rcline46

However, you cannot use the grouping technique as a subterfuge for an impermissable eligibility requirement.

It may be a charter school, but is it a PUBLIC school, or a FOR PROFIT school. That is the real question. Many charter schools operate like private schools, so make sure the facts are right.

A trust is not an employee. However, as a member, the LLC must create the plan. You cannot create your own plan as self employed.

My old documents say an Employee may elect to not participate at the approval of the Employer. So check the document in effect at the time of the original waiver. My interpretation would be that an Employer would be any member of a controlled group or affiliated service group. That would leave this gentleman out in the cold.

Try both of these. They are brokers specializing in getting annuities. Dietrich & Associates - www.dietrichassociates.com BCG Terminal Funding - www.bcgtermfund.com

ETK - you must use the same Top Paid Group rules across all Qualified plans, that is true. THe question was if that rule is also forced to Caeteria and H & W plans. I admit I have not looked for the answer, and I do not work on those plans, but I think the definitions for HCE and such are different.

No, the TIAA annuity product does not meet the exception rule, at least not that I ever heard. However, because the products fall under different code sections (403(b)(7) and 403(b9) I think), TIAA-CREF put them into different documents way back when.

The distribution policy should be clearly spelled out in the plan document, especially since it is a protected benefit. Failure to follow the policy is not a good thing.

I think the two plan thingy - one plan is in mutual funds (CREF) and the other is in annuities (TIAA) - you may want to check that angle also.

In our documents, when 'W-2 income' is selected, it refers to: Information required to be reported under Code Sections 6041, 6051 and 6052 (Wwages, tips and other compesation as REPORTED on form W-2). Compensation means wages, with the meaning of Code Section 3401(a), and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business)( for which the Employer is required to furnish the Employee a written statement under Code Sectios 6041(d), 6051(a)(3) and 6052. Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). So, the OP left out REPORTED from the standard definition, or the document they are reviewing is deficient in respect to the LRMs. The unfortunate fact is that sometimes, pay that is to be reported on a W-2 is not reported due to other requirements or exceptions in othe regulations. Way back when, when W-2 pay was introduced, it was Box 10 on the W-2. However that went away a long time ago, and Box 10 is no longer relevant or usable, but the W-2 title stuck. The result is that determining compensation is no longer a simple task, and plan amendments such as the final 415 regulations requires a much more detailed examination of the document and the payroll records of a client to get the answer. It just ain't that simple any more.

The quoted definition in the OP is not quite right. He left out 'reportable'. Also the final 415 regs brought deferrals back into the definiton of 'W-2' pay in 2008. We find it quite rare to get proper plan compensation from ANYWHERE on the actual W-2. Sometimes the Medicare wages are close, but only if the company does not have a 125 plan.

The distribution options, including on plan termination, should be in the plan document(s). Try to locate them and see what they say.

Have the auditors give you the cite - verse and chapter - that says it is required. Then look it up to see if it is necessary. The problem is that auditors have quite some leeway in what they want, and it varies by CPA firm. I would think you would have a trustee here, or a custodian that provides a report to push the audit into the 'limited scope' arena and avoid the questions.

Is the current plan a SIMPLE IRA or a SIMPLE K - big difference. I will assume you were correct in saying it is a SIMPLE K. Just amend the plan as of 1/1/2014 to what you want. 2013 is a lost cause because it is a SIMPLE

Since no participant in a DB plan, even a cash balance plan, has an account, the fees would be paid by the plan, which in turn means paid by the plan sponsor. Other wise you get a reduction in accrued benefits, and have violated 411(d) (6). Not a good place to be.

I recall the IRS opining at one of the conferences that maybe it should be pro-rata if the document is silent. OTOH, my opinion is whatever group the person is in at allocation time. You can really mess this up with a change from an eligible group to ineligible group mid year, which I think is the underlying basis for the IRS position. The client should clearly see now the utility of 'each in their own group' design, since they can then change their mind on how to handle the situation each time it may arise.

The first question is how are the groups defined - each in their own group, or by category. If each is in their own group, then the emplooyer sets the contribution by person and you do not have a problem other than testing. If not, then does the document specify what happens in this situation? Maybe by probably not. Since you have a year end requirement, sounds like its time to modify the plan to what your client wants.

Several years? Do a ROTH conversion now with taxes now if the participant really wants it.

If the document is properly drafted, it will say what sources are to be used to determine the 50%. It also may be in the administrative policy. If not found, the client must make the call.

You must 'distribute' to get them off the list, otherwise they will be counted.

I have put in a cash balance plan for a single HCE plan - if incomes vary wildly the a percent of pay plan allows contributions to vary with pay.

First - to bcmom - do not overthink what you may need for non-discrimination testing. Not knowing the demographics it is possible you could pass on a contributions basis and avoid gateway and cross testing completly, no disaggregation necessary. If you have to do a 'fix up' for BRF testing, it may do wonders for the final test. If you have to get into component plans, remember the 410(b) coverage requirements and a whole host of rules like average benefits percentage tests. This is not an area you want to dabble in as the 'magical land' can cause you to become the 'Sorcerer's Apprentice'. To Mr. Poje - I will concede that component plan testing is akin to disaggregation, my personal predeliction is to not use 'dis' when doing components.

I do not think you can disaggregate based on years of service. However you do have to do the Benefits, Rights, and Features testin addition to the crosstesting. And you will have to satisfy Gateway for all the NHCEs.

For simplicity, say the old formula was pro-rata based on comp. I would determine what the pro-rata amount would have been based on the final allocation, and give that percentage to those particular participants. Obviously the there is no hard guidance, and others may think my methodology is not correct based on their interpretation ot the situation.

They have not reached the 'last day' and therefore have not accrued the right to a contribution under the old formula. One caveat - if no requirements are needed for death, disability, or retirement (fairly common) then should one of these occur, they have accrued under the old formula.