Earl

As I understand it, it is not retro, however @ 1/1/02 it disappears without regard to the date of the transaction in question. So 1/1/02 it becomes retro. do you see it that way?

Tom - Do you think that the contrib. has to be deposited before 12/31? A receiveable contribution would prevent a merger... If the benefit accrued, would it matter if you met the obligation by a contribution to a "successor" plan. I am thinking of having people execute Board minutes to merge the plans as of 12.31.01 and just dump the money into the surviving Trust.

The SH match satisfies the TH only if there are no other contributions, i believe. So careful if there are any other contributions.

I thought it was clear.... DB is plan years ending after 12/31/01, and DC is plan years beginning after 12/31/01 So for DB we are in it now. DC is yet to start.

extra money, dude, not money. How can you design an investment product that isn't set up to accomodate following the regulations? thats the source of my incredulity. Seems to me to penalize people for following the rules.

this may not be different but.... don't the regs say that each HCE defines a rate group? Then you test each rate group for cov & non-disc. So..... if different HCEs do in fact have the same EBAR, they would all be in the numerator for the ratio percentage test of that rate. (the denominator would count them as individuals for all rates). So, how could you show separately? If 3 of 10 have a BAR of 3.65% that rate group covers 3/10ths of the HCEs. Not 1/10 individually.... For Nondisc. class test they would again be lumped for the fractions at each rate. For ave benef test they would be totalled individually. Maybe you are looking at benefiting schedules listing each person that are then extracted for the test results?

particularly since MP plans seem destined for the dust bin of history.

my advice is pay the withholding when you withhold. I work with single location small employers. I have not heard a reason to do otherwise, except on takeovers where some people pay a fee to make a deposit. Seems unconscionable to me that you pay extra to follow the regs?

sorry if i was unclear.... Not change to 2 years for eligibility....yikes! change to 2 entry dates (1/1 & 7/1) following 12 months of service. The idea is that you can legally set up the plan with that as the most stringent requirements. If you use 21 & 6 months with quarterly entry it is clear that for testing you can "pretend" you are using 12 mos. It is not clear (to me anyway) that you can "pretend" you have semi-annual as opposed to quarterly entry. But sometimes i say it is worth the risk. is that more clear?

Here is another slant on the test. I have never heard definatively what the otherwise excludible employee definition is. Obvoiusly you can change to 21 and 12 mos. no problem. However, if you have 4 entry dates, can you change to 2? Well.... If you have 4 entry dates, change to 21 & 12 and see if you pass. If you do, no problem. If you don't, change to 21 & 12 with 1/1 and 7/1 only (excluding those nasty October entrants). See if you pass. If you do, assess the differential. I am not confident that you can change the entry dates and that is not a Blaze discussion, however that is what I do. I change if necessary and it results in passage. If I still fail, I calculate refunds using the 4 entry dates results. Also, the variable in RTS that allows for otherwise excludible does not use the same logic as just changing the min service period. It has been a while since i looked at it, but as i recall it was different than any interpretation I had heard.

to do the otherwise excludable testing I usually code EBP as 21 & 12 (instead of the 21 & 3 months or whatever). Any ideas on that procedure? Took a long time to reply...I used to check here often but gave up... Hope to hear back. earl

we have been opening 1999 and updating the numbers and dates. I was not planning on going back and creating "real" ones. It seems you are. why? thanks

My understanding is that the deduction is available for fiscal year in which plan year ends. With a safe harbor contribution, since it accrues as employees get paid, can a 6/30/01 fiscal yr end return claim safe harbor amount for the first 6 mos of year? Maybe the answer is no since employer can back out up to commitment notice in November? Is the answer different for a plan subject to 412? thanks

I asked Schwab if they would set up such IRAs and was told yes. I have not done it with them, however. All my lost people have been small $ and we have used the 100% withholding technique.

sort of interestingly....the Corbel/PPD 401(k) document (not yet approved) has a provision for declaring auto. enrollment and spearate provision for including current employees as of a certain date. An idea that seems to be taking hold.

My thought on paying her out is that it makes some sense to convert a terminee with an account to the Key balance, but less sense to convert a prior distribution to an employee who was not Key at the time of the distribution. Reading the Q&A of 1.146-1, T-1, for 416 an employee is an individual currently or formerly employed. So that makes me think that the person is converted to Key until the 5 years with no service period runs. So maybe that is the answer.

sorry for any lack of clarity..."his wife" was to mean the son's wife (owner's daughter-in-law). Son initially had no direct ownership, only through attribution.

Dad owns a company. Son and his wife are employees. Son is a Key Employee, wife is not. Wife quits but account balance stays in plan. Two years later Dad retires and son becmes owner. Wife is still not an employee. Does her account balance become includable as a Key Employee balance for Top Heavy? She is "Key" but is she "Employee"? Would it help to pay her out before ownership change? Or would she be added back in and converted to a Key Employee balance for 5 years?

What is the correction for a SAR-SEP that fails the 50% participation test? Seems to me that it is just not a qualified arrangement and all contributions for all participants are taxable. Then correction. Just treat as an "ADP" failure? Refund by 3/15, include in 2000 compensation and report on 1099-R in 2001(Prior code)? Or are amended W-2s required? Then earnings are taxed how?

as you say...."if there is insufficient amounts available to pay the premium". I think there is a big problem if the reason for lapsing is "because I couldn't be bothered figuring out how to pay from the Trust rather than the contributions." By the way, insurance in 401(k) sucks....big time.

We are close to making the switch. We want more felxibiltiy in the importing of data. I have a guy working on it for me and it seems that under traditional there are only the formats available while ODBC permits self design. It was our carping that got the latest format designed. It was just announced in a FAXed fact a week or so ago. Also we are using unit value accounting and the transfer process is very problematic....stray .01 and -.01 all over the place.. Not material but not professional looking. Control over the Participant statement design promises better formats via ODBC also. Have you made any steps since your original posting?

In fact there is the opportunity to play a Safe Harbor every other year game with a fiscal year end 401(k) Plan.

Since you have not gotten a response.... I sure don't see a problem with un-terminating. The problem would be with the administrator (the real one, not the contract one) failing to follow the board's direction. But since they are probably the same person/people that will go nowhere. Just get a Resolution to rescind termination and authorize deferrals under the plan. You are stuck with the 100% vesting, though. Wonder if any thoughts to the contrary.... My only experience is with DB plans unterminating due to lack of sponsor taking action to distribute and 412 kicking back in.

I think the answer is that correction is required. There def. was an error and the Participant has been impacted in a measurable way. Now, as with many things in the private pension world, required doesn't mean it is going to really happen.

I think the short answer is the Trust pays the premiums rather than the deposit being split between ins and side fund. The trust debit would be chargable to the individuals with insurance. Just DON'T let those policies lapse without notifying the participants. Also, why do you say the match is used? Is this an administrative practice or a document provision? I don't think i have seen a document that specifically limits the source of money available for premium payment. Thus if there is "room" under the incidental limitations if deferrals are used, I don't think you could not use them without participant election to let the policy lapse. Really dangerous situation for the Trustee if he lets a policy lapse when money is available to pay premiums and no participant notice is given. Uninsurability is more common than you think.