rcline46

SoCal - you forgot the original post - only 3 eligibles - two owners and one non-owner - all HCEs. Lucky all are HCEs, so you can pass ABPT with non-owner excluded. Just pray they never become an NCE!

You should be able to answer your own question: 1. Does the plan pass 401(a)(26) if it is a DB plan? 2. Does the plan pass the Ratio Percentage test? 3. if 2 is no, does the plan pass the Average Benefit Percentage Test? See, now you know the answer!

We had a client start deferrals before they signed the amendment for the 401(k). The IRS audited and picked up on it. The agent was getting very testy about it. Then the agent realized two things: they would only hurt employees if they imposed a penalty, and the action happened outside of the the audit period! They could not impose any penalties. So - the moral of the story is, what can they do? your dates indicate that this is outside of audit period, and then what penalty can the impose at this late date?

Erisatoolkit - it is talking like that which confuses people. I doubt you really believe what you said. Masteff said it correctly. To put it another way, you took a loan of pre-tax money and put it into you pocket and spent it instead of spending post-tax money. You now have to replace the pre-tax money. If you were truly using post-tax money, you would get a basis in the plan (and of course it would be subject to ACP testing!). It is not a new contribution subject to the 402(g) limit or ACP testing. It is replacing money that retains the pre-tax flavor (ignoring ROTH money).

Interest payments are 'after tax' money, that is clear. Principal payments are replacing the 'pre-tax' money that was borrowed, and therefore are 'pre-tax' money. Say the principal payments are after tax money betrays a fundamental lack of understanding what is happening.

If you are an attorney, then you can give an opinion based on the VERY limited exceptions to spousal beneficiary (which is usually in the document). If you are not an attorney, do not under any circumstance do more that point out the section in the document.

That is when you raise your hand and ask the 'noted expert' to explain the discrepancy between black and white and his/her interpretation. Of course, when there are conflicting answers, I thake the one that works best for me!

Your answer is in the instructions for the 8955-SSA - page 3 - When not to report a participant. "A participant is not required to be reported on Form 8055-SSA if, before the date the Form 8955-SSA is required to be filed (including any extension of time for filing), the participant: 1. Is paid some or all of the deferred vested retirement benefit.." I think this is rather clear.

Tom, getting code A stuff from Relius should (yeah) be easy, how about the code D people - any luck there?

You have to keep it forever, as it may affect amounts of future loans.

I agree with Tom. A plan with this type of formula, even if it passes the bright line tests, would need to get IRS approval.

This requirement has been around a LOOOOONNNNNNGGGGG time. Remember that there used to be no requirement to issue a statement unless a participant requested one, and so the necessity for the SSA statement. Since PPA, statements are required periodically. Most TPAs that I know issued statements every year on all plans. I remember an audit from long ago where the auditor requested to see said statement. Our annual statement satisfied the auditor. I don't think this is a problem for most of us. Its only a problem where statement are not issued in violation of PPA.

We always run effective availability tests on tiered matching formulas because they fail about 90% of the time using the unsafe harbor percent. They just don't work.

Yes, that is correct, PLUS YOU have to be approved to practice in Texas. I cannot figure how they get around ERISA pre-emption even if they escape ERISA coverage.

If you actually read the 416 regs, there is no requirement to ever do a Top Heavy test. There are only consequences if the plan is Top Heavy. SO we all run the tests to avoid the problems if we miss Top Heavy. Of course you could do as AndyH suggests and assume the plan to be Top Heavy, that is allowed under the regs. The question is - what is the cost for doing the test? If you are being charged, or are charging for the Top Heavy test separately then that is a horse of a different color.

Did the employee sign a waiver to never ever participate, or merely decline to make deferrals? Thre is a HUMONGUS difference in the two actions.

Prevailing wage contribuitons are EMPLOYER contributions and therefore the accounts are figured into Top Heavy testing, and the contributions can be used to satisfy Top Heavy.

When I get detailed information, this will be checked with an ERISA attorney if there is any doubt. Doctor group one - it is a P.C., specialized area. Doctor owned sub-s corp. 100% owned by an employee, non-owner of Doctor group one. THe sub-s corp provides training for home care of clients of Doctor group one, home care supplies and an on-call registered nurse who also makes home visits. CLients of sub-s must visit the office at least once a month, and practitioners of Doctor Group one are available for consultation. Doctor group one specifically advertisers the existence of the sub-s corp. It appears to NOT be a FSO-A org because no owner of group one ones any of the Sub-s. It is an HCE of group one that owns the sub-S. as for the B org - I am getting income numbers. However it appears that all of the activities of sub-s are for clients of group one, and of a nature traditionally provided by employees of group one. THe provisions of the home supplies and the existence of other independent companies that do the same work as sub-s gives rise to a concern that this might not be a B org. Any other items I should be gathering? Any exceptions to the ASG rules that might apply here? Thanks in advance for your thoughts.

Read Rev Proc 2008-50 - see Appendix F, Schedules 1 and 2. You will have to have all of them signed.

We are currently 'discussing' a plan term with an IRS agent who is of the firm opinion that a notice is required for the cessation of the safe harbor portion of a plan (this one was a match) even though the plan terminated. I would give a 30 day notice for safe harbor cessation.

I would read Kevin C's discovery to say that if a plan did NOT say the waiver survives a rehire, then (if the plan were silent) the waiver does not survive a rehire. Seems like I am alone in left field again.

Since we are actually discussing Tom's 'status change' quote from the IRS manual, and we have no further known guidance, we are giving our interpretations of the situation. I think that the severance of employment (bona fide, etc) would be sufficient to remove the waiver. At rehire I would require them to sign a new waiver as if they were a new employee.

Without relying on any regulations - the person ceased being an employee (yes a status change, but not some mere switch to union or something else, they were gone). Now the person is re-hired. a former employee is no again an employee. Would you automatically reinstate prior deferral elections if they had been deferring? Or would you require them to re-enroll, just like they have to re-enroll for medical benefits? If they have to re-enroll, then I think they get to 'unwaive'. In fact I thnk the waiver terminated when the employee terminated.

The 1996 or earlier plan would be a SAR-SEP, not a SEP. Mayber Querky is thinking of a SIMPLE IRA?

FreeErisa does not have a plan under that name. Make what you will of that.