AndyH

Or call them "Deferral Groups" to avoid any ambiguity. Sorry, couldn't resist. It's been a bad day (please don't take a picture). [REM]

It would be interesting to know what LTROR assumption can be justified, especially in light of the new rules. Maybe that would be a disclosure that would be actually useful.

CS, yes you are deserving of nomination, but you must understand that 9 posts over 2 years in the ESOP section isn't exactly center stage.

412(i) means that a heated argument is about to ensue. WOW means .....well, I'll let Mike or someone else explain that one. Good idea, WDIK

I think you need to slow down an think about what you are testing. Presumably you are doing the ADP and ACP tests, right? Then the ABPT and 401(a)(4) tests are irrelevant. Test using gross pay as you suggested, or any pay definition that satisfies 414(s). Then think about QNECS or refunds. 401(a)(4) is not relevant to ADP and ACP testing unless you have multiple companies or class exclusions which does not sound like it is your concern.

I noticed that there is a "Lawyer in Black" user registered who could have been a "dark horse" candidate, but thankfully he seems to have gone away without ever scaring us er' posting.

OK, thanks gentlemen. Guess it's the same "Employee<>Employee unless benefitting" odd gateway lingo logic, which is of course what David said in the first place.

What if a DB requires 1,000 hours and somebody works 900 (and average comp doesn't increase). The person is non-excludable and non-benefitting, so he must be in the test, right? If he is in the test, and accrued a benefit during the measurement period (prior year), why doesn't his accrued benefit count? I guess I should have logged in under Partly Cloudy2 today, but I'm not getting this. Or are you saying that the condition of 1,000 hours is a "plan-imposed cap" which is irrelevant for 410(b) purposes??

Hmm. Good question. Mike and David, do you both think the person should be a 0% in the test even though he benefits during the measurement period? And what if it were a DB general test, where the person was non-excludable but not benefitting in the current year. Even if he had accrued a benefit during the measurement period would he be in with a 0%??

I think it depends on what the document says. What was the basis for the DB annuity? How was it calculated? Was it a regular distribution election, i.e. was a life annuity elected? If so, and a lump sum was also available, then I don't think that a lump sum later is an option because an election has already been made at the annuity starting date and the QJSA waiver period has expired. But again I think the answer depends on the specifics of the document, and what election was or was not made at the start date.

yeah, I remember doing a double take on that several times also. She was probably interested in affiliated service groups and cliff vesting.

Somehow I forgot to nominate Partly Cloudy. p.s., Twitch, we need a picture of Max Power.

Thanks. News to me.

I'm puzzled by this. Can someone provide an example of a 3/15 amendment that reduces a contribution, does not constitute a cutback, and can be treated as effective as of the preceding January 1? Two effective dates? Has anyone actually done this? And I mean a decrease, not an increase.

And when I grow up I want to be a moderator for both of you.

Did anyone out there except me here Mike's "Mr. Preston story" at ASPA last October?

Agreed. And you also cannot cross test the ESOP by itself to test under 401(a)(4).

Mike, just to clarify, are you saying that the ASPA Q&A response was wrong, or do you instead mean to suggest that it was not complete because it did not suggest the option of separately testing statutorily excludable employees? Would you clarify which part you disagree with? Thanks.

ok, I'll do the dirty work on this one. ASPA 10/02 Q&A's. And this one is actually in writing. Questions for Discussion "1. A participant in a 401(k) plan is eligible to make electie deferrals but does not do so. Due to an end of year requirement the individual will not share in matching or employer profit sharing contributions. At the 1996 ASPA annual conference (Q&A 1996) the Service indicated that such person's compensation was includible for purposes of the deductible limit under Section 404(a)(3). Under Code Section 404(n) as added by EGTRRA, elective deferrals are no longer considered employer contributions. With this change will the compensation of participants such as this individual be included for purposes of determining the deductible limit under Section 404(a)(3)? If not, would it be includible if there was no end of year requirement for the matching contribution such that the participant would have received a matching contribution had he deferred?" Answer: "Under the change in law, these individuals are still eligible under the plan and their compensation is included for purposes of the maximum deduction limitations." This is in writing. And I have a note next to it that says "No hesitation!"

And I do like the user name, BTW. It's a possible award nominee.

To be more precise it's actually the earlier of the plan date or the date pax references, which still becomes the date that pax references. I have one that provides for NRA later than 65 + 5 P (it uses SSNRA) but it appears to be ok because benefits are fully vested at age 65 (actually, age 60), available for distribution at age 65, and meets other requirements that escape me at the moment. But the vesting and distribution provisions I think are critical.

Well put. I have also read articles that omitted this critical factoid about statutory exclusions. Lots of "experts" out there that do not have command of the facts. All you need to do is read the introduction to the amended cross-testing regulations. Explanation of Provisions. B. Gateway for Cross-Testing of New Comparability and Similar Plans ....Thus, if the plan is treated as two separate plans in this manner, cross-testing the portion of the plan benefitting the nonexcludable employees will not result in minimum required allocations under the gateway for the employees who have not met the section 410(a)(1) minimum age and service requirements."

Point well taken. I am perhaps overreacting to many recent conversations with people including accountants, bankers, etc. who are reading about the legislation recently passed by the House and Senate and jumping to the wrong conclusion.

No way, Jose. Where is this stuff coming from? SCUDDESLER had it right. Who wrote that article? Perhaps he/she is here to refute him/herself.

I happened to have just gone back and re-read ASPA's communications to it's members on this subject. In July 2003, ASPA said that the Bush administration was proposing legislation that would affect 412 (funding) et al and would also change the interest rate using for lump sums beginning in 2005 or 2006. And even that was stripped from the ultimate legislation, so even if something is passed in 2005 it is almost certain to have a phase-in to at least 2006 or 2007 if not later. All the serious proposals from industry groups (Academy of Actuaries for example) were suggesting some sort of delayed effective date.