Logan401

Very good point. I let the client know that her amount would be immediately forfeited. In the event that she came back to service, we would replenish the amount back into her account. Thank you Tom!

The participant is actually eligible to receive the 2012 profit sharing contribution which we are working on now. Participant termed this year, 2013 & has less than 500 hours so it will not affect the 2013 contribution. So, going back to 2012, we know she is eligible to receive the contribution, and we know she is termed and 0% vested. I believe we would have to amend to give her 20% vesting for this to be okay?

A plan has two eligible participants in 2012, a 100% owner, and a regular NHCE. Plan waived eligibility if hired by 4/01/2012, and NHCE was hired 03/01/2012. Vesting schedule= 2/20%. NHCE termed 3/15/2013. Question: NHCE is eligible for 2012 profit share, but is 0% vested. The document requires immediate forfeiture for anyone that terminates employment. I believe that the IRS position is to partially vest in this case. Is that correct?

In a different scenario where there is 1 HCE who is 30, and one NHCE is 60. If the NHCE is receiving 10%, we can then just test on a contribution basis and it will pass as long as HCE gets 10% or less.

Hi Mike, looking back on my earlier posts I do not see that I addressed NRA=65 in the plan. I am sorry for that omission, and I thank you for your informative replies!

I am jumping back on this one because of what I remember reading years ago. In regards to those who are above the NRA. I have read that 1.40(a)(4)-8(b)(1) allows the current age to be disregarded in determining testing age under a cross-tested defined contribution plan. So, if the participant has passed the normal retirement age, we can use the factor for zero years to NRA. In this case, anyone over age 65 will be age 65 in the cross-testing. is this the case, or am I misinterpreting?

So the Owner gets tested on a benefits basis, and it passes as long as his EBR<= to NHCE 2 (highest EBR) he is tested with. The other 2 HCEs are tested on a Contributions basis, and will pass as long as their Contribution % <= NHCE 1 (lowest EBR). HCE 1 rate= 16.50%, has an EBR of 3.39. It will take 8.60% to get NHCE 2 to 3.39 EBR, just like you said. For the other 2 HCEs, will this mean they can both receive up to 8.60% and it will pass as long as NHCE 1 receives the same?

There are only 2 NHCES in the plan. HCE 1: OWNER is 59 HCE 2: Son of Owner: 24 HCE 3: 32 NHCE 1: 55 NHCE 2: 51

Client's plan has a safe harbor NEC. Owner's brother was an NHCE in prior year, and helped the cross-testing because he was the youngest employee. The brother is now an HCE based on prior year pay. In addition, the owner's son is newly eligible. Obviously, this does not work very well for the owner. Is it required the the safe harbor NEC be included in the ratio test for cross-testing? Can only the the discretionary nonelective be tested?

So I understand, what you are saying is that if everyone was < or = to age 65, then the tables have no bearing. But, because there are 2 EEs over the plan's retirement age, that is when the tables differ. Is this correct?

Hi Mike, So, what you are saying, there is no difference between the tables when it comes to cross-testing profit sharing. Why would some PS plans choose a certain table if the results are all the same? To answer your questions, there is one person age 66 (HCE), and one age 71 (NHCE). Thank you

Hello Mike, This is regarding cross-testing for New Comparability PS. I was searching for the actuarial Factors for each "years to testing age." The table I use is the UP-1984 Mortality Table; 8.5% interest rate. We are taking on a plan that uses an "8.5% interest rate for pre-retirement and post-retirement, and the 1971 Individual Annuity Mortality Table. Thank you

Does anyone have a link or file they can send me for this table? I have been trying to find it, but have not been successful. Thank you!

Hi Tom, that was the answer I was looking for. Logic told me that you cannot do it. Seeing they were HCEs, and they both expressed they did not care if it came out of their accounts evenly on a dollar basis, I had to ask! Thank you

I have an unusual request from a client. The client funded a New Comp. PS on Aug. 8th. There are 2 groups: HCEs & NHCEs. Two participants in the HCE group. The owner an the CEO making > 110k. The owner asked me now if he can pull $12k from the 2 HCEs accounts & distribute that to the NHCEs. They want to pull $6k from each of the 2 HCEs. The problem is, they do not make the same pay, so pulling $6k each would make an uneven distribution from the group they are in. Can we amend the HCE Group to make them each in their own group to make this happen? I know you cannot amend after the 1st of the year, but not sure if you cannot if the $ is going to increase the NHCE group's benefit.

They would need to terminate that plan, then rollover the balances if they choose?

Can this type of plan be merged into a 401(k) plan? It is not an ineligible Code 457(f) plan. It is set up as an Account Balance plan.

If a plan is safe harbor, is it allowable to have a discretionary match that offers 0% for the 1st 2%, and 100% of the next 2%, provided that it does pass the ACP test?

One more scenario for me to fully grasp this... Participant over 50 No deduction limit worries No testing issues Total deferrals= $17,380.00 Total safe harbor NEC= $6,240.00 Can he receive a $30,880.00 profit sharing allocation? Or, is he restricted to $30,000.00 because he exceeded the 402(g) limit by $880.00? Thank you!

Thank you John!

What if the scenario was the following?: Compensation: $100k Participant is age 54 total deferrals= $16,500 total ps= $38,000.00 This brings him to $54,500 annual additions

If they made up to a 4% discretionary match instead of a ps, that would have kept them safe, correct?

Here's the dilemma: Working on a plan transfer/merger. Prior plan has a Qualified Automatic Contribution Arrangement. They make a 100% of the 1st 1%, 50% of the next 5% match. Vesting = 2/100% Plan doc states that Forfeitures are not used to offset future contributions, but instead they are used to fund a discretionary contribution at year-end. Prior plan administrator allocates the forfeitures pro rata to all participants. Since discretionary contribution is made, you must run top heavy and indeed they are. Client is informed they need to make an additional $6,500 required top heavy contribution. Question: Does the QACA have the same top heavy rules as regular safe harbor that you can match up to 4% discretionary & not run top heavy? Any other course of action that can be taken?

More than likely not since they will most likely be enrolling in the successor plan.

Tom, thanks for your reply. Peace Out!