AndyH

Can anyone point me to a simplified filing summary for 125 plan, group life, etc. benefit plans. Looking for something simple enough to refer client to. Preferably it would reflect the recent 125 filing notice. One thing of interest, for example, might be a statement of how a participant is defined for purposes of the 100 participant welfare plan threshold. Thanks.

You might get more responses by posting this under cross tested plans.

A 412(i) plan sounds like the "Hotel California" of retirement plans-you can check in anytime but you can never completely check out.

Thanks. That looks right. Just curious: what would the PBGCs role be for a 412(i), to step in if both the insurer and sponsor went under? Or just the insurer?

412(i) plans pay PBGC premiums? Seems bizarre if the liability at termination is the vested contract value.

Which part of 2001-17 are you referencing?

...and the best way to avoid the female leopard seal is to use a document like Tom described. She used to not tolerate those but now gets along fine with them.

I think jpod has a valid point. Adding people could take away contributions for participants as of 12/31/20001. And, mbozek, are you saying that a calendar plan can be amended in May 2002 retroactive to 1/1/2001 for a discretionary change? What is the justification? I'm not saying it can't be done, I just have never heard of such a thing and wonder what the justification/authority might be.

Thank you both for your comments.

If a qualified retirement plan that covers all employees is amended to exclude employees hired after a certain date (e.g. May 1, 2002), will the plan fail coverage when the 70% ratio percentage test is no longer be met, or is the average benefits percentage test available for coverage testing? Opinions please.

Thank you. Can you point me in the right direction in terms of where to find such comments?

MWeddell, thank you very much. I could find absolutely nothing addressing this question. Your cite is it. We're going to take a counter interpretation on the basis that we are not testing the ESOP itself, but the IRS position on the issue is very helpful. I still can't figure out why the prohibition on cross testing ESOPs exists if you can cross test a K deferrals for ABPT.

[This was originally posted under Cross Tested Plans-received no response] It seems clear that an ESOP cannot be cross tested for 401(a)(4) purposes, but if you are testing a profit sharing plan and must go to the average benefits test, and an ESOP is included, does anything prohibit determining the employee benefit percentages for the combined allocations on a benefits basis? I don't see anything prohibiting it, but it seems like a contradiction.

What is the acronym for an acronym error? Did you mean :-) ?

It seems clear that an ESOP cannot be cross tested for 401(a)(4) purposes, but if you are testing a profit sharing plan and must go to the average benefits test, and an ESOP is included, does anything prohibit determining the employee benefit percentages for the combined allocations on a benefits basis? I don't see anything prohibiting it, but it seems like a contradiction.

Thank you.

I'm not a lawyer but based on a real life experience I agree. I think it can be excluded, but such exclusion needs to be in the document, or you need to have a specific reference to the appropriate DOL regulation which specifically says that it need not be credited. There is one, but I don't know the cite off hand.

Yes, you are on the right track, but there are potential age discrimination issues when you identify the groups in such manner, so I would caution against that. Just as you wouldn't want to have two classes, men and women. But, the concept is the same, just call it doctors with less than x years of service, less than x% owners, etc. Just some way of accomplishing reverse age discrimination without appearing to do so. And once you learn this stuff you'll learn some fancier approaches such as component plan testing where some people are tested on a benefits basis and some on a contributions basis. But you need some experience to mess with that. But, for now, using more than 2 groups can get you closer to where you want to be.

How does the exclusive plan rule work? Is it an issue of no employee benefitting under 410(B)? Can a company that sponsors a frozen, underfunded DB plan where nobody benefits under 410(B) maintain a simple IRA?

A new comp plan is a flexible target plan! The allocations work the same way except there are fewer allocation levels in a New Comp plan whereas a target would have a different contribution level per age, comp level, and participation history. With a young group of doctors you're going to have to either give them lower contributions, use something not age-based, or use a creative design by incorporating eligibility exclusions for some HCEs and general test it. Any single plan covering both old and young doctors is always problematic. There's only so much you can do. Sell them an annuity (half kidding) if they don't like the plan! Or a real estate limited partnerhip in the Everglades. Great tax write off.

The reference is to regulation 1.401(a)(4)-11(g) ...and...I think most people would agree with Tom. Designing plans to fail isn't the way most people would go. This is about as mild as I can put it.

We started labeling ours per the instructions last year, which is a major time consuming hassle. But I have yet to hear of any rejections of, for example, takeover plans without the mandated labeling.

Thank you all for your comments. I agree completely; just wanted a little reinforcement.

I've been asked to respond to a comment from a software vendor that "most documents don't provide for more than 2 groups resulting in substantial extra charges for those clients who end up with more than 2 groups" Are there major document providers that limit plans to 2 allocation groups or discretionary classes? Is having 2 groups the most common? It would surprise me if either were true. Comments please?

Maybe it's a simple as a careful reading of the regs. Under 1.401(a)(4)-3(d)(1)(ii), "....Thus, the most valuable accrual rate reflects the value of all benefits accrued or treated as accrued under section 411(d)(6) that are payable in any form and at any time ...." Maybe it's simply the fact that the lump sum value determined by applying the 417(e) rate(s) is not by protected from decreasing under 411(d)(6)?