Lou S.

Tom he was silent on the ADP. It is funny you assumed that meant it passed, I assumed that meant it failed. Intersting theoretical side questions on the refund of excess aggregate contributions under this fact pattern. 1. What if the match is descretionary and they later decide, opps we can't afford it no match for this year. What happens if you already made refunds in anticipaton of the ACP failure based on the assumed match? 2. What if this is daily valued and tracked by partictpant and source in individual accounts. Assume that one or more HCEs who have this recievable match, that this represents 100% of their matching account? Can you cut the check from their deferral account? Or do you need to wait until they have an actual matching account exists with the deposit before due date of tax reurn but after 2.5 month window for refunds w/o 10% penalty?

I agree with you. Part should be eligible 1/1/12 under your facts and cirumstances.

If the funds are available for in-service distribution, they are are available for in-plan conversion. At least that's how I understand it.

Well since no one else is chimming in I'll take a stab. Mind you I don't work with 403(b) but rather 401(k) so if the rules are different here I apologize. From the IRS fix it guide on 401(k) plans (near their EPCRS link) it sounds like you have a definition of compensation failure. You can check out this link for more info http://www.irs.gov/pub/irs-tege/401k_mistakes.pdf#page=2. Now you may not like the conclusion but in this case the IRS suggested fix seems to be to make an additional contribution on behalf of the affected participants (with interest) and not recoup it from the participants. I don't necessarily agree that this right thing to do as it seems like a windfall for the employees but generally the IRS fix is almost always in favor of the employee over the employer when there is some error.

Seems like they want their cake and eat it too, no? I think if you are allocation fees on any basis other than purely per capita, purely pro-rata or a comination of some fees pro-rata and other fee per capita, then you are making a fiduciary decision that you better be able to back up with some solid reasoning. I personally would be uncomfortable with such an arrangement, especially if the bulk of the rollover dollars were from owners and or HCEs but I am not a lawyer.

Tell them you have no record of them being a client since 1986. If an attorney does come, I would probably notify by E/O insurance but I can't see anything beyond defending against a nuisance claim based on what you are saying. Who did his TRA 86 restatement, GUST & EGTRRA as well as the host of other amendments. Were none done since the plan was set up in 1986? If that's ture sounds like the guys got off cheap with the IRS.

I agree with 12ax7, no CG here. Unless you have ASG or family attribution issues then owners 3, 4 and 5 are not key in by virtue of the more than 5% or more than 1%/comp so unless they are key by officer/comp they are not key in the determination.

Issue a maybe notice and if the reorganazation goes through be subject to testing, if it doesn't you can be safe harbor for 2012. That's one option that may work for you.

Sure. But it would be a fiduciary decision by the trustee to pick your investment. If you are talking about a plan that offers participant choice, then I think you would have to offer all investments to everyone or risk BRF testing. Though not sure why a plan would offer a window of target date funds and restrict access to some by age.

Or a call from an angry lawyer who thinks ERISA is pretty name for a girl but hasn't heard it is actually a nearly 40 year old piece of legislation.

Tom, his question wasn't about in plan conversions though which are clearly optional. But thanks for the info on safe-harbor plans not being allowed to add mid-year. Though I really think the IRS has gone off the deepend with restrictions on changes to safe-harbor plans, though that is a whole seperate issue. It is specifically about allowing a direct rollover of an eligible rollover distribution from a qualified plan to a ROTH-IRA, even if the funds being rolled over are pre-tax.

I'm not sure if it is required but our PPA amendment from a large national document provider contained the following provision - If they included it, my quess is the IRS was requiring it.

Are you talking about the "In Plan Roth Conversion Option" from last year? If so, you have until 12/31/2011 to formally adopt such amendments retroactive to when you added the feature, presumably in 2010. We are going thought that right now with the plans that added it last year.

No because you have an increasing discretionary match which would be described 0% of the 1st 4% PLUS 100% from 4 - 9% That doesn't satisfy the safe harbor match rules.

The owners of Company A also own 100% of Company B, so they are a related employer. But does that automatically mean they must be covered by Company A's plan? Perhaps they arent required to be covered and the eligibility question isn't applicable. Company A's Plan does not have to cover the employees of Company B. But Copmany A's plan will need to pass testing with considering Company B's employees as non-benefiting since it is a controlled group if it doesn't cover the employees.

The IRS will presume the termination is involuntary, possibly leading to a partial termination, but the sponsor has the ability to refute that presumption. Good point. This is true assuming the sponsor has good records that the employee did in fact leave voluntarily. However if they have been showing he employee on PBGC premiums and paying them 2 years after the employee left, then my presumtion is the client doesn't have very good records. Though I fully admit this could be a faulty assumption on my part.

Jim I agree with you. We don't work much with leased employees but when last I researched it I came to the same conculsion under §414(n)(4)(B) that you had to count all service back to when you originally hired them through the leasing company for eligibility and vesting. I think in our document they would be treated the same as going from an ineligible class of employee to eligible class of employee when you formally hire them away from the leasing company in much the same way as someone who is an excluded union employee but becomes non-union. Anybody disagree with it?

Not to throw a monkey wrench into this for you but be careful the IRS doesn't determine a partial termination occured in 2009 due to the 50% drop in participation which might lead to restored benfits at 100% and once again being PBGC. I know on 5310 IRS submissions we've done of late they question every drop of more than 20% based soley on the drop in participant count no matter how small the plan.

I assume this was all done in 2011. If so then no RMD in 2011 for the new IRA since IRA balance on 12/31/10 was $0.00. If there was an RMD required it should have been processed by the decedents 401(k) if she was due a 2011 RMD. The second question is can he do a second rollover? I thought there was limit that unless it was trustee-to-trustee transfer you could only do a rollover once in 12 month period. Though admitadly I don't work much with IRAs and could have my facts wrong on this. The last question is, is this an inherited IRA or an IRA the spouse is treating as his own. If it is an inherited IRA, I do not believe it is eligible to roll into the qualified plan. Though agin my facts could be off on this. So in summary - no RMD required but I'm not sure if what he wants to do is allowable. Though that may not be the answer you were looking for. Hopefully someone else with more IRA experience can shed some light.

I don't have an answer to your specific question, but don't you have a 401(a)(26) problem with only 2 of 6 in the DB plan?

No required ones that I'm aware of. Though if you added In-Plan Roth Conversion last year I think you need to formally the adpot the amendment by 12/31/11 and I think Corbel has a snap on package for that but I may log an incedent just to confirm.

Viable approach.

Thanks Tom. That's exactly what I was looking for and like I said, I knew I SHOULD have know it.

I feel I should know this but don't. Company A sold all of its assets to Company B. Company B hired all of Company A employees. Company A has no more payroll and is terminating its safe harbor 401(k) plan prior to year end. Does Company A still get safe harbor relief for the year or is it subject to testing?

No problem at all. The only potential problems I see are 410(b), ACP and 415 but with only HCEs you pass the first 2 automatically.