ETA Consulting LLC

Agreed, but your issue is compounded by the fact they are HCEs. Benefits, rights, and features must be currently (plan provision) and effectively (actual operation) available on a non-discriminatory basis. Allowing 2 HCEs: 1) Early Entry and 2) outside of the plan's written terms appears to be an eggregious violation of these standards. Good Luck!

I think we could agree that this is a document preparation issue. When defining allocation groups, the descriptions should be as unambiguous as possible and avoid overlap (one participant in more than one group). Since that did not happen, it is an interpretational issue; where the Plan Admininstrator (presumably) has the responsibility for interpreting the terms of the plan. This leaves open the possibility that in two distinct plans with the exact same language, one plan will consider owners to include owners by attribution while the other plan will not consider attributed owners as owners. From the IRS's viewpoint, it is fine as long as the plan is not operated in an arbitrary and capricious fashion. Good Luck!

The son will be attributed what the father owns. Double attribution does not apply since there is no prior attribution under section 318. The father is owner of the trust ownership (and that is not a 318 issue). Therefore, the son is considered (for HCE and Top Heavy) to own what the father owns. Good Luck!

They do "NOT" have to restate when they terminate the plan before the restatement deadline. The 'reason' for restating first is to get as many of the good-faith amendments under the new opinion letter. This provides greater protection in the event some language in the good faith amendments (i.e. RMD extentions) were flawed. In the end, it's just a measure of risk. You can easily argue that the juice is not worth the squeeze in certain situations and proceed with your termination. Each case should be view on its own merits. Good Luck!

That would be it. Terminate the 401(k) and implement the 403(b). Good Luck!

"IF" the employer is a church, then they would not need a document. You are correct, though, that 403(b)(7) is reflective of the type of investment (e.g. brokerage account funded with mutual funds); and is still a 403(b). Good Luck!

"Plan termination" requires distribution of assets within 12 months from the date of termination. Good Luck!

The question is this case is whether the plan is "actually" terminated. When you fail to distribute within 12 months, there is an argument to whether the plan terminated. If not, then, as a rule, all regulatory requirements (i.e. restatement or amendment deadlines) would apply through the current date. Not sure when the last DB restatement deadline was; wasn't it April 30th, 2012 (not sure). At any rate, if by terminating on 1/31/12 you avoided the need to restate; you "may be" a non-amender. Just some random thoughts that come immediately to mind. Good Luck!

Yes. That's how I'd deal with it. Good Luck!

Agreed. Use a VCP filing to identify the issue (loans that were never defaulted) and the solution (deem them in the current tax year). Good Luck!

Not really. The "penalty" on late deposits is a prohibited transaction issue where the DOL considers amounts withheld from payroll to be plan assets immediately after being withheld. Should these amounts not be timely deposited into the trust, then the employer is considered to have not separated those assets from the company's assets; and that's a prohibited transaction. In your situation, nothing was withheld. The employer merely failed to fund amounts the participants were entitled to under the terms of the plan. The debate is whether those deposits would be considered as annual additions in 2011; or 2013. I'd argue 2011 due to an oversight and leave it at that. Good Luck!

No, I wouldn't recommend it Just change the election before the next payroll. Good Luck!

You know, the best approach is to read the document for that plan. Everything this is "allowed" by the Code isn't always included in the plan's written terms. Also, 99.9997% of the time, if it is written within the plan's terms, it is allowed in the Regulations. I'd start with the reading the plan. I "think" the section of the code is 411(a)(11), but not sure without additional research. Good Luck!

Since I don't know, I would wait to receive the determination letter of exempt status. I say this because it appears that "Filing for recognition of exempt status" is a requirement for 501©(3). Had it merely been optional, then you'd, obviously, be okay. However, I see only where the filing for recognition is required, but nothing stating you must wait for the IRS to respond. You could argue that as a 501©(3) requirements were met by merely filing, but you're not required to wait for a response. You'd think a requirement to wait until the IRS responds would be on the application. This should help add a little more confusion to the process Good Luck!

A 'reasonable' approach would be to attempt to ascertain where (and when) the 'investment losses' occured to the plan. It may have been within a particular fund. Once done, attempt to identify the impacted participants. I cannot see where the current employment status of a participant would have any bearing (at least not initially). Good Luck!

It would appear as if the Administrator would make such election in the document. I would read further to attempt to ascertain whether or not the equivalency is used for any group of employees. The provision you included appears to be definitional; I hope that's a word You're looking for the provision on how this particular plan will operate with respect to counting hours. Good Luck!

Government entities, generally, are not subject to ERISA. Good Luck!

Good point!

Just wanted to throw it out there to be clear on the rule. When I first learned of the Safe Harbor exception to TH, I learned 'as long as the plan was safe harbor (and no additional contributions were made outside of safe harbor ADP or ACP), then the plan was excepted from TH'. This failed to recognize that under the safe harbor, all Non-key employees (including those who are HCE) must be included in the safe harbor contribution. I, incorrectly, believed that you could give the Safe Harbor to NHCEs only and still be exempted from TH. There 'may' be practitioners today that are under that impression

Just to clarify, if the SH Contribution; whether non-elective or match(formula), is provided to all Non-Keys (including those who are HCE), then you may be exempted from the Top Heavy when the only contributions made under the plan fall under the Safe Harbor. The key here is that it's not exactly "everyone", but everyone who is a non-key (including those HCEs who are non-key). Good Luck!

There is a requirement to track inservice distributions (for at least five years) for Top Heavy determinations. It wouldn't matter if the distribution is rolled over. Also, under the bankruptcy rules, all IRA funds that were rolled over from qualified plans would be exempted from the bankruptcy estate (in addition to the $1 million in IRA assets). I cannot think of anything else, off-hand, that would necessitate tracking. Good Luck!

You're thinking logically; don't do that Pickup contributions are the result of an anomaly where the "employer" funds the contribution and merely "designates" it as being funded by the employee. That would normally imply a non-elective contribution since it was not being made pursuant to any employee election, but made totally by the employer. That is not the case. This contribution is a pre-tax contribution, but is not counted against the employee's 402(g) limit. The question, then, becomes: If it is an "employee contribution", then shouldn't it be subject to FICA? It's not if the employee can find an governmental agency to pick up the contribution in their plan and record is as a non-elective. I am still a little shaky on these rules and am going from memory; but do know it defies logic in many instances. Good Luck!

Not sure, but would like to 'ask' this additional question as a potential answer. It would seem as if the "maximum contribution" would be totally undermined if a 10% penalty would apply if you were to make it. I guess my question would be: What is the purpose of the maximum contribution if the penalty would apply?

Initials and "EDUCATION"; what else is there? Not being sarcastic, but that is it. You do get a higher level of education. However, it doesn't end with the CPC; it begins. Rules are constantly changing. The CPC (at least when I took it) focused more on how you approach situations as opposed to whether you can answer a question correctly. Look at it this way: I can tell you that 1 + 1 is equal 2. You can remember that and provide that answer anytime the question is asked. But, it is only when you 'learn to add' that you'll be able solve other equations without relying on mere memory. In our industry, certain percentage knows 'only what they were told and remembered', but no why or how. I think the CPC modules (at least when I took them) focused on ensuring a consistent and relevant thought pattern on any particular issue. Not sure what other's experiences were (are), but thought this worth mentioning. Good Luck!

True. Remember, through VCP, you can ask for "anything". You may not get it, but you can ask for it. The chances of getting what you want may increase as you are able to demonstrate how the recommended correction would cause a significant business hardship. Good Luck!