rcline46

As I understand 401(k)(11)(B)(iii), if you have a Safe Harbor match in a plan for NCEs only, you cannot have ANY discretionary match which goes to HCEs only. Another consultant is telling my client that you can do the basic Safe Harbor match for NCEs only and a discretionary match for HCEs only as long as it does not exceed 4% of pay. Of course they have not yet give the code/reg cite which permits this. Is there another cite other than the one above to 'prove' you cannot do this? Or is it possible, and if so, where would I find the rules? I know that the portion of a QMAC used to satisfy ADP testing cannot again be used in ACP testing. Is there a cross reference to this in the Safe Harbor regs I am missing? Thank you.

It is clearly (to me anyway) that it is not the responsiblity of the TPA to keep documents. It is the responsibility of the plan sponsor. It is a legal document of the sponsor, not the TPA or recordkeeper. Keep looking.

Under Rev Proc 2003-44, Appendix B, 3.01(3) (b) and © it gives optional methods for determination of rates of return for the fund. One of the methods given is a pro-rata portion of the fund return. There is a discussion in our office as to the precise meaning of the statement, to wit: The fund return is the return of the fund in the plan (read specific mutual fund(s) selected), or; The fund return can be taken from published sources (annual, year-to-date) and a pro-rata alloction of the published return. Obviously calculating the return vs. taking published returns creates a BIG difference in time and cost. How have others been treating this option? Is there any known guidance, official or unofficial, on this method? Thank you all.

Hello Tom. The deduction thing - by LAW anyone benefitting in the plan has their pay counted for deduction purposes, and by LAW, if you are eligible for to make a 401(k) deduction you are treated as benefitting. So the IRS lady is just wrong, as she was on other points. Late 401(k) SH contributions - Mr. Holland mumbled something about it being an operational failure, EPCRS, and don't know.

Don't forget that the LS value can not be greater that the value of a max benefit at 5.5%

Youngsters. 81-202. TRA 86 called for a rewrite of 81-202 therefore 'new' comparability.

No.

I did not see a thread on point here. We have a Multiple Employer Safe Harbor 401(k) plan. The primary sponsor is being acquired by a larger firm with a non SH 401(k) plan. The question becomes - can the SH plan survive after the transition period? If we can manage to have the new and old each be 410(b) groups, I think so but would like confirmation. If we cannot keep them as 410(b) groups, what happens? Consider that this might not be known until after the year end, meaning we apparently are testing a SH and a NON SH plan together. Note that the documents do NOT automatically include affiliated employers.

Yes, but the plan must be amended by 2/28/06, like ASAP. And hope your software can handle it and the payroll provider handles it properly. In other words, you may not be READY to start taking Roth contributions on 1/1/06.

And don't forget to watch the 404 and 415 limits on large matches.

Not only that, but even tho the co is on a cash basis, qualified plan contributions can be accrued!!! That came in with ERISA in 1974, so your $20,000 contribution in 2005 for 2004 can be deducted in 2004.

In my prior post I said employed. SInce you can't get hours credit if not employed I mistyped. It should be participating. Kirk is correct, of course, for the eligibility overlap. But eligibility service should not be confused with vesting service. And vesting service should not be confused with accrual service. They each have their own rules.

There is no question there is double taxation on the interest, but it is growing tax-deferred.

Since vesting is on a plan year basis, credit is given for EACH plan year to be included, whether employed or not. There is no overlap in a normal situation. The only overlap that can occur is if there is a SHORT plan year. In that case you count hours for the ORIGINAL plan year as if it were not shorted and give credit if over 1,000 hours, and then count hours for the NEW plan year, including the overlap, and again give credit if over 1,000 hours.

The simple explanation: You have pre-tax money in the plan. You take pre-tax money out of the plan and put it into your pocket and do not pay taxes on what you put into your pocket. You take the SAME pre-tax money out of your pocket and replace the pre-tax money in the plan, just at a later time. Therefore there is no double taxation. No article needed.

Are you talking about ME?! Maybe not, don't remember getting that question recently. Well let's see here....... hmmmmmmmmmm ...... OK, what you have is the difference between NRA and NRD and assumptions. As I recall, being an ancient myself, is that NRA can't be beyond 65 with 5P (looking for SSRA +5 but not here yet). However NRD is another matter entirely. I have not seen software that will allow you to get an NRD beyond Anniversary after NRA or January 1 after NRA, but see, they are different. So you can set NRD at 65 +10P, and NRA at 65 + 5P. Then of course as an actuary you can ASSUME the HCE will retire whenever you want! (Still thinking you are talking about me, you young whipper snapper!)

They can take it all unless the document specifically states otherwise, like your 100% vested account limit.

A corrective amendment must ADD benefits. The HCE has already 'accrued' the right to a benefit. the -11(g) amendment must be non-discriminatory, and must INCREASE benefits.

It sounds like the taxes are correct since you MUST withhold on the value of the loan when the participant is paid directly. You need to get the $2,000 back from the participant. File a lawsuit if necessary or else the trustee must restore the money to the plan.

Had a nice long reply killed because of board activity. Freeze up to 12/31/05 - 30x no increase Freeze 1/1/06 or later - AB increases due to COLI even if no more accrual years.

In our annual questionnaire to the client, we ask THEM if all deposits were made timely, and the client signs it. We only report on the 5500 what the client has, in writing, told us.

For Carl Sagan - 'Billions and Billions and Billions'

This is a plan intended to be qualified under 401(a) of the Internal Revenue Code of 1986.

I thought 408 specifically said you could NOT roll a Simple IRA to anything but another SIMPLE IRA.

Don't forget to read your documents! Many have a correction built in for inclusion of ineligible employee. No amendment needed. Usually a forfeiture of contribution. Of course er makes ee whole, forfeiture applied to next contribution so everything will be ok.