Lou S.

I believe that is correct and the way we have done it.

Any chance to aggregate the CBA plan and the 401(k) and maybe they aren't top-heavy? Been a long time since I looked at those rules with respect to CBA/non-CBA aggregation so I'm not sure it is something you can do but might be worth the research if 3% contrib is significant. Otherwise I agree that they 3% is required, that's not really in doubt.

OK, maybe a controlled group does exist. If so and B still has ees they can probably take advanatge of the transition period if they want. When in doubt refer them to an ERISA attorney to determine potential controled group status.

If they bought the assets, there is generally no controlled group situation. The owners of B still own B and are responsible for the plan that now probably has few or no active employees. Company A could grant service with B in their document or treat them all as new hires. B could terminate Plan and participants of B can take distributions as they please. OTHO when Company A buys the stock of B, you generally have a controlled group and the employment history of B carries over to A and A becomes responsible for the Plan of B. Plan B can't really be terminated at this point, A would need to be maintained seperately or merged into A Plan. You can take advantage of the transition period provided you meet the requirements. Hope that helps.

Sorry I can't point you to a specific cite but at several conferences over the years the IRS has addressed this informally from the podium and said not to include the $0.00 comp partner in the ADP/ACP test. I think the logic if I recall correctly was that since they had no comp, they had no effective ability to defer and should not be included with a 0% rate.

yeah but they'd be giving up the employer match to to it. though I have to admit this plan design does sound antiquated, why not just do a ROTH-401(k) and get the best of both worlds?

To me the new rules just seem silly in most applications. The old rules that allowed for a 415 excesss without VCP were much better in my humble opinion. The new rules just seem to punish a plan that has a good year, makes a large PS (or ESOP) contribution and pushes someone past the 415 limit simply because tehy deferred the max 402(g) limit. I mean there are built in mechinisms for refunds for 402(g), ADP & ACP, why not 415? Though I will say with the increased 415 limit to 100% of pay under EGTRRA, we see these 415 excesses far less frequently than when the old 25% pay limit would kick in. I guess the IRS had some logic for eliminating the built in correct in the EGTRRA cycle but damned if I know what it was. So unless the IRS changes it back you either limit allocations by plan doc to avoid the excess in the first place, which seems to punish savers, or do the refund under VCP.

VCP submission under EPCRS.

Standard caveat of read the document to make sure of your groups. But can't you test your otherwise excluables seperately and presumably no HCE will be in that group so your gateway for that group would pass. If you are testing all together for some reason such as to pass 401(a)(40 testing, than yes they would need the 1% to satisfy the gateway, does your doc have language to "top up to meet gateway"? If so I don't think you'd need amendment, if not I think you do.

General followups on the new 2848 that have me a bit confused. Since most of our clients are qualified retirement plans on the 2848 - Do we need seperate 2848s for the Plan and the Trust with the Sponsor (or Admin committee) signing for the Plan and Trustee signing for the trust? The new instruction appear to indicate this is so. Though for many of our smaller plans this is the same person. When the trustee is signing the 2848 do we always need a Form 56 Notice Concerning Fiduciary Relationship as well?

The IRC and treasury regs both have all kinds of weird stuff that I can't believe is "allowable" but I see nothing wrong with what you are posting according to the letter of 72(p) code & regs. Probably violates the spirt which was intended to limit the rolling $50K loan but sometimes the critters don't think out all the details when they write the rules. Based on your theoretical fact pattern the participant never had a highest outstanding loan of more than $20,000 until he takes the final $30K loan. Assuming he pays off the prior loan before taking a new one and no two loans were outstanding on the same day.

I really don't see a problem at all. Many documents put each participant in their own group in the document but in reality when it comes to the acutal allocation one or more groups (usually the owners) get one rate and all other groups (usually the NHCEs) get another rate unless you need to give some NHCE an increase to pass testing.

You are correct. Non-key HCEs must receive the TH minimum. There is no rule that HCEs must get the gateway, that only applies to NHCEs.

Yeah it was the Unemployment Compensation act of 1992. It was supposedly used to fund additional federal unemployment benefits during that particular recesssion by collecting the taxes sooner.

Why restore it at all? Won't it just be considered a forfeiture? Either it will be used to reduce employer contributions, pay plan expenses or be added to a discretionary contribution. In the first two cases you'd just be putting money in now to take out the same amount soon after, in the 3rd case just increase this years dicretionary contribution by the amount of the loss. Am I missing something?

Good info Kevin. Nice story on how the IRs goes about forwarding them. We too have used it with some sucess at times. Seems to be hit or miss when we use it. But we view it more as complying with the DOL rules on locating lost participants than any real expection that it will actually find a lost participant.

Looks like you just miss the safe harbor exception under 1.401(a)(4)-2(b)(2). If they got 1/52nd per week worked you'd be OK but doesn't look like 1/12th month satisfies the safe harbor exepction on uniform dollar allocation per unit of work. Still though I'm having a hard time imaging a scenario where your alloction would not pass testing on an allocation basis. edit - as a followup if only the new hires are a concern, couldn't you just test separately as all your new hires would prsumably be NHCEs unsless they were owners.

It's been a long while since we were in teh FSA business but IIRC the FICA tax savings alone generally more than paid for overspent ee accounts and administrative expenses. The unused balances were typically rare in the smallish plans we did administer and back then someone used to just buy a bunch of over the counter meds, glasses or contact lense solution if they weren't going use it all. I think someone once got creative and bough a bunch of condoms and ran it though as birth control to zero out the account. Though I realize some of that can no longer be run through the FSA. I have little sympathy for people who over estimate and then complain about the small forfieture even though as other have pointed out they are are propably already ahead when figuring in tax savings. Though I wish they would bring back the old ZEBRA accounts, now that was a tax benfit plan. Though with the current debt/deficeit those aren't likely to ever make a comeback in congress.

This is the 2nd thread on the same topic. I gave an answer in the other thread that someone else agreed with that since the excess deferral is NOT ELIGIBLE FOR ROLLOVER, it should not be restored. I just thought ERISAtoolkit had a very interesting idea that I thought might be helpful in the future. Though if I remember correctly I think I found the same thing our document the last time this came up so even if you can do what EtK is suggesting is possible, we might not be able to do it our plans anyway.

I like that idea and have always thought it was how it should be but I've never been able to find anything in the code or regs to support it. Do you happen to have a cite to support that because prospectively I'd love to be able to take that position.

Can you correct with retro active amendment lowering in-service requirement to age 62 or 63?

My understand is the gateway applies to any employee who receives any (non-match) employer allocation. So participants who might have to be counted for other purposes such as 410(b) can be excluded from the gateway if they receive $0.00 allocation of employer contributions or reallocated forfeitures.

I don't see any legal IRS problems with what you are trying to do with respect to limits or what is allowable. Just make sure the refinance doesn't extend beying the original 5 year period. You also need to make sure your loan program allows for it. As for paying with IRA assets via direct transfer, that would be a rollover in, not as a lump-sum loan payment.

No. The $786 was not eligible for rollover in the first place.

You would no longer have a uniform allocation in your PS plan which would persumably blow the written terms of your plan document.