cpc0506

Thanks for all of your responses. This is how the majority of us in the office read this as well.

Plan has been a large plan for the past few years. This year the participant count at 1/1/2009 fell to 111. I would like to file a Form 5500 SF. Is the plan still a large plan for 2009 or can I use the 80-120 participant rule and file a Form 5500-SF? This is the languag from the Form 5500 Instruction Booklet: Exceptions: (1) 80-120 Participant Rule: If the number of participants reported on line 5 is between 80 and 120, and a Form 5500 annual return/report was filed for the prior plan year, you may elect to complete the return/report in the same category(‘‘large plan’’ or ‘‘small plan’’) as was filed for the prior return/report. Thus, if a Form 5500 annual return/report was filed for the 2008 plan year as a small plan, including the Schedule I if applicable, and the number entered on line 5 of the 2009 Form 5500 is 120 or less,you may elect to complete the 2009 Form 5500 and in accordance with the instructions for a small plan, including for eligible filers, filing the Form 5500-SF instead of the Form 5500. I have bold and italicized the words that I am relying on to be able to complete a 500-SF. If you can elect to complete in the same category and then can elect to complete in the other category.... Any thoughts.... Thanks.

Client does not include bonuses in allocation of safe harbor 3%. After running the 414(s) Test, the plan fails, i.e., it looks as if the defintion of compensation is discriminatory in 2009. How is this corrected? And to what level? The plan document also limits the HCE group to the top 20%. Does this limitation have to be applied to the 414(s) test, just as it is used for adp/acp testing? Or can I chose not to limit the HCE group for this test? Thanks for you guidance.

Peter, thank you for your response. However I could not access the website you provided as a link for information as to the relevant statute. Any other suggestions?

The township is in the state of PA. All the adminstrator said was that we match contributions made into the Township's 457 Plan and the Township sponsored 529 College Savings Plan. And that is what is written into the document. Does this information help in rendering an opinion? Thanks.

A client has come to us with a 457 plan. The client is a township government office. They tell us that their 457 document was written to give an Employer Match to any employee who makes employee contributions to a 529 plan. The rate of match is 50% of the first 8% of employee contribution. The match is calculated based upon the total employee contributions to both the 457 plan and the 529 plan. Is this allowed? Has anyone ever come across this issue before? Thanks for your input.

The beneficiary is the spouse of the deceased participant and he also works for the company that the deceased participant worked for.

What is the regulation with regards to the timing of a distribution to a deceased participant? Participant died in 2004 and there are still assets in the plan. Thanks for your help.

New Client for us in 2009 has been allowing all employees into the plan effective first of month following employment. This was just discovered when completing testing work. How do we handle? Can we provide a retro-active amendment to fix. The document indicated age 21 and 1 year of service. Thanks for your thoughts.

We have a 'new' client. The company is an S-corp. The owner receives a w-2 and a k-1. The prior TPA used both the owner's w-2 pay and k-1 earned income as his 'compensation' for testing purposes, limits, contributions, etc. I always thought that for a s-corp, the definition of compensation could only be w-2 comp. Am I missing something? Can anyone provide some guidance? Thanks.

A client has approached us to be their TPA. The client has a 403b Plan and a separate Profit Sharing Plan. The client never adopted a written plan document by December 31, 2009. The 403b plan just has salary deferral, no employer money. What do we do about not adopting a written document by 12/31/2009? The client would like to merge the 403b Plan into the Profit Sharing Plan. Can this be done? Can the 403b assets be transferred to the Profit Sharing Plan? Does the 403b plan have to be terminated? Looking for some thoughts.... Thanks.

Currently the plan document allocates PS salary proportionate. Eligibliity requirements are 21 and 1 year of service. Once eligibile, there are no conditions on getting the allocation. The client has come to us (at the end of May) and requested a change to the document to allocate PS class allocated by participant. They want the change for 2010. Do I have an issue with changing the PS allocation mid-year? Thanks for any guidance you can provide.

You do need to check the language in the document to see if additional valuations are allowed for the Profit Sharing side of the plan. If the document does not allow, you will need to amend the document to allow additional valuations.

I finally got a note back from ASPPA and the correct answer was not on the test. Here is their reponse: " Thank you for submitting your candidate inquiry form re the CPC ESOP Module. You are correct, the right answer was not listed as an answer choice. We've since updated the examination for future candidates and sincerely appreciate that you brought it to our attention. Again, thank you for pointing out this error and helping us to improve the quality of our materials."

A client has a 457 Plan with Employer contributions. The client is a governmental agency (local township office). The contribution is a Matching contribution that is given as a flat percentage of compensation (4%) to any one who is making salary deferral contributions, regardless of their rate of participation. Does a 457 plan have to perform ACP Testing for this match?

Kate, I finally took the test. I got a passing score, but no confirmation from ASPPA yet. Now I am waiting to hear from ASPPA with regards to my questions. I did re-read the form that ASPPA asked you to fill out with regards to issues you found and the form indicated that ASPPA would not respond until you completed the exam. Hope your exam went well. Kathy

Please advise. Thanks. Doesn't sound like a problem to me. You test on the aggregated plans, of course, right? We were originally told that all 'non-owner' employees were union employees. So we could permissively disaggregate union vs non-union. Now we find out that there are non-union employees who are not owners in both companies. And plans have never been tested together.

Hello. I have two clients that are members of a controlled group. Both companies are owned 100% by the same 4 people in the same percentages. Each plan is a straight 401k plan. No match, no Profit Sharing. All aspects of the plan are the same. The owners were paid in both companies but only participated in one plan (and they were the only employees and participants in that plan). I do believe this might be a problem. Each client each had their own GUST document. And each filed their own Form 5500. Is that okay? Should they be combined into a single EGTRRA Volume Submitter document? Please advise. Thanks.

Kate, I wrote to ASPPA on April 6 on this issue and completed the required form on the website. The website information indicated that if I did not get a response from ASPPA within 10 business days, that meant there was no change to the information. So I am really confused. Kate, what answer did you get for the problem? Is my thinking correct or did I miss something in my analysis. I do understand what QDROphile was saying, but the question specifically asks for the particiular employee's annual addition AND not the annual addition limit for 2010.

The question specifically asks for Employee A's annual addition amount. However, even if I add back the disregarded interest and forfeitures, this number is not one of the answers. Any thoughts.

I am working on the ASPPA CPC ESOP Module this quarter and am not getting any of the answers associated with the question regarding annual addition limit. Is there anyone who can help? The particulars are: C Corporation, HCE receive less than 1/3 of the ESOP contribution, looking for the 2010 annual addtion limit for Employee A based uon the following information: Employee A earns in excess of $500,000 Elective Deferrals = $16,500 Matching contribution is 100% of first 4% of compensation ESOP leveraged stock forfeiture = $3,450 ESOP contribution is $24,500 (including $8,875 in interest) My understanding is since company is a C-Corp and HCEs are receiving less than 1/3 of the ESOP contribution, that the annual addition limit would be Elective Deferrals + Match + ESOP Contribution (less interest) AND you ignore the forfeiture amount. So if my math is correct I think the annual addition limit is $16,500 + $9,800 (100% of 4% of $245,000) + 15,625 (ESOP excluding interest) = $41,925. This answer is none of the five provided. Am I calculating correctly? If not, what am I missing? Thanks.

We generally provide quarterly testing for large plans and semi-annual testing for small plans. Regardless of the results of the test, the client is informed. If the test is failing, we provide a copy of the actual test and recommendations in order for the plan to pass testing at the end of the year. This is for our current year testing plans. The letter is always addressed to the plan sponsor/trustee; never to the affected participant.

Another point of view... We leave in the special date for the 401k feature so there is history in the document.

Our prototype document allows the participant to chose an number of options for forefeitures. Two of which are: 1. As of the last day of the Plan Year in which the Plan Administrator distributes the Participant's entire vested interest (this is what was chosen) 2. As of the earlier of the last day of the Plan Year in which the Plan Administrator distributes the Participant's entire vested interest, or the last day of the Plan Year of the 5th consecutive Break in Service. So the client wants to change to option 2.