or 5% of pay.

http://benefitslink.com/boards/index.php?/topic/41238-adpacp-test-shifting-question/ do'h now I know I'm getting old. I asked this same damn question 5 years ago.

Interesting just found this http://benefitslink.com/boards/index.php?/topic/52196-shifting-if-adp-fails/ from last year (or 2 years ago) particularly the last post I can tell your for a fact that by shifting in my example the plan will create larger ADP refunds all of which can still be reclassified as catchup even though there are 2 NHCs involved. time for me to read the attachment in the other thread...

How long did it continue? Was it one pay period where it was attributable to 2013 hours worked or has it continued throughout 2014? Is the Plan in the DL process or terminating w/o a DL?

Maybe, maybe not. Read your Summary Plan Description (SPD) on the definition of compensation. The employer is allowed to use either but it needs to be in the Plan document.

Well the ADP fails but no refunds are required because all the excess is recharacterized as catch-up and remains in the plan so I don't think I'm allowed to shift. Also plan uses prior year testing. If I'm allowed to shift 0.02 from ADP -> ACP the plan will pass ACP. This would create slightly larger refunds for ADP but still well below the catch-up limit so no ADP refunds would be required either. If this is something I'm allowed to do I'd love to take advantage of it. Is there a citation on how and when you are allowed to shift that I can look at? And on a chuckle note, NHCE ACP is closer to .05 than it is to 2 to use your numbers.

Can you change the termination date?

If he's a sole proprietor and the contribution was made in 2013, why do you need to remove it? Just call it an employer contribution the question becomes which year. Is he over the 25% deductible limit in 2012? If no do you really need to do anything? The whole contribution is deducted on the same line of the 1040. If he's over the deductible limit in 2012, amend the return but since contrib was made in 2013 and not 2012 you don't have an excise tax for 2012. If you are under deductible limit in 2013 I see no reason to pay an excise tax.

Pretty sure I've researched this in the past but is there a de minimums refund limit that you don't have to make? We have 2 ACP refunds, one for $1 + earnings and another for under $100. Unfortunately I think the answer is we need to make these refunds but just wanted to know if there was something I was missing.

Generally speak yes but if you have any specific questions about your own benefits I would strongly recommend consulting an attorney who is versed in both bankruptcy and ERISA or at least a firm who has attorneys who can consult on both. Not doing so could be a very costly mistake.

If there is money in the plan I see no reason not to make the refund from money in the plan. Of course you may have a problem in 2015 if the plan fails the test again and he doesn't have enough in his account to cover the refund but I say burn that bridge if you come to it.

I'm confused. If you use a target date fund, you usually use the whole suite of funds not just one fund. Someone who reaches NRA in 2040 would be defaulted to the XYZ 2040 TDA Someone who reached NRA in 2055 would be defaulted to the XYZ 2055 TDA etc. You just need a rounding method for folks who land in between the band.

Yes. It is an employer contribution.

If they are terminating the ESOP that will make everyone 100% vested. I'm sure there are a number of reasons why someone would terminate an ESOP. One might be that the company is being put up for sale.

Individually I suspect a lot of congress critters are reasonably smart. But when they get together I think their collective IQ drops by 30 points.

It's all part of the paperwork reduction act.

Yes. The amount is not deductible.

I do not believe code 7 is correct in that case unless the participant is over the age of 59.5

For what it is worth my mother receives a pension as surviving spouse after my father died and her 1099-R is code 4. Prior to his death the code was 7.