rcline46

I have not found any references to successive eligibility since 1994 410(b) regs, and all examples are to concurrent eligibility. I am not willing to stretch concurrent rules to successive situations. Since I admit I am not a perfect searcher in all of the material, then there might be something on successive eligibilities that I have missed. Note - neither does this rise to a pattern of amendments creating discrimination cuz 1 is not a pattern.

Guess I am going to be stubborn ..... With all due respects to Mr. Poje and Mr. Tripodi.... Reg 1.410(b)-6(b)(2) does not anywhere use the words "for the plan year". Not one of the examples (as I admittedly skimmed through them) discusses successive eligibility requirements in time, only different plans. If the fear of this technique is based on what is in the reg above, I don't see it. If the fear is due to an IRS functionary opining at some conference, I won't be swayed, but I can understand others may be concerned. So Tom pointed out what he feels compelling. I don't see it there. I will let Fred, and any other readers, make up their own minds. Until something more compelling comes along, I must humbly disagree.

Let me try again. If you have different eligibility for different groups of people - clerical staff and professional staff - then the BRF applies. This case just does not fit the bill. It is like a window early retirement. It is not dual eligibility. I don't have Tom's book, so in Sal's book tell where this fits the definition of dual eligibility. Since the one time, effective date eligibility condition ENDS the day after the effective date, then there is only ONE, not TWO eligbility conditions for those hired after the effective date. Tom, Fred - got time to quote me just where you think this qualifies as dual eligibility??

In deference to Mr. Holland, maybe a schedule B is gone, but the PLAN still exists although no longer subject to minimum funding. So 404 should still be available. As a fall back position, how about good old 162?

I would think the overriding concern is if the EIN of the LLC changed. If not, then I would think it is a continuation. A partnership actually changes to a new partnership so I've been told. I don't know if they get a new EIN.

I don't see the problem. Almost all 401(k) plans are set up with an open enrollment/immediate eligibilty on the effective date of the plan. If you are not employed on that date, then you fall under the 'normal' eligibility rules. Those hired after the open enrollment are not eligible for the plan, no how, no way, and are not in any testing. How can someone get into the 410(b) testing if they have not satisfied eligibility? Even in Fred's case shoud you use th -0- hour rule (and note I don't think it is applicable) and not the -1,000- hour rule, the next entry date is JAN 1 04 and they STILL are not in the 12/31/03 testing. They just are not participants. So what did I miss? And by the way, I don't know of anyone who considers this dual eligiblity because it is a 1 time thing and does not persist through later plan years.

First, he got bad advice. Second, I hope it was not an HCE that got hardship Third, assuming Second is not a problem, he can amend back in. What was wrong with denying the loan, so that all available loans were taken and then giving the hardship?

Kjohnson - I understand the first example. However, your example seems to be missing me, I don't follow it. I know that dividends are double taxed - once to corp, second as income to recipient. At no time are the untaxed. Your example does not seem relevant to the corp itself if dividends were allowed to be deducted, and those who received the dividends, even if given a break from ordinary income taxes would still be paying taxes, not getting a free ride.

Ok, document says comp while eligible, so first $205,000 can't be true for anyone who starts other than Jan 1. Second, document says cannot exceed $205,000 for the year. Nowhere does it say FIRST $205,000. Match - calculated on a per pay basis AND limit not addressed in this section! So only ANNUAL limit applies. Not that the SH match cannot exceed $8,200 or the formula applied and summed by pay, whichever is lower. Result - whoever said FIRST $205,000 is wrong as a matter of the document itself.

The sponsor made have information from their health or insurance plans, or by word of mouth from other employees. This is not to say the sponsor should actively pursue the matter, but review the information they already have.

I think you get a free pass. If no NCEs eligible last year then they do not have an ADP % for last year. This does not mean a -0- ADP, it means NO ADP. If you have no ADP % last year to test against, then you get a free pass. Tom, would your answer change if all NCEs were hire in current year with immediate eligibility - ie no NCEs employed at all? What if NCEs hire in current year but not eligible? What if you are using statutory exclusions? I think all of the above cases give a free pass.

If the Dr. was just an SOB and they quit I don't think that gives rise to 100% vesting. If the Dr. said he was closing his doors in 2 mos and they quit then that would give 100% vesting. So don't be too quick to jump!

Yes a 5330 should be filed. It is the same as not transmitting deferrals. Interest needs to be calculated on each late deposit.

Haven't researched the Q & A's other than in prior posts, but also consider - The position I take is first, if you are nervous then you can be conservative and word your deferral as fixed $ and avoid the issue. I have no problem with that. Then, if you can say x$ per pay, then since that is convertible to a %, they are equivalent, so stating a % is mathematically no different than stating a $ level. The second arguement is that a salary deferral agreement is between the employer and employee. It is not a part of the plan document, is not included in the 4 corners of the document, is not an attachment or addendum to the document, and in fact may contain such items as 125 reductions, non-qualified plan deductions and other items not involved in the qualified plan. Therefore the items on the SDA need not conform to language in the document. (Side note - a matching contribution IS a plan issue!) You will find no definition of an SDA in ERISA, only that deferrals must come from a valid SDA. Third part is exactly what you said, but I will emphasize and annotize - The PLAN (does not say SDA) shall not take into account compensation in excess of $200,000 (indexed) (recognizes that other non PLAN operations may use comp over $200,000). Therefore, any calculations in the plan - defined benefit formulas, money purchase or profit sharing calculations, matching contributions - these must all limit the compensation to the 401(a)(17) limit. An employee deferral is NOT computed by the plan, ever. The plan may set limits, as does 402(g), but just what does the plan limit really say? It says ON AN ANNUAL BASIS the contribution cannot exceed some % of pay (and yes this pay is the 401(a)(17) limit). You just cannot turn this around and say you must stop deferrals when you hit the annual pay limit - that is backwards! Ignoring 402(g), you cannot determine this answer UNTIL you have reached the end of the year. Only at year end can you determine if the deferrals have exceeded the plan limit. Let's see what happens if you try to test at mid-year - when PAY reaches the limit. The employee has not yet reached the plan limit. You are now prohibiting the employee from reaching the limit. Under what authority are you limiting their ability to reach the plan limit? I see not authority for that limitation in the plan. Is there any need to continue this?

I will have to research it, unless someone else knows - but the IRS has pulled back on the 1999 statement because it was proven they were in error. Need to look at a later question! Have to wait a bit afore I have time.

They are wrong, and cannot provide any cites to support their position. Since they are the ones denying benefits, they must provide the cites to support their position. Take a look (do a search) on previous threads concerning compensation for deferrals and matches. Very enlightning.

We need more details - when was the partner bought out/liquidated and when were they rehired? Also need to know their age, as I think I remember that if you were ever a Key employee after a certain age (55) you would always be Key. Any familial relationships that might trigger being Key?

Lets do simple, not complex! First the idiot has to be an employee to be employed on the last day. To be an employee, there must be an employee-employer relationship. If the employee called in sick on 8/31 there would be such a relationship. If the employee called in dead, there could not be such a relationship. That is why some plans give the allocation with specific wording. It appears the employee called in dead (not working there anymore). No matter what overtime, accrued leave time, whatever else, they are not an employee and therefore are not 'employed' as of year end. My opinion of course.

Thanks to both of you. Someday I will learn just what keywords to use on a search!!! (nah, probably not).

Does anyone know where to get a current list of state withholding requirements for qualified plans? I need to update our files. The links from the Sept 2000 posts no longer work. Thanks all.

Tom, that's because my grey hair fell through and out my chin! Nothing on top to get grey!

HR-10 plans disappeared in 1984 with TEFRA. Its been 20 YEARS!!! Where do people come up with this terminology??? Next thing you know, we will be getting questions on how to implement class year vesting! TOOOOOOO many dinosaurs!!!!! (BTW I started working on software for pensions in 19 (GULP) 7 (DOUBLE GULP) 1!!! So I can talk about dinosaurs!!! Pay as you go funding, true individual level premium, insurance company rates, both current and guaranteed, 990's. Then designed our annual administration system for ERISA (the Death Knell of Pensions!!) in 1975, rewrote it completely in 1983, 401(k) daily val software in 1984...... And still Keogh plans live!! Well, at least in the vernacular. My biggest problem is remembering regulations that never existed!!! Keep having fun.

But when I takeover the PS plan, and see the J & S requirements and no separate MPPP accounts and remove the J & S then the law has been circumvented. I think you have to keep track even though they may have the same benefit options.

First I base my opinion on Notice 98-52 IX B. 1. on permissive aggregation. Should I be wrong in my interpretation (the service has yet to issue guidelines on mergers and acquisitions and such stuff as listed in 2000-3), then I would think you would only measure the HCE while eligible in each plan.

Posited scenario not possible. All plans of employer must be safe harbor or all not safe harbor. See regs and 98-52