30Rock

Do you think forfeitures (which under the plan can be used to pay plan expenses and reduce future employer contributions) can be used to pay earnings under 2 scenarios - 1. late deferral deposits, 2. missed contributions - i.e. missed match. Can I use forfeitures to fund these earnings? Thanks!

Since the 15th fell on a Saturday, can Monday the 17th be used as the deadline for issuing refunds? Thanks!

Is anyone advising plan sponsors of this IRS form to report change in plan sponsor, address, EIN, such as when a plan merges? I have plans that merged in 2012 and 2013 and I assume to be safe the sponsor should file this form? Form 5500 has the information but the DOL gets this, not IRS. Any comments would be appreciated! 8822b.pdf

Thank you for this cite and finding Dismissal payments. I think it is a gray area!

I can show you a pre-approved volume submitter where you have to exclude severance pay if paid before termination of employment, and if you do not exclude it in the plan, then it is plan compensation. I was very surprised to see this. I think the original statement from K2 Retire said the IRS messed it up. I see another plan document that excludes severance pay on a "post severance" basis.

The original question is - is severance pay paid before an employee's termination date included in 415 compensation? I have seen a pre-approved document take this position, and then exclude this pre-termination of employment severance pay from plan compensation.

You first start with 415 compensation. Then you document can define plan compensation - however you could never include in plan compensation what is not allowed as 415 compensation. So I do not think you really answered the question either.

Well that was not my question - I understand only too well the 415 post severance rules. I am talking specifically about payment to leave the company where the company says please leave, we no longer want your services and here is $80,000 of severance pay on your last day of employment along with your final regular paycheck. Now can they defer on this $80,000 severance pay and include it in ADP testing, and receive match and nonelective? It is not post severance severance pay but it is severance pay paid on the last day before they actually terminate and walk out the door!! Any one else have comments??

So is it up to practitioner discretion?

How is severance pay handled under 415 regulations and for purposes of plan compensation if it is paid before the employee officially terminates? I have recently seen a pre-approved document that allows severance pay if paid prior to the time the employee terminates, for example on his last day, CAN be included unless the plan excludes it? I was under the impression that ANY severance pay was not plan compensation eligible? Any thoughts!

Participant deferred $7000 over the 402g limit last year 2013. She terminated and rolled her account over to an IRA. Not sure why recordkeeper did not monitor this excess but in any event, what is the procedure for recordkeeper and plan at this point? Issue participant a letter notifying her of excess and that she should contact IRA to take it out. Is there an April 1 deadline? Do the double taxation rules apply if not distributed from the IRA by 4/15? Thanks for any help!

I have a situation where a 401k plan merged into a 401(a) plan in 2013. Before the 401k plan merged, it was a safe harbor, We suspended the safe harbor match, and then merged the plan 6/30. How do we run the ADP and ACP test - is compensation pro-rated? Can compensation be limited to period eligible? And what happens to 415 limit since the plan merged and a merger is a continuation? Likewise, the 401a plan froze on 6/30 but is the survivor plan and is still alive but no more contributions after 6/30 - do we pro-rate the limits? Thanks!

I know this is a 401k forum but could not find an appropriate folder. Does anyone have experience with setting up a 401a plan just for making a one time contribution of unused sick and vacation leave? I see the IRS in 2005 put out internal guidelines stating this could only be done if the plan otherwise has recurring contributions, or via a 403b plan 5 year post termination contribution. But a large provider named Bencor has many school systems using their document for these special pay plans. I am not sure how they can still do this? Any thoughts?

Ok maybe I should start over because I think I messed up the question - so under the 1.410(b)-6© exception I can exclude the 403b plan employees when testing the match and deferrals for coverage under the 401k plan. But I still have to pass coverage for the nonelective piece under the 401k plan without aggregating with the 403b because I am not allowed under the regs to use the 403b to help me pass coverage. So if my nonelective fails RPT, when I do the ABT does the match and nonelective percentages in the 403b plan come over as 0, or can I count the match? And part 2, if I am doing 401(a)(4) on my nonelective in the 401k plan, can I use the match and nonelective benefit percentages in the 403b plan or are they still not permitted to be aggregated and they come in as 0 here too? Thanks!

Ughh I have links from 2010 that state the opposite with a comment from you. Not for profit with 401(a) and 403(b), Average benefit test rcline46 Post #1 Registered User Group: Sitewide Moderator Posts: 1,589 Joined: 24-February 00 Member No.: 3,694 Not for profit has a deferral only 403(b) and a 401(a) with 'varying' contributions by person. Since 2002 even Not for Profits have had to pass discrimination testing. Oh by the way - we are taking the plans over for the 6/30/2010 year.... As I read 415, we aggregate the 403(b) deferral with the 401(a) contribution to test maximum annual additions. Indications are this was 'overlooked' in the past so I am asking for confirmation on this point first. Since the 401(a) contributions are such that they cannot make any safe harbor formula, and they cannot pass general testing on a contributions basis, I now go to cross testing. IF (that is a big IF because I do not know the results yet) each rate group does not pass 70%, I will need to perform the Average Benefits Test. If I have to do the ABP, then again I include the deferrals into the 403(b) plan, correct? My thoughts are yes and yes, but I am willing to listen to rebuttals. lippy Post #2 Registered User Group: Registered Posts: 125 Joined: 14-March 06 Member No.: 15,912 I don't think 403(b) deferrals are ever included in any nondiscrimination test, including the average benefits test. rcline46 Post #3 Mar 17 2010, 05:40 PM Mar 18 2010, 07:11 AM Mar 18 2010, 07:36 AM Registered User Group: Sitewide Moderator Posts: 1,589 Joined: 24-February 00 Member No.: 3,694 I guess technically 415 is not a discrimination test, only a compliance test. SO you do agree it is in the 415 test? lippy Post #4 Registered User Group: Registered Posts: 125 Joined: 14-March 06 Member No.: 15,912 Sorry, I missed that part of the original post. IIRC, a 403(b) account is considered individually owned for 415 purposes, so the 403(b) plan contributions and the 401(a) plan contributions of the non-profit would not be combined for 415 purposes (i.e., separate limits for the two plans). However, if an employee of the non-profit owns a business of his own (at least 50%, I think), then any qualified plan sponsored by that business would share a 415 limit with the 403(b) account. Keep researching - I'm not 100% sure of my memory on this. Of course, the individual had one 402(g) limit. rcline46 Post #5 Registered User Group: Sitewide Moderator Posts: 1,589 Joined: 24-February 00 Member No.: 3,694 When the plans are sponsored by the same employer, I don't think 415 would allow $49,000 in the 401(a) plan PLUS $16,500 in the 403(b) PLUS any match or non-elective contributions in the 403(b). Bird Post #6 Registered User Group: Sitewide Moderator Posts: 2,028 Joined: 23-June 04 Member No.: 13,348 Yes, I think deferrals are in the 415 test, not in the rate group test, and in the ABT. Mar 18 2010, 08:41 AM Mar 18 2010, 10:45 AM Mar 18 2010, 11:33 AM Mar 18 2010, 11:42 AM lippy Post #7 Registered User Group: Registered Posts: 125 Joined: 14-March 06 Member No.: 15,912 Re ABT, check out Reg. 1.403(b)-5(a)(2) and the ERISA Outline Book, footnote 138 on page 1B.498 (2009 ed.) Re 415, look at Reg. 1.403(b)-4(b), Code Section 415(k)(4) and EOB p. 1B.512 (2009 ed.) rcline46 Post #8 Registered User Group: Sitewide Moderator Posts: 1,589 Joined: 24-February 00 Member No.: 3,694 lippy, did I tell you I HATE REGLATIONS!!! 1.403(b)-4(b) does not seem to be relevant as I am not testing the 403(b), the test is in the 401(a), and the 415(k)(4) is not relevant as there is only 1 organization involved. What little I can glean, is that the 403(b) deferrals ARE included in the 401(a) 415 test. Actually it would seem there is only one 415 test which is not related to plan type. Would be nice see something that says that, but my search skills on the BNA site don't seem to match the way they present stuff. As for the references for ABP - not testing 403(b), but I see deferrals are not included in the discrimination testing for 403(b). There EOB references - don't have the 2009 EOB, have 2008 and page numbers don't seem to line up. Tom Poje Post #9 Moderator Group: Sitewide Moderator Posts: 4,791 Joined: 26-August 98 From: Florida (land of hot humid summers) Member No.: 1,560 Question 10 from the 2008 ASPPA Conference: If matching or nonelective contributions to a §403(b) plan are used in the average benefits percentage test to satisfy the IRC §410(b) coverage requirements, are the §403(b) deferrals included in the average benefit percentage calculation as well? You should exclude salary deferrals from ABT test. See Treas. Reg. §1.403(b)-5. lippy Post #10 Registered User Group: Registered The 415 bit is on pp. 1.899-900 of the 2008 EOB. The ABT footnote is not in there - it was added in the 2009 book. Come to think of it, I first met this issue before the 2009 books were out, and I recall the older books weren't very helpful. I did some research elsewhere and determined that while the issue was unclear, Not for profit with 401(a) and 403(b) - BenefitsLink Message B... Page 3 of 6 http://benefitslink.com/boards/index.php?showtopic=44993 10/6/2011 Mar 18 2010, 11:45 AM Mar 18 2010, 01:23 PM Mar 18 2010, 02:42 PM Posts: 125 Joined: 14-March 06 Member No.: 15,912 the case that 403(b) deferrals are never included in a 410(b) or 401(a)(4) test was more convincing. Then the 2009 books came out with the footnote that supports that position. The footnote refers to an IRS comment at the 2008 ASPA conference. If I can find my research and it's not copyrighted material, I'll post it. Won't be today though because I have some very urgent business to tend (yeah, I have to get to the liquor store and back before basketball starts). Maybe one of the real 403(b) experts (i.e., not me) on these boards will chime in with some enlightenment. Were's John Simmons? lippy Post #11 Registered User Group: Registered Posts: 125 Joined: 14-March 06 Member No.: 15,912 Tom beat me to it. That's the Q&A I mentioned (although the footnote says Q&A 9 - don't know if that's a typo or if that one addresses it, too). Tom Poje Post #12 Moderator Group: Sitewide Moderator Posts: 4,791 Joined: 26-August 98 From: Florida (land of hot humid summers) Member No.: 1,560 it is #9, I mis-read the format of the spreadsheet rcline46 Post #13 Registered User Group: Sitewide Moderator Posts: 1,589 Joined: 24-February 00 Member No.: 3,694 Now I am really messed up! That is what I get for reading regulations. It would seem that 403(b) employER contributions are separate from 401(a) employER contributions when doing a 415 test within the same employer and it does not appear to have changed with the final 403(b) regulations. What a deal! That leaves the elective deferral. Now I am not sure the elective deferral is counted in the 415 limit for the 401(a) plan - is it real or is it Memorex? Is it an employEE or employER contribution for this purpose? Or does it matter? As I said to lippy before, I want clarity! The regs actually say in 415 what is included and to some extent what is excluded, but the 403(b) contributions are not mentioned! Only in Not for profit with 401(a) and 403(b) - BenefitsLink Message B... Page 4 of 6 http://benefitslink.com/boards/index.php?showtopic=44993 10/6/2011 Mar 18 2010, 03:23 PM Mar 18 2010, 03:45 PM « Next Oldest Cross-Tested Plans Next Newest » the 403(b) regulations discussing 403(b) compliance and discrimination are the deferrals mentioned. Does this mean they deferrals are excluded in checking 415 in 401(a) plans? dmb Post #14 Registered User Group: Registered Posts: 529 Joined: 15-May 00 Member No.: 4,140 QUOTE (rcline46 @ Mar 18 2010, 02:42 PM) Now I am really messed up! That is what I get for reading regulations. It would seem that 403(b) employER contributions are separate from 401(a) employER contributions when doing a 415 test within the same employer and it does not appear to have changed with the final 403(b) regulations. What a deal! That leaves the elective deferral. Now I am not sure the elective deferral is counted in the 415 limit for the 401(a) plan - is it real or is it Memorex? Is it an employEE or employER contribution for this purpose? Or does it matter? As I said to lippy before, I want clarity! The regs actually say in 415 what is included and to some extent what is excluded, but the 403(b) contributions are not mentioned! Only in the 403(b) regulations discussing 403(b) compliance and discrimination are the deferrals mentioned. Does this mean they deferrals are excluded in checking 415 in 401 (a) plans? FWIW, we have some not-for-profit organizations with the same setup, 403b for deferrals, 401a for employer contributions. After reviewing regs mentioned in this string, we came to conclusion that 403b and 401a are treated as two separate entities for 415 as well as 410b testing, so we think a participant can defer $16,500 in 403b and receive $49,000 in 401a. Tom Poje Post #15 Moderator Group: Sitewide Moderator Posts: 4,791 Joined: 26-August 98 From: Florida (land of hot humid summers) Member No.: 1,560 you might want to check http://benefitsattorney.com/modules.php?na...wpage&pid=1 she has posted this chart the last few years as I understand it, other plans are counted when looking at the 401 Unless its a govt 401k) but not when looking at the 403b Enter Keywords Search Topic 2 Pages 1 2 >

Lets say that you have a 401k plan and a 403b plan in the same controlled group. Both plans have deferrals, match and nonelective. The 401k plan can satisfy coverage for purposes of deferrals and match under 1.410(b)-6(g) by excluding the 403b plan. However lets say the 401k plan has a tiered nonelective formula requiring 401(a)(4) testing. When running the average benefits percentage test, do you pull in the match and nonelective - ie all employer contributions, even though you were allowed to exclude the match doing the coverage test? I think deferrals continue to be excludable. Thanks for any thoughts!

Lets say that you have a 401k plan and a 403b plan in the same controlled group. Both plans have deferrals, match and nonelective. The 401k plan can satisfy coverage for purposes of deferrals and match under 1.410(b)-6(g) by excluding the 403b plan. However lets say the 401k plan has a tiered nonelective formula requiring 401(a)(4) testing. When running the average benefits percentage test, do you pull in the match and nonelective - ie all employer contributions, even though you were allowed to exclude the match doing the coverage test? I think deferrals continue to be excludable. Thanks for any thoughts!

Sorry but I am not following. THe executive is working for a new tax exempt employer and wants to transfer his account which is allowed under the 457b regulations. The question is does he have to make a short term deferral election like 3 months to give him time to find out if the new plan will accept the transfer? This way if the new plan will not, he can make a one time election to defer his payment to a later date.

I have a client with a terminated participant. He wants to defer his payment, but in the event the plan of new employer allows a transfer, he wants the option to be able to transfer the benefit to the other plan. His deadline to elect is fast approaching, and his concern is if he has to make the election before he finds out if his plan allows the transfer, then he will be locked in to the deferred date and will lose his ability to do the transfer. Any thoughts??

Can someone give me some guidance on what normally happens in an acquisition situation or when an employer moves their plan to another vendor and holds onto participant deferrals a little longer than the segregation rules allows. Is there leeway for these type of circumstances? I mean like a 5 day delay or so, nothing extreme. Thanks!

So this would require a VCP filing I believe!

What is the correction for a safe harbor plan that in years prior to 2012 calculated the safe harbor match on annual pay rather than pay period? They remitted the safe harbor each pay period but then at the end of the year remitted a true up contribution because at one time prior to 2005 I think the plan was at a prior vendor and the document did allow this annualized pay. The plan then switched to payroll based until 2012 when it was amended to use annual. They now want to correct the prior years. Does this blow up the safe harbor and ADP and ACP testing is needed, or can we just forfeit the excess match, which of course is not that easy since some employees have terminated. Thoughts!

Also did you see the PDS document does allow for installments to be accelerated if they are based on life expectance using the uniform table I think.

So Oldman your answer is No? This distribution commenced years ago, so I see no way to change it?

Thanks OldMan. I have both a 401a plan merging with a 401k plan and they want to freeze it in its entirely and not 100% vest. I am concerned. There is no talk of ever making contributions, all future contribuitons go into the ERISA 403b plan.