ETA Consulting LLC

You won't find the answer in the EOB as the approach to answering your questions has been outlined. Based on your description: 1) Plan Requires Completion of 500 within 1st 6 months of employment 2) Should employee fail to meet that requirement in the 1st 6 months, then the employee must complete 1 year of service (e.g. 1000 hours during 12 months) 2a) Notice, there is a earlier of provision (6 months with 500 hours or 12 months with 1000 hours) which is standard. Now, IF the plan is actually written to provide unlimited 6 month periods for 500 hours, THEN ignore "2" above and you'd move to a 2nd 6th months of employment to determine if 500 hours are worked. 2b) The 2nd "Eligibility Computation Period" in your analysis is for the 1000 hours during a 12 month period; and not the 6 month eligibility determination. You "MUST" provide a full year beginning on the date of employement and ending on the date before the 1 year anniversary for the 12 month/1000 hour requirement. This is the anniversary year. However, in subsequent years, you may 'switch to the plan year' for purposes of measuring 1000 hours during 12 months. This has nothing to do with your 6 month 500 hours requirements. 3)With is understanding, since the individual failed to work 500 hours during his first 6 months, then he MUST work 1000 hours during his first year of employment. Should he fail to work 550 hours during his second 6 months, then he'd have to work 1000 hours during the plan year containing the 1st anniversary of employment. 4) Notice that I am assuming the plan is written to give the employee ONLY one 6-month opportunity to work 500 hours before resorting to the 1 year requirement. You should verify whether this is or isn't the case. Now, read this 5 or 6 times and it should begin to sink in Good Luck!

I, too, remember when the IRS issued Regulations applying gap period earnings and shortly afterward it was changed (by "PPA" I believe). I, definitely, would not consider making the refund until the contribution is actually made. It does seem kinda odd that you're distributing beyond the 2 1/2 month mark when the deposit being distributed isn't even required to be made by then. Nonetheless, you'd still have to make the deposit as the match must be made under plan terms; and there's no term stating you'd receive it only if it would pass ACP. Good Luck!

I agree with Poge, but to answer the original question; I'd say yes. You could not get to 1000 hours during a 12 month period without first working at least 500 during a 6 month period. So, all you are doing is making it, literally, half of the requirement. When you do this, you should ensure you maintain accurate records of the computation periods being measured. This is where Poje's response becomes relevant. Many documents would include language to say "X" number of hours during the 1st "Y" number of months. When you miss that requirement, then the only entry is that you work 1000 hours during 12 months; as they do not give you a second computation period. So, you can do it, but the plan's language is important. Good Luck!

No. The TH minimum would kick in after all other contributions have been allocated; so you may have to do some math to back into the additional amount necessary to ensure those individuals who would otherwise not have met the TH minimum will receive the 3%. You have a couple of distinct 'definitely determinable formulas' operating here. 1) Is the integrated formula which "may" read to provide 3% first. You should follow the formula. Based on the comments, it likely does not provide a change; so you'd probably end up allocating only $6,000 (or $6,500) under that formula. Your math will determine this amount. 2) The TH minimum would likely say that after all allocations have been provided under those other formulas, any eligible employee who is employed on the last day and failed to receive the TH minimum (likely 3%) will receive the additional amount necessary in order to meet that minimum. You would have, "mathematically", determined that amount; and would then allocate it to only those individuals. Good Luck!

On the surface, you are correct. Attribution and excludable shares may run pretty deep. From a straight numerical perspective, you are correct. It also doesn't address Affiliated Service Groups. But, I agree with your analysis. Good Luck!

Yes. While is SEP has it's own 415 limit (25% or $51,000), this limit applies separately to each Employer. "Employer" means the sponsor and all related employers (Controlled groups, Affiliated Service Groups, or Management Groups). Good Luck!

I think the 'control problem' is a legitimate statement. There should be checks and balances to ensure things are done correctly; despite the employer's unwillingness or inability to adhere to the rules. From a process perspective, the 1099-R reflecting the rollover should match the Form 5498 that will be produced by the IRA. This will show that the IRA contribution limits for the year were not exceeded since the contribution was a rollover. If the amount rolled was less than the IRA contribution limit, there may not be an adverse impact; other than questions on how the taxpayer actually reflected the transaction on their Form 1040. It "may" not be a bad idea to let sleeping dogs lie depending on the amount of the contribution and where it was rolled. I'd imagine if it were rolled directly into a Roth IRA, the IRS would've already began to kick up a little dust. Good Luck!

Sure. But the contributions to the individual IRA may not be deductible depending on the appropriate rules. The short answer is that there is nothing precluding an individual from participating in a SEP and an IRA during the same year. Good Luck!

We know that the 1.25% max applies to each HCE (it is NOT an average that applies to all HCEs). Top Heavy will apply, so you may have an issue. Good Luck!

The exclusions are done "ONLY" to find the number to be included in the top paid group; not who may be considered HCE. Good Luck!

Yes. It's called "find the answer that is most convenient to me" and then "find some misinformed soul to give it to me" The only "class" exclusions to a SIMPLE IRA is the Union, Non Resident Alien, and Employees who will not earn the minimum dollar amount ($5,000) during the current year. Good Luck!

No; a loan may be received from each plan. The regulations do not provide that one plan's loan provisions (i.e. one loan at a time) applies to all plans. Therefore, each plan has its own provisions allowing for one loan. Good Luck!

Everyone must take an RMD from a SEP at 70 1/2 since the SEPs are treated as IRAs for all distribution purposes. They are not, however, treated as IRAs for Contribution purposes (so a Traditional IRA is the only vehicle that precludes you from contributing beyond age 70 1/2). Good Luck!

Yes, they are exempt. They are exempt from QJSA in 401(a)(11) and anti-assignment in 401(a)(13). The spousal consent rules are detailed in Section 417 of the IRC. Don't know how this led me to believe they were exempt from 401(a)(4); but still trying to mend my bruised ego on that one Good Luck!

I think ESOP and QDRO has made two interesting points to be considered. In order to make sense of these rule, you should use the context during the time those rules were first written (pre-daily valuation). Back in the balanced forward days, this was the rule because investment values changed. Also, during that time, documents were often written to restrict any distribution from the plan prior to paying off the outstanding loan balance (this is QDROs point). During balance forward days, this was necessary in order to protect the other plan participants from the loan recipients failure to pay. ESOPs point is that in a daily plan, this is taken care of up-front since you are actually distributing cash directly from the loan recipient's account in order to fund the loan. Should he default, it has no impact on any other participant's accrued benefit under the plan (and become entirely a tax issue for that loan recipient). Under the current daily rules (the notion of 50% doesn't add any logic, but has merely been a rule since the balance forward days). Good Luck!

Okay, you are passing both the ABPT and the NDCT. Reasonable Classification is something different; which basically argues that it is a good idea to base your classification of groups on business criteria or some other "reasonable" criteria. For argument sake, placing employees whose grandparents are still living in a group would not be reasonable. <- I'm just making a distinction here. When it comes to reasonable classification, I don't think "accrual requirements" would have any impact. Regardless of the classification, any member of any group who fails to meet the accrual requirements will not receive an allocation. That many impact the NDCT, but shouldn't have any bearing on whether the classification of the groups are reasonable. This is merely how I've always pieced this issue together. Good Luck!

Yep, but it's a 403(b); so they aren't even required to have a written plan. Another provision that doesn't apply to non-electing churches Kevin C, I think we are on the same page on this one, but merely approached the question differently. Good Luck!

You're not missing anything. Many churches apply vesting schedules that are aligned with those in the Regulations; even though they are not required to. Hence, if they are using 'elapsed time' to calculate service, they should apply the service spanning rules for consistency. Good Luck!

You have to further apply the service spanning rules for breaks in employment of less than 12 months. For breaks exceeding 12 months, the vesting service date would move foward for the amount of time that elapsed (so you would no longer use the initial employment date). Good Luck!

You're looking at two mutually exclusive rules. The Dividends are payable to the participant despite any distrbution restrictions. "IF" the participant decides to leave them in the plan, they will be treated as investment gains and will be 100% vested. So, an individual may be only 20% vested in an employer security but would be entitled to 100% of the dividend payable on that security. That may be paid regardless of any distributable event; so how can that possible impact the lump sum definition requirement all amounts to be distributed within on taxable year after certain events? Good Luck!

Sure, but you have to remain cognizant of the definition of "leased employee". Until an individual meets the "performing services on substantially a full-time basis for a year" condition, they are not considered employees of the recipient. Good Luck!

There is a service failure on the rep's part for providing inaccurate info. This, unfortunately, happens a high percentage of the time. Whether or not there is a legal remedy would be beyond the scope of retirement planning. Your contention is that the misinformation he provided led you to make a decision that you would've never made had you been properly informed. In the meantime, this misinformation conveniently earned him a commissionable sale of an IRA product. This appears to be a civil issue. Good Luck!

When a distribution is rolled over, those funds take on the characteristics of the vehicle they are rolled into. Hence, you consented to a distribution from the 403(b) where your consent was required for that distribution to get issued. IRAs do not contain any spousal consent provisions; meaning your spouse would've been free to name any beneficiary without your consent. Hope this helps. Good Luck!

I disagree with the recordkeeping platform. The "payment period" is between January 1st of the year he meets both conditions to April 1st of the following year. 2013 is the year he turns age 70 1/2; regardless of the actual day. Therefore, terminating employment triggers the RMD in the year; and the 1st distribution made should be used to satisfy the RMD (meaning it would not be eligible for rollover). This would be different if he were still employed and requesting a distribution. In such event, no RMD would be due for the year until he actually terminates. He has an option of whether to terminate employment. I don't think he has an option on whether he turns age 70 1/2 during the year. Good Luck!

I'd doubt you'd find any guidance on that one. Typically, when something occurs enough, the community will begin to ask questions; and the IRS will eventually take up the issue and give guidance. Until then, you merely have the written rules and regulations that do not anticipate this type of event happening. We know that the funding for such IRAs must merely be postmarked by the April 15th deadline. Hence, when scrutinizing the contribution, I'd imagine the IRS would look at the date of deposit in proximity to that date. Better yet, the IRS may rely heavily on the Form 5498 produced by the Custodian; so the real question may be would the custodian agree to accept that funding for 2012 and issue a Form 5498 to that extent. I'm not sure if you could get something more definitive than that, but merely a few thoughts. Good Luck!