cpc0506

We inherited a 403b plan that has had a written document since the plan's existence in July 2004. The client provided us with a new document dated 1/1/2008 and numerous amendments. Is this plan required to be restated for EGTRRA by 4/30/2010? Please provide some guidance. Thanks.

I have a plan that was written to release forfeitures when the vested balance was paid out. The client read the Adoption Agreement (what a surprise) and learned that he had the option of releasing forfeitures earlier and he liked the 5 year break in service rule. This is amendable, right? There is no benefits, rights, and feature isssue, is there? Thanks for your guidance.

In line with this question, we have a slightly different scenario. A client established a safe harbor document effective 1/1/2008. Due to financial constraints, the client could not pay us to complete their Form 5500 for 2008 and chose to fill out the 2008 Form 5500 themselves and basically terminated our services as TPA in September 2009. A safe harbor notice was provided for 2009 and now that the client has some funds, they want us to complete the plan year work for 2009 and onward. (They came back to us in February 2010.) This is just some history that now leads to my issue. No safe harbor notice was provided for 2010. No amendment was adopted to remove the safe harbor language from the plan for 2010. Is the plan 'safe harbor' for 2010? Can we just complete the EGTRRA restatement with an effective date of 1/1/2010 for the client removing the safe harbor language? The adoption date of this restatement will obviously be sometime between now and April 30. 2010. Any guidance would be appreciated.

I would think that you can ONLY re-classify any portion of your 2010 Salary deferral amount as 'catch up' if the plan fails the ADP Test as the HCE has not exceeded the standard Salary Deferral limit for 2010. Had the HCE deferred $22,000 between 1/1/2010 and 3/31/2010. then I might agree. Also, I do agree that your 2009 catch up is only $4,000 as the standard SD for 2009 was $16,000 (unless other funds were re-classified due to a failed ADP Test). Anyone agree with this assessment?

It is my understanding that the key employee's contribution rate is determined based upon all contributions. And his salary deferral is 'considered 'an ER contribution. Is that right? Thanks

Please help. We are not in agreement in our office.... What 403b plans HAVE to file a Form 5500 for 2009 and beyond? All? Some? Only ERISA plans? Is there a comprehensive list of employers that must file the Form 5500? Thanks for any guidance you can provide.

Sorry, I misread.

A 403b that excludes employees? I thought 403b had to have 'universal availability' except for the allowable exclusions, such as students working, or those who would contribute less than $200 in a year?

What are the suggested options in the following scenario: A plan did not defer bonus payments according to the participants deferral election in 2009 or prior years; for example 0% was withheld from a bonus UNLESS a participant made a special election to defer from the bonus. The special election should have been the other way. The standard amount should have been withheld UNLESS the participant requested a different amount. Would they have to make a correction? Could they make the change moving forward only? Thanks for any guidance on this issue.

Did you look to see if there has been a published errata for the test. ASPPA does update information on their website for exams as well as study guide changes.

Hello. One of your clients just contacted us that they would like to change the safe harbor match language to allow 'true-up' at the end of the year. This would be for 2010. Apparently one of the employees in 2009 (not an owner, but an HCE) made most of his salary deferral payments to the plan in the early part of the year and had his match capped. The safe harbor match is currently deposited on a pay period basis per the document specifications. The employee would have received more match if there was 'true-up' at the end of the year. The current plan document does not 'true-up' the safe harbor match. The plan is a calendar year plan. Is this something that can be done for a safe harbor plan during the year in question? The client did provide a safe harbor match notice to the employees on a timely basis.

I definitely have a controlled group. As for the aggregation issue, I believe I have to. The reason being is that I cannot pass the coverage test. Company A only pays wages to the 3 of the 4 owners and no one else. Company B pays wages to 2 of the 4 owners and other non-highly compensated employees. I don't believe I can pass coverage. Kathy

Thanks for your reply.

The 10% Penalty exception for Distributions applies to employees who terminate employment during or after that year in which they turn age 55. I get that. But what happens when the PLAN terminates? Do those who are age 55 get an exception? And what date to use – plan term eff date or plan distribution date?

Remember, you can have language in the loan program that does not limit the loan the 50% of vested balance. So it is possible that there might not be enough money in the account.

We have a potential new client with some issues that need to be resolved. First, there are two companies that are owned by the same 4 individuals. Our conclusion: They are a controlled group. There are presently two prototype plans. The plans have never been tested together. The owners are paid by both companies, but only defer in one of the plans and the owners are the only ones deferring in that plan. There are no other employees that work for that company (or that is what they initially indicated in their correspondence to us. We havefound out consequently, there are other employees who work for that company as well.) There are both union and non-union employees in both companies. Both plans cover union employees. It appears to us that the plans should have been tested together. And possibly the combined plan failed ADP Testing for the past three years. Also, if both plans are aggregated, there is a top heavy issue for the past 2 years. I would like some guidance. What recommendations would you make regarding this situation. What can we do to fix this client?

Thank you very much!!! This clarifies the issue/answer for me. And, thank you to other replyers who also helped educate me with regard to this matter. The kind help was appreciated and I am grateful. You also need to be concerned how the plan handles PS/M forfeitures. If forfeitures are re-allocated, you will not have top heavy exemption that the safe harbor match provides.

ABC Leasing Company is the 'common law employer' of any individuals that it pays. Does this change things?

If all the companies listed in my scenario were corporations, then there is any way/chance that I can have an ASG?

So we know that Company A, B, C, and D comprise one CG. There is no other company relationship with any other companies aside from the four listed. When you stated "I agree that you always have to consider whether there are any CG's that do not encompass all four corporations and perform testing accordingly.", are you saying that if Company A and B comprise their own CG, that needs to be tested? And if A and C comprise their own CG, you need to test them separately? Or is it enough that if A,B,C,D are a CG, I don't care about the subgroups that might exist?

Can a plan that has adopted a safe harbor 3% in 2009, change the plan specifications to a basic safe harbor matching plan for 2010 without affecting the status of the plan? Thanks for any guidance you can provide.

Bob, Inc provides actuarial services for only two companies (TPA, LLC, and LOAN, LLC). Robert owns 100% of Bob, Inc, which in turn owns 5% of TPA, LLC (a Third party administrator) and 20% of LOAN, LLC (a loan processing company) The remaining ownership of TPA, LLC and LOAN, LLC is owned by unrelated investors. Which company(ies) satisfies the defintion of a First Service Organization? Which company(ies) satisfies the definition of an A-org?

I have two companies, both owned by the same four owners in the same percentages. It is definitley a controlled group. They were set up with two separate plans which are identical and only have a 401(k) feature. Don't I automatically pass coverage since there is only 401(k) and everyone who is eligible is considered 'benefiting' and so I can perform ADP/ACP Testing separately for each plan?

I have two groups of employees who work for XYZ Corp and for whom I am trying to decide if either group should be included in my non-excludable count for 410(b) coverage for Corporation XYZ: Group 1: 4 Employees who are paid by ABC Leasing Company and worked for XYZ Corporation 20 hours a week for at least one year. Daily duties are determined and directed by XYZ Corporation. Group 2: 16 employeeswho are paid by ABC Leasing Company and worked for XYZ Corporation 30-40 hours a week for more than a year. Daily duties are determined and directed by XYZ Corporation. Group 2 full under the definition of 'leased employees' And so I believe Group 2 is included in my count, but I am not sure about Group 1. Can anyone provide guidance.

What I was trying to get at was: If Companies A, B, C, D comprise one controlled group, can I perform only one coverage test? For example, company A and B are a controlled group as well. Do I need to perform a coverage test for this grouping as well? And if Company B and C meet the requirements to be a controlled group, do I need to test them as well?