QNPG

How would you know what the benefits provided by the plan, which generate the "premiums" are? This seems like an excessively broad statement. In addition, this cash out arrangement strikes me as playing with fire. Lots of potential issues. It's been my experience that the purpose of having a 412e3 plan is to have life insurance in the plan. You are funding for a retirement benefit with the bonus of having an insured death benefit. Please excuse my ignorance, but what else would the benefit be? The original post seemed to be confused about the fact that a participant can work past NRA and still contribute to the plan. Some of my clients choose to fund straight annuity and still go with the 412e3 because the rate on the investment is guaranteed and they are able to get a higher deduction in that plan rathan than a traditional DB. I am no expert, of couse, just speaking from my experience and trying to help. thanks.

He can work past his NRA and continue to contribute to the Plan for a few more years. Am I missing something? I'm going to assume the plan is funded with life insurance and not straight annuity. Upon actual retirement, he could buy the policy from the plan or cash it out at that time. I have had many clients work past their NRA by a few years and still contribute the annual level premium, then terminate the plan and buy the policy or cash out the policy at that time.

At the risk of admitting my ignorance, how did you calculate that? I also get 45%. 8.5" * 11" = 93.5 sq in. Take away 1.25" each margin = take away 2.5" in height and 2.5" width = 6" * 8.50" = 51 sq in remaining area 93.5-51 = 42.5 sq in lost area. 42.5/93.5 = 45.45% lost Thank you!

At the risk of admitting my ignorance, how did you calculate that?

Unfortunately, they're taken into consideration for 410(b) testing if they're a nonexcludable employee even if they don't actually defer by their own choice. Also, if they are an eligible employee - meaning not excluded by name (70% test) or class, and they satisfy the allocation requirement (if there is one), they're eligible to receive the profit sharing contribution. My two cents...

Relius (Corbel) has a great volume submitter with a multiple employer agreement which can accomodate your need. Do they sell single-use documents, or does one have to subscribe to their document system? I do know that FT Williams has single-use documents. You may want to check them out.

Relius (Corbel) has a great volume submitter with a multiple employer agreement which can accomodate your need. Do they sell single-use documents, or does one have to subscribe to their document system? Ahh, good question. I am not sure. Their number is 800-326-7235.

Relius (Corbel) has a great volume submitter with a multiple employer agreement which can accomodate your need.

Including all "eligible" NHCEs who defer is one of the ADP/ACP safe harbor requirements.

First limitation: 1. Highest balance in 12 months - $10,000 2. Current balance $9010.72 3. Subtract 2 from 1 $989.28 4. Subtract 3 from $50k = $49,010.72 Second limitation: 5. Enter current vested account balance: $40,000 6. Multiply amoutnon line 5 by 50% $20,000 7. Enter amount from #6 = $20,000 Participant loan limit under the general rule: 8. Enter lesser of line 4 or line 7 = $20,000 9. Enter the participant's outstanding laon balance $9010.72 10 Subtract amoutnon 9 from amoutn on 8 - $10,989.28 Line 10 in this hypothetical situation would be the highest loan amount possible after the first loan is considered. Hope this format helps.

Thank you for the information. I appreciate it. I also saw a link to BenefitsLink from Google relating to this topic as well. It was a big help.

Would you happen to have an IRS Notice or DOL publication to reference? Thanks for your response. I appreciate the information.

Can an ILIT (irrevocable life insurance trust) buy a individual participant’s policy directly from a qualified plan. If yes, do they then avoid “the three year contemplation of death rule”? Any particular cite to which someone can direct me?

hehehe

How are the deferrals ineligible? The participant was not eligible to participant yet was allowed to defer Check out Rev. Proc 2008-50 (I think it is page 106) - Early Inclusion of Otherwise Eligible Employee Failure. This may help. You may be required to submit for a determination letter.

How are the deferrals ineligible?

No, being a participant is not a protected benefit. It is, however, a benefit right or feature once you become a participant.

401(a)(26) requires coverage of the LESSER of - 1. 50 EEs OR 2. the GREATER of - 40% of all employees of the employer OR two employees. Classification of HCE and NHCE is not relevant for 401(a)(26); however, in order to pass 410(b) coverage, exclusions must be definitely determinable business classifications (unless you pass the 70% ratio test). You can pick and choose to some degree but you would need to be very watchful of the 410(b) test if you use names to exclude. You may have to turn to the average benefit test to satisfy coverage and there you cannot exclude by name. As for the plan document, the purpose of the plan is for the exclusive benefit of the "employees". I'm sure your plan document defines "eligible employee", and if there are any excluded employees or ineligible employees, would be required to state those as well. Hope this helps.

I see. That still sounds funny, though.

I thought that, unless you were some type of educational institution (age 26), the maximum age requirement was 21?

I must have missed the entire premise of the question! Sorry guys.

...strangely familiar!

The plan may take advantage of the “otherwise excludable employee" rule (i.e., permissive disaggregation) to divide the plan into two plans for testing. The “upper group" plan includes all participants who would have entered the plan if the plan had a year of service/age 21 eligibility condition. The “lower group" plan includes all other plan participants (generally those with less than a year of service). The NHCEs (or all participants) in the upper group plan will receive the safe harbor contributions, thus satisfying the safe harbor requirement. The lower group plan is considered a separate plan, and since the participants would not be receiving safe harbor contributions, that “plan" must satisfy the ADP test. Note: Generally, the lower group plan would automatically satisfy the ADP test because it would be composed solely of NHCEs.

I think this would be considered a "discretionary" amendment (as apposed to a interim amendment or corrective amendment), and therefore, would be required to be executed no later than the last day of the plan year for which it applies. Even so, the 3% SHNE does not have an allocation requirement so I would imagine that you would also have a cut-back issue if it was taken from them after it was acrrued (end of year of after). Just my two cents

I would hope that the supporting trust document would make some reference to the minimum funding requirements of Code Section 412 at some point in the allocations and contributions section. I guess I was looking at it from that perspective. A plan name doesn't necessarily designate a plan a certain type of plan either. I've seen many odd names which had no bearing on the type of plan and required contributions included.