rcline46

A 401(a) plan may be terminated and assets distributed. No such luck with a 403(B) plan. Can have a defined benefit plan under 401(a). No such 403(B) animal.

There is always an estate whether a will or not. All states have intestate laws (where there is no will). Plan admin must follow the state rules, or give the money to the local court to distribute (interpleader).

Ah, the crux of the matter! A loan is an asset. Ask any bank or financial person. The recipient has a liability. Loans may be unsecured, or secured. If secured you may pledge personal stuff, or up to 1/2 you vested balance (at time given). It is not a distribution and therefore vesting is irrelevant in the loan amount. Consider our instant case - only now the $1600 falls 75% to $400. The total balance is now $400 PSP plus $400 loan or $800. You are still 40% vested in $800 or $320. Yet you want the loan to be 100% vested. Does not work. My way still gives the correct answer.

I follow, but you are looking at only 1/2 (NO PUN) of the problem. 100% vesting in your entire balance doesn't count. OK, it won't show the problem. Start with $2000. All er money so no 100% vesting. You are 40% vested in the $2000 or $800. You borrow 1/2 vested amount or $400. So far, ok. Instead of 1 account, 40% vested, you have 2 accounts, PSP and loan. Total accounts are $1600 PSP account and $400 loan account. (when I lose you let me know!) Your vested amount is still $800. You want the loan account 100% vested ($400). That leaves the PSP account with $400 vested money. (400+400 = 800 - that number CANNOT change) So the PSP acount of $1600 has $400 vested in it, or 25% vested. Even though you are 40% vested, you now see 25% vesting in one account, 100% vesting in the other account. This is just impossible to program. But let's continue. You pay back $50 (ignore interest, because it makes it REALLY complicated!). You now have a 100% loan account worth $350 and a $1650 PSP account at $450 vested, and I don't want to calculate the vesting %! But its somewhere between 25% and 40%. And so forth. If you saw this on your statement, that you were NOT 40% vested, you would go bananas, I guarantee! Now do it the Relius way - BOTH accounts 40% vested. 40% of $1600 is $640, 40% of 400 is 160 total 800. Pay back $50, which is 40% vested ($20). PSP 1650 at 40% is 660, loan 350 at 40% is 140, still $800. Smooth operation, no explanations. The loan rules say you only pledge 50% of your vested account as loan collateral. Nowhere does it say you are actually borrowing vested money, you are just borrowing money against a pledge. If the plan is NOT an individual account plan the same loan is just an asset of the plan, and everyone owns a prorata piece of it. There is no vesting attached. In an individual account plan it becomes an asset of the borrower, just like any other investment. Vesting just applies to the asset.

Remember you are playing between the CPAs and the DOL. What the CPA is saying is they do not have a full trustee's report, certified by the trustee, as to the transactions and investments. Without the report, they must do a full audit. The DOL regs tell the CPAs that if they cannot get a report by someone regulated, then the CPA has to check everything.

The regs say 1 rate group per HCE, so you have 10 rate groups. The fact that 3 of them are identical and so may be shown as one is a matter of preference. I don't think the IRS would quibble.

I would think not for a different reason. Prop fund zebra is listed as a value fund, so I choose it. The manager is replaced a year later due to poor performance. The new manager now changes prop fund zebra to a blended style. Am I notified so that I may change to a different value fund? If not, several 404© items have been violated. Therefore, I do not think the posited situation satisfies 404©. I also do not think offering only proprietary funds will satisfy 404© as a starter.

Quantech / Relius does a 'look through' for loan balances. The concept is when the loan is paid back, and the principal returns to the source from which it came, what should the vesting be? Simple example - borrow from 40% vested account - you borrow 20% of the account ($100 - vst $40 - borrow $20). Technically you are still vested 40% in $100. Your suggestion would have one vested 40% in $80 and 100% in $20 - total vested amount would be $52 - doesn't work! Relius essentiall has 40% in each account, so it works. WHen paid back, loan acct is $0 and $20 has returned to whatever the vesting current is, not current vesting on the 'asset' and 100% on the $20. Does this make sense?

Unfortunately, the 2000 instructions won't allow you to skip 2A for Age Weighted, Grouped/tiered, or super integrated plans.

THe general rule on amending PBGC rates is you calc the benefit under both rates for 1 year after the later of adopt or eff date and pay the larger amount. Your first example, pay at larger of 100% or 120%. Second example, pay at 120% rate. Also, if you were paying larger of Act Equiv or PBGC, final check is against Act Equiv for larger there also.

No. The plan document controls distribution / rollover. The new provisions PERMIT rollovers between various types of plans, but only if document allows distributions.

Since we cannot tell if the sponsor segregated the funds before sending in to us, we cannot determine if a contribution was late. Therefore, in our annual questionnaire, we ask the client if any were late, and the form is signed by either trustee or administrator. We complete the 5500 based on that information.

Use all applicable codes, so use 2E. Make sure 2A is applicable since you need to distinguish between TESTING and ALLOCATION.

Good question, and the answer is - it doesn't matter. Cannot do 401k deferrals before plan is signed anyway. However, compensation is critical. If plan defines as only while participant then you lose 1/2 year pay on boss. If effective is 1/1 even tho entry is 7/1 and comp is full year, you get full pay. Top Heavy is on full year pay regardless. A short limitation period is only when a plan year changes and is not relevant for the first year. There are other threads on this item. So... What are you trying to accomplish, what will the half year pays be, and make your choice.

Does an Employer / Employee relationship exist? In fact, this person is no longer an employee, they are drawing benefits on a non-qualified plan of deferred compensation. Therefore they cannot defer 401(k), nor will they be an employee at June 30th (unless rehired).

AndyH - what are you doing to me!!! It seems we have at least 2 interpreations (following from Tom's analysis): 1. Once you have deferred in 4 calendar quarters, you become eligible for a 100% match in the 5th quarter and forever thereafter. A one time deferral in each quarter counts. Quarters can be any time. 2. If you defer in 4 calendar quarters IN THE SAME YEAR you get an extra 50% AT THE END OF THAT YEAR. You must restart the 4 quarters each year. I have been arguing no. 1. On number 2 it looks like a 50% ongoing match with an EOY 50% extra match. The EOY extra match must pass the same 410(B) tests as any EOY match. I would NOT consider this a BRF situation! This is two separate matches with different rules.

The fundamental question is whether or not accessability (current availability) to the enhanced matching formula meets one of the exceptions to testing under the BRF rules. Service is not the issue although component plans may help the situation for those under the most restrictive eligibility should testing be required. Medusa shows the regulations clearly differentiate between service and 'minesterial' functions, in that, as we all know, for 401(k) purposes merely satisfying eligibility is enough to be considered benefitting (and the reg pointed out says the same for matching contributions). And of course passing the ACP test is the ultimate non-discrimination test. If the enhanced level makes you feel uncomfortable, then by all means test, and request an opinion from the Service. But the regulation clearly states (in my opinion of course) that enrolling is a ministerial or mechanical act, and that is necessary to get the 4 quarters in to get the enhanced match, and that is one of the exceptions. Thank you Medusa for finding that reference.

I agree that age/sevice applies to optional forms, not match levels. -4(B)(ii)(B) gives us ... application for benefits OR SIMILAR MINISTERIAL OR MECHANICAL ACTS,... (emphasis added). I would equate enrolling for deferrals is similar to applying for a benefit. This application then triggers both the first level and second level match. It is similar in concept to mandatory contribution plans where coverage testing does not have to be proven where the rate was 6% or lower. Effective availability has not been addressed, but I believe it passes without question. I may be a lone voice in the wilderness, and only AndyH can apply to the IRS for a ruling (its his plan). Did prior TPA have any notes on why they thought acceptable?

I will review when I get back to the office. My position is if the different rate of match were hourly to salary, division a to division b or some such thing, I would fully agree testing is required. This different rate is substantially available to all employees, and is contingent only on deferrals. For now (until I can review - doing so online is too hard) we can agree to disagree.

I reviewed 1.401(a)(4)-4(B)(2)(ii)(A)(1) "any specified age or service condition with respect to an optional form of benefit...is disregarded." Also see ....(B) "....application for benfits or similar ministerial or mechanical acts, ..." I think the wait is ignored and everyone is considered eligible for the 100% match, so no 410(B) question. SHould you disagree, then the testing as described is correct. And it would be all at 50% and some at 100%.

Memory seems to tell me that if the formula difference is only due to passage of time, separate BRF testing is not needed. Of course the ACP has to be passed.

Check the document, but most plans use the rule of annuities by the end of the year after year of death, lump sums by the end of the 5th year after death.

We just check the percentages and tell the sponsor what to contribute. Allocated to accounts in year due.

Since elective deferrals still count for annual additions, and 416 is about annual additions, then still a Top Heavy consideration.

Since a spin off is a new plan, as long as notices are properly given I would say this is ok.