ETA Consulting LLC

Just to reiterate, I will lead my client in choosing flexibility in most instances. Over my 20 years, I've seen plans with design flaws (i.e. cannot get to the gateway because of accrual requirements) that created nightmares. Because of these experiences, I always attempt to incorporate flexibility whenever possible. When I have a 3% SHNEC, I typically use the wait-and-see; just because. So, there is no right or wrong; it's just a matter of preference. At the end of the day, I think we can all agree that we're merely making these recommendations to our clients and providing them the best information possible for them to make informed decisions. Good Luck!

I never use the last day/1000 hour; so I don't think it's a consensus. I, too, thought Craig was being a bit paranoid in that you are given total flexibility on how the allocations are made without violating the definitely determinable formula requirement. When you, then, open the door to how the plan is tested, I think it would be worth mentioning that you have a built in fail-safe for 410(b); and you also get the cherry-pick the employees who will receive the allocation (because each individual is in their own group). Good Luck!

Are we sure that "Guaranteed Payments" are a part of 'earned income'. I was under the impression that they were not; but have always yielded to the Accountant in ascertaining which portions of the K-1 constitute earning income from self-employment. Good Luck!

I've seen it done before. In those instances, the Resolution specifically references the document as an appendix and states that it is adopted. I don't recall it being an adoption agreement, but a mass submitter document. At the end of the day, it should depend on the wording specifically 'adopting' the provisions of the adoption agreement and trustee agreement. Good Luck!

"IF" each person is in their own rate group, then you may provide a zero contribution to those employees who are not employed on the last day. The only thing you would forgo is the safe harbor exclusion of employees who terminated with less than 501 hours. If an employee terminated with less than 501 hours, you don't get to exclude him from your 410(b) analysis because being terminated is not the reason he would fail to get the contribution. Good Luck!

Yes. There are still 5500 participant counts; even though no one actually contributed. Even if not required (for some reason that I cannot imagine), it would still be a good idea to file it. Good Luck!

Well, we know that "IF he was not an eligible participant at any time during the year", then he would not be entitled to a TH minimum. So, the subsequent year question is answered. As for whether or not he is entitled to a TH minimum for a year in which was he an eligible participant (for at least a part), the answer seems somewhat debatable. We know that you must be a participant (e.g. not merely an employee, but actually meeting plan eligibility) to be eligible for the TH minimum. For any year that this is not the case, you would not possible be eligible. We were all in agreement on that issue. The debate was with respect to years in which the employee was eligible for only the first part (prior to meeting the eligibility for the TH accural; 1000 hours in DB and last day in DC). Again, just framing it up...

I debated this situation a couple of years ago. My answer was no, but there was some compelling arguments that he should, indeed, receive the TH minimum. In a DB plan, the TH requirement is that he works 1000 hours during the year. DC is employment on last day. In your situation, you're saying that he was an eligible participant that entered an excluded class prior to working 1000 hours... Just framing it up...

An SPD is, typically, an ERISA requirement; and the failure to furnish one is a criminal act punishable by jail time. Hence, it is a participant notification requirement falling under the DOL's purview. The written provisions requirement for 403(b) plans is an IRS requirement. Good Luck!

Even though the plan will pass every non-discrimination test ever created (since everyone is an HCE due to ownership), the plan is, technically, subject to ERISA for not meeting the criteria explained by Belgarath. Good Luck!

Well, when you look at what it means to benefit from the plan, it is actually accruing a contribution. So, until an HCE actually receives (or accrues) a contribution, non-discrimination would not fail. Hence, you could easily amend the plan to exclude any employees other than the owners (in that regard). I, personally, do not see (off hand) any other benefits, rights, and features issues that would come into play in this scenario; as no one else would have a balance. Good Luck!

Well, you must follow the written terms of the plan. Documents are, typically, written in a manner to provide flexibility in the definition of Compensation that will be used for tested. However, for allocation purposes, the definition of Compensation must be very specific (as not to violate the definitely determinable formula rule). So, as to whether or not you may use 'any' definition of Compensation that satisfied 414(s) to test your plan, you may have to refer back to the document. Good Luck!

No. The attribution rules of Section 318 do are only vertical (to the Father) and not horizontal (to the sisters). Hence, the sisters will be Former Key Employees and their balances will be excluded from the analysis. Good Luck!

Sure. Many people who are age 70 1/2 and still employed often roll their IRA balances over to the qualified plans in order to suspend their RMDs until termination of employment. There's no issue with doing this. Good Luck!

It "IS" a never ending process. Allocating additional contributions, which will continue to magnify the problem by it's very definition, may not be a good idea. Good Luck!

When you file the Schedule 1, you would print a copy of the amendments from the Basic Plan Document and submit them with your filing. You would, then, explain to the IRS that those amendments were adopted with the preapproved plan. So, when you submit the signed adoption agreement, they will understand that those amendments are incorporated into the Basic Plan Document for the preapproved plan. There would be no need to sign the amendment if you didn't change any of the defaults. I've submitted several. In one instance, I actually had to clarify to the Revenue Agent that the amendments were part of the BPD and adopted with the adoption agreement. They accepted it. Good Luck!

Sure.

You would want to get historical deferrals to load to the system. You "may" obtain this from historical W-2 information from the client going back to the year they first allowed deferrals to the plan. It may also help if you only obtain this information from those who are less than 59 1/2. But, the hardship would not reference the period of time you took over. Instead, it will reference all deferrals since the time the plan first allowed them. Good Luck!

I think they would've fired the Trustee, or the Trustee would've resigned. At the end of the day, asset placement is a Trustee responsibility. It is the Plan Sponsor who hires the Trustee. So, you're hiring someone to perform a duty and then undermining their position. Good Luck!

As of today, he's only 20% vested in whatever the balance is. So, you'd forfeit 80% today; leaving him 100% vested in the remaining balance. Good Luck!

Technically, the approved providers, in conjunction with the Employer, are responsible for enforcing the plan's requirements. So, simply writing a list may not suffice; there must be an agreement of the provider to work collaboratively with the Employer and other vendors to ensure the rules are followed. Must this be done with the actual plan document; I don't think so. But, that may be the most efficient way to document the allocation of administrative responsibilities. Good Luck!

Technically, you have a payment from the plan to someone who is not even a participant (and not entitled to any payment from the plan). You have a qualification issue that should be corrected under EPCRS (either SCP, if available, or VCP). Good Luck!

I'm with Kevin C on this one. Over the past few years, we've beat this one to death Good Luck!

I agree that it is not a stretch. The non-discrimination rules and 415 limits are clearly defined. Maximizing ANY NHCE to the 415 limit would not violate either of these rules. So, from a Qualified Plan perspective, I don't see an issue. From a organization planning perspective, there could be questions as to how you would justify such a substantial contribution to any single employee's account; but that would be beyond the scope of the plan. Good Luck!

Sure. In that case, you'd only use Compensation and Deferrals through the date of the amendment for calculating the match. Good Luck!