ETA Consulting LLC

They violated the particpants' elections to defer into the plan. Those should not have been stopped until the plan was actually terminated. A simple amendment to terminate could've accomplished that. But to take a unilateral action to deny participants rights to defer under a written plan appears to be a violation (like putting the cart before the horse). Good Luck!

My document defines a "Participant" as an "eligible employee". I asked that question in order to avoid the semantical debate. As for whether or not someone who is no longer eligible for the plan due to being part of an excluded class is entitled to a TH minimum, my position is that they are not (since they are not a participant in the plan on the last day). Now, you are saying differently (that because they were a participant at some point during the year 'and' they are employed on the last day, they are entitled to a TH minimum). I'm having trouble determining that entitlement since they are not participants in the plan on the last day. When I say Eligible Employee, I mean participant (but not active participant). May plans provide different definitions to these terms. At any rate, I think our positions are clear. I just don't see how someone who is not a participant at year end can receive the TH minimum. Good Luck!

How does your document define "Participant"?

Thanks. I was under the impression it was used if timely deposited. I see, here, that QNECs, are specifically excluded from being used twice; even though the amendmend to prior year testing does causes all other contributions to get used twice. I stand corrected Good Luck!

Yes, if the plan meets the conditions of amending to use the prior year method. Good Luck!

You would use modified AGI to determine the income used for making the contribution. Good Luck!

I'm with K2retire on this one. The document should clearly identify which employees are eligible for the plan. Good Luck!

They should've done this in 2011 (before it became a large plan) and avoided the audit altogether. No big deal because you, now, have 5 small plans. Good Luck!

I think the question is whether they are entitled to a TH minimum since they are not "eligible employees" under the plan as of 12/31 (due to the amendment placing them in an excludable class on 9/1). I think you must actually be an 'eligible employee' on 12/31 as well. Since the plan was amended to exclude a certain class, then that class would not longer be partcipating in the plan. This type of amendment may open a host of other issues if there were no accrual requirements in place (i.e. last day/1000 hours). Remember, you cannot amend to change the allocation of a contribution after the conditions for receiving that contribution have been met. Hence, the amendment on 9/1 excluding those employees "may" be an issue if the (otherwise) accrual requirements for a contribution have been met. At the same time, however, the accrual requirement for the TH minimum is the last day; so there wouldn't be a point of contention on that issue. Just a few things to think about Good Luck!

When it comes to a question regarding a distinct plan's ability to be tested as such, as if there is a citation needed in order to avoid aggregation with other plans of the employer, then referring to the plan document is not lazy, but the correct approach.

I'm with K2retire on this one. The 20% is a minimum. Good Luck!

The plan document is written pursuant to the Regulations. Not to be argumentative, but the actual language explaining the tests (e.g. coverage ratio and ADP/ACP) is actually written in the document. If there was something to actually preclude a standalone plan from being tested as such, then it was likely be written in the document. It's a process; don't overthink it Good Luck!

He's not talking about aggregating, but merely testing each plan separately. Each plan is on it's on distinct document. That document would explain that in the event the tests that are described therein are passed, then there would be no need for additional testing (which would presumably include aggregating with other plans). Just look at it as a process Good Luck!

The plan document. Good Luck!

Your client is correct. The employer contributions to a 457 are treated as employee salary for FICA, but not included in 415 Comp. Good Luck!

There is a fine line here. The "rule" is that the employer may not impose any "significant" adverse conditions for employees who terminate and choose to leave the funds in the plan. Hence, if the balance is above the cashout limit, then there is nothing the employer could do. There was an issue a few years back where (if I remember correctly) the courts seemed to rule that charging a fee for these terminated participants would not constitute adverse treatment for leaving their balances in the plan. Not sure what criteria the fees had to meet in order to avoid being considered adverse treatment , but that may be a start to attempting to provide insight on your question. Good Luck!

Yes; if they are subject to ERISA. Good Luck!

Each year. The RMD must continue. You may use the beneficiary's single life expectancy in the years following the year of death. This language will be in the RMD section of your Basic Plan Document. Good Luck!

If it is a 401(k) plan, then plan termination is not a distributable event when the sponsor maintains a successor plan. So, not sure if that is the case, but you'd typically want to ascertain a reason why the assets were not fully distributed within 12 months. Good Luck!

You're not missing anything. You must change something by the end of the transition period. Good Luck!

So, you would want the forfeiture to be allocated in some method other than proportional to Comp? You can do that as long as the formula is definitely determinable (meaning you define clearly how it will be allocated). You must also ensure you complete the appropriate non-discrimination test in the event you provide contributions pursuant to an allocation formula that is not uniform (i.e. prorata). Good Luck!

I understood the question. The fact is that the HCE definition for H & W plans is more liberal; where many employees can be considered HCE merely because they are managers who earn more (but not necessarily above $115K. At the same time, the H & W definition of Comp also references HCE under IRC Section 414(q) as one of the requirements (meaning if you're an HCE in a Qualified Plan, then you're also an HCE in the H & W Plan). This is where all plans utilizing the 414(q) definition must apply the Top Paid group election in a consistent manner. It is not whether it is a pension plan or welfare benefit plan, but whether 414(q) applies or not. Notice: You may be an HCE in an H & W plan and not an HCE in the Qualified Plan. However, if you're an HCE in the Qualified Plan, you're also an HCE in the H & W plan. For 414(q) purposes, the Top Paid Group must be applied to all plans in the same manner. Good Luck!

If your plan does not authorize the use of the top paid group, then you may not use it. Hence, anyone whose Compensation during 2012 "EXCEEDED" $115K will be an HCE. To your second question, Yes. All plans of the employer must use the same criteria for determining HCEs. You may not implement the top paid group for one plan and not the other. Also, when the top paid group is used, there is some flexibility with the exclusions when determining the actual number. You must be consistent with this criteria across all plans. Good Luck!

You're not. A SEP does not contain language to exclude employees and still pass coverage because the entire notion of coverage testing does not exist. Hence, if the church wants to exclude employees and still pass non-discrimination rules, they should use a vehicle that provides for it; the most flexible being a 403(b). If the minister is a NHCE, then you may even do a one-person 401(k) plan. But, a SEP; I cannot see. Good Luck!

I cannot conceive a situation where it would make sense. Since the rule is that the amount becomes taxable in the year it is no longer subject to a substantial risk of forfeiture, the typical practice is to try to coincide the actual distribution with that time frame. Good Luck!