rcline46

It would have to be under state law. I have not heard of anything where the employer is permitted to demand the employe have a bank account.

CODA arrangements have to due with constructive receipt. Deferrals must be made before a person has constructive receipt. Now we are speaking of pay the person will have constructive receipt of on or after attaining and entry date. So if they have said pay, then they could order a deferral on that pay. Put simply, if that is a paydate, then they can defer.

RMD is -0- because it is based on PRIOR year valuation (date) and there is no prior year. The new regs did not make any change to that rule as far as can see.

Why -0- funding? Remember I posited a Beginning of Year Valuation, which requires -0- current pay (although you CAN finagle a final pay). With -0- pay, you can only have a -0- accrued benefit. Under UC funding - cannot have a cost. The first pay you will have is the beginning of the next year the way most documents are written. Other funding methods based on projected benefits WILL have a cost. My contention is that if ANY funding method under the proposed regs is forced to have no cost, then the regs A PRIORI are bad.

Ok, so - no pre-participation comp, new plan granting 5 years past service, beginning of year val. Previously there was an accrued benefit on day 1 of the plan, because we got the 5 past years and used at the very least the pay for the limitation year ending 1 day prior to beginning of the year. Under the proposed regulations, we cannot use even this immediately preceeding pay, so the pay for accruals is -0- zip zilch nada. No accrued benefit. Now let us suppose we are using a typical UC funding method. No AB, no funding. Bad result. Proposed regulation is just WRONG!!!! In my opinion of course.

I read the article. Very interesting. The 500 hour rule is a 'forever' not a plan year rule which means if a 'forfeited' employee returns, they continue to earn against the 500 hours, meaning restoration of funds, etc. This is even if they have been gone 15 years! Administratively this is 'impossible'. So, everyone except the one document I have uses 100% immediate vesting. Thank you Mr. Moreland for the reference, and I bet a bunch of others will be just as surprised!

I have a plan document covering Davis-Bacon participants from Montana. The document provides that if a covered employee is terminated with under 500 hours, the D-B contributions are forfeited, 500 or more 100% vested. I was under the impression that due to their nature, D-B contributions had to be 100% vested at all times. Searches in RIA did not help. Is anyone else aware of the provision, and if so can you direct me to the source? Thank you.

For 2004 put children of owner in all other class for allocations if you haven't. If they do not own stock personally, they are not an owner. They most definitely are HCEs by attribution. THey are KEY by attribution, but since they have to own something to be an owner, if they don't own it - presto - not in owner group!

ALL of our individual aggregate plans are funded level $ amount. It is not a problem. Level % gives increasing costs, level $ gives same cost as long as salary scale is met. Sort of like prefunding!

For amounts over $200 you MUST give the Notice of Tax Treatment, so you may as well give them the option, ie no force, with a response time of 30 days. After 30 days do the force. Your notice should warn them of the impending force out if no response.

Their goal is to SHELTER the money, not WASTE it! They could spend it anywhere, they just want to keep it!

Now I did not go back to the regs, but we did a calendar year plan with entry dates on 4/1 and 10/1. When researching this we discovered the EFFECTIVE date of the plan must be an entry date, but first day of plan year was not so required.

I would think you can satisfy the attorney by showing the J&S was computed as an actuarial equivalent of the original Life Annuity. (Or in some cases by the use of a table in the document). In a perfect world, the reverse is also true at any age, but I would not want to try to prove it!

The way I read the min gateway amendment, I would allocate 3% to the all others group, then let the gateway amendment 'force up' the NCEs. I think this process works because your allocation within the group is modified by the document to selected employees, not by the employer.

I would be concerned that a 'corrective amendment' to a prototype plan may take it out of reliance.

Charlie, first look to your document. You may have fail-safe language built in. We specifically REMOVE the fail safe for 410(b), but you document may have it, even in a new comp plan. Afer that little problem you are on your own. If you have excluded people by name, that is not a reasonable classification and you cannot use the test. In this case the people are not named out and absent anything other than an opinion, I do not feel this violates a 'business reason'. Others may feel differently.

I have been thinking, which is always bad! The IRS under the new LRMS and regs says the plan must be amended, and a SH plan cannot have the 'normal' testing language in it. That means a radical difference in the documents. So what if??? There are 4 document types - Std, Match SH, 3% SH, and Maybe 3% SH which we conveniently call A, B, C, and D. Should a client want a SH plan we create all 4 documents, IE 4 plans, 1 trust. Each year for the SH Notice, the notice states the usual, PLUS "and for the upcoming year the plan contributions will be made under document X". Since the IRS has stated that you should be able to do in 1 plan what you can do in multiple plans, now let us bring the 4 plans together into 1 plan where the appropriate Articles are set forth. Now the notice can say "and for the upcoming year the plan will NOT use Articles q,r,s, etc". And now boys and girls, we are back to what we have today, but more complicated!

According to the IRS, the plan must be amended no later than 1/1/05, otherwise you are not operating in accordance with the plan terms. Of course you could amend later and submit under VCR for a document correction.

The rule is "as soon as can be segregated from the sponsor's assets but no later than the 15th business day of the next month". First note that it is the 15th business day, not the 15th. Second note that if you can get deferrals made on the the 31st deposited by 15W, you can get deferrals made on the 1st deposited in 15W! Third you cannot ignore the "as soon as can be segregated". I just attended a lecture by a DOL investigator and he settled with an employer at 2 days. If you can issue the pay checks and deposit taxes for people who do not defer in 3 days, you can certainly deposit the deferrals into the trust in the SAME 3 days because it is the SAME money! And that is the DOL position. You have to prove some business necessity for a longer period.

I doubt it. Problem 1 is that the person is on all reports (think daily val!). Problem 2 is that the TPA has information and must manually make decisions no matter what the document says. Problem 3 is the large number of institutional prototypes and IDPs NOT skillfully written. That is why I agree - terminated? Stop deferrals automatically.

Kirk, the answer to your question lies in tweaking your example just a bit - Calendar year plan, change Friday to December 31. The second person receives a next year contribution. Now when it comes to testing you have a 'non employee' with a deferral and comp in the next year testing. The IRS has stated that this person is not in the testing because they were never eligible in the following year.

DB takeovers seem to be a rarity here, and even then its only a 1 year problem cuz things like rates are changed to our way if not already there.

Since we control the docs and did the restatements ourselves, you can count on it!

First, mandatory contributions must be EE not ER contributions. I don't see any way to classify as ER regardless of entity/plan type. Second, even though it is post-tax money, I believe that it is an over-contribution and must be returned to the employee, with 1099-R for any earnings. Lastly, I don't read that the contributions were a condition of employment, but it is not clear from the post. They may just be a condition for participating in a plan and I don't think that has changed since forever - to get an accrual of ER contributions, you have to make a contribution.

Thanks guys. Sometimes I just need reassurance. It wasn't the maximum, just run of the mill lump sums were the concern. What with a 2 year law, grandfathered rates, some applying to funding and all that I wanted to be sure the 30 year T-Bill rate (look-back and stability) was solid. Which of course means the funding problems for plans gets worse cuz you funding at a high rate and paying a low rate.