actuarysmith

No offense, but isn't your scenario exactly the point behind safe harbor plans ? - not having to worry about who does and does not contribute................ The 3% non-elective (100% vested) employer contribution covers the Top-Heavy and ADP/ACP issues. As long as you stay within the section 404 & 415 limits you are fine.

There is a thread started out there on this subject under the topic of form 5330. I think that you will have to file a 5330 even though the amount is small. There is no De Minimum rule. As far as the calculations and the number of days late - we have been asking our clients to tell us how many days late the deposits have been! I know it sounds crazy (because they probably assume that it is our job to do that, but doing so would make us fiduciaries), but there is no black and white rule to use on this matter. It is a facts and circumstances determination.

They are definitely called Davis-Bacon plans. Only some firms specialize in the admin on these plans.

If the plan is a standardized prototype (i.e. not idividually filed with the IRS) and no seperate TIN had been obtained, I would be inclined to just change the effective date of the plan to a later date and skip the 5500. There has been no discrimination in favor of HCE's by this action.

411(d)(6) would preclude amending the plan for the current year. The terminated employees had already satisfied the terms and conditions for benefit accrual and are entitled to a contribution for the current. The plan could be amended, but would only apply to future plan years.

A CODA does not allow any other benefits to be contigent on it, or allow it to be contingent on any other benefits.

No offenes to Marla, but why the he-- is she asking that question under this thread? It has nothing to do the topcic!!

I would think that if it is an asset purchase only, then the Sarsep would not be part of the acquisition. If it is a stock purchase, then the sarsep becomes part of the "deal". Once that occurs, you would need to look at eligibility, coverage and participantion, etc. and likely terminate the sarsep or expand coverage to pass.

Couldn't you just 1099 this amount and pay it directly to the participant? It seems that this would have the same tax treatment and reporting treatment in the end.

I concur with the response stated above. You are deemed to own the stock through attribution for discrim testing, therefore I believe that you would also be deemed to own the stock for purposes of prohibited transactions (such as loans to Sub-S shareholders).

I am not an expert in this area, but I have had some exposure to the issue. In the standard "model 5305" type SEP and SARSEP documents that are provided by banks, insurance companies, brokerage firms, etc. I believe that the 15% limit applies on an individual basis. Several years ago, our firm had an individually designed SEP document that we would use in the case of a plan sponsor that had previously sponsered a DB plan. (Since you are prohibited from using a model SEP in that case). It seems that as long as you stayed within the 404, and 415 guidelines, you could write a custom SEP or SARSEP that would allow you to exceed 15% on an individual basis and get the full 25%.

Our firm adminsters 100's of cross-tested plans and we do not put allocaton percentages in the SPD's. However, I should also state that none of our plans have "hard-coded" percentages in the plan documents either. (These have been filed and approved by the IRS). Unless you have set up the "old" style cross-tested plan where you specify exact percentages, I don't see why you need to address the issue in the SPD. Our SPD's do state the definitions of the different allocation group.

We have had this situation come up as well. In some cases, the participant has had a history of multiple loans, or previsous defaults, etc. In these cases, we have taken the view that the participant is not creditworthy to take a new loan, and have granted the HS W/D immediately instead.

I don't believe there is any explicit prohibition against using a match formula greater than 100% - we've done it before. As long as your plan meets all of the applicable tests; ADP/ACP, top-heavy, 404, 415 etc. you should be fine.

Our firm sent out a letter explaining the issue to our sponsors. We wanted to find out how to answer the related form 5500 question appropriately. Surprisingly, many of the employers who had late deposits were not at all opposed to complying with the rules - even when the penalties were very small (and the cost to comply was greater than the actual penalty).

Unless the loan policy specifically states that loan repayments must come through payroll deduction I see no reason why a participant could not make payments "out of pocket". It is just not as convenient and requires the amort schedule to be revised.