ETA Consulting LLC

So, you're saying that you can have a plan covering a union, where you provide a nonelective contribution to only the HCEs of that union? The only exemption from non-discrimination testing for unions that I'm familiar with is from ACP and 410(b) with respect to exclusions of employees 'not covered under that particular collective bargaining agreement'. To that particular CBA must satisfy non-discrimination with respect to HCEs and NHCEs within that CBA. Please verify.

Understood, but in order to do that you must ascertain that it is in-fact incorrect. You would need to outline all facts and compare this to how "you believe" any system's programming logic should handle it. With that said, there is an argument that the entire $22,500 could be included in the ADP test. Remember the difference between 402(g) and 401(a)(30). 401(a)(30) references "plans of the employer" with respect to plan limits. Since $16,500 was deferred with an unrelated employer "AND" the employee did not exceed his "402(g) limit" during 2011, then you can easily see where , under the plan, there are no catchup amounts for this participant (since no plan limit was exceeded). 401(a)(30) does not require you to look at the deferral amounts for unrelated employers. And, to the extent 402(g) was exceeded across two unrelated employers, the plan isn't required to offer you an opportunity to correct with a distribution of the excess; it is merely an option. So, arguably, the $5,500 deferred in 2011 plus $17,000 of the $18,860.48 would be includable in the ADP test. Relius "may" be attempting to calculate this until the $5,500 in catchup for 2011 was hardcoded. My analysis would be that only $1,860.48 would be catchup for the plan year and $22,500 would be included in the ADP test. Good Luck!

So, you're saying he contributed exactly $5,500 during December 2011 and this amount was in excess of the 402(g) limit? Catch-up timing in off-calendar years can be very simple, but gets complicated very fast. How much did he actually contribute during December 2011; and how much did he actually contribute during the entire 2011 calendar year. Let's suppose that only $3,639.52 was contributed during December 2011 and that amount was in excess of the annual deferral limit. Then, on top of that, the participant contributed the $18,860.48 during the first 11 months of 2012. In this case, the catchup for the "plan year" would be $5,500 ($3639.52 for 2011 portion and $1860.48 for the 2012 portion. This would mean that Relius is correct. But, this scenario provides a little insight into the additional questions that need to be answered in order for a proper analysis to be done. Good Luck!

Two acknowledgements: 1) Advisors can be very dangerous; and 2) Beware of semantics. Many advisors incorrectly refer to any Employer contribution as a "match"; where industry professional (such as us) classify each type of contribution based on it's features (i.e. deferral, employee after-tax, rollover, non-elective, match). Three rules apply to match: 1) Must be made pursuant to a definitely determined formula. In theory, you would base the rate of match received on the age of the participant as long as it is stated in the plan. 2) That formula has nothing to do with how the match is tested. You must pass the ACP test and you must ensure you have 'rates' of match that are non-discriminatory. 3) Unlike non-elective contributions, there is no test for matching contribution that allows for leveraging age. Good Luck!

You are correct. While the IRS considers the child an "owner" due to attribution in IRC Section 318; the DOL does not. Therefore, the plan is subject to Title I of ERISA; unless the child is a direct owner. Good Luck!

If there are two unrelated companies: Let's say ABC and DEF. Each company has it's own employees. Those companies merge into a controlled group. On what authority would you not retain the original hire dates for each employee with each company? If I was hired at ABC on January 5, 2005, and ABC is purchased by DEF (under a stock purchase), on what authority would DEF be allowed to ignore my service under the company they just purchased? Please advise.

I don't think you can as the "Employer" did not change. This would be different if it were an asset purchase which didn't involve a controlled group of two employers. Notice that there are a different set of rules when it comes to a deemed 'severance of employment' for distribution purposes when one company acquires a subsidiary of another (and doesn't take over an existing plan). This rule, however, impacts the ability to take a distribution. In your case, you're looking for the ability to exclude service for purposes of eligibility. There doesn't appear to be any exception. There are some exceptions for "vesting", but I'm not sure those stated exceptions would apply. Good Luck!

Yes, just be sure that his deferral is made in January. Unlike Qualified Plans (that give you more time until your income is actually calculated by your accountant), SIMPLE IRAs have a hard-fast 30 day rule for deferrals. Good Luck!

True. The QNECs provided to that CBA must pass 401(a)(4); which is typically the case since it's allocated as a uniform formula. When you utilize a part of the QNECs in the ADP test, then they are not included in the testing for the regular formula (which not creates a non-uniform formula in the test). In your case, the rate for HCEs exceeds the NHCEs in all instances. Under the "old rules" (prior to the bottom up rules being adjusted), you could move the QNECs for 30% of the NHCEs to the ADP test; leaving you a coverage ratio of 70% for the allocation formula and an additional increase in your ADP test. The rule being applied is that the QNEC cannot be used in both tests. You may still do this, but must satisfy the "targeting" methodology applied when attempting to use QNECS for only a portion of the NHCEs. Good Luck!

But the resulting QNEC to the HCEs only will fail. This is not entirely correct. It "IS" subject to testing, but only with respect to members of that CBA. So, within that one CBA, you'll have only the HCEs who receive a QNEC while no NHCEs received it (since the QNECs were tested in the ADP test). Good Luck!

Under the safe harbor match provisions, you cannot match deferrals that exceed 6% of Compensation. You may match $4 for every dollar deferred up to 6% of compensation, but you may not match deferrals above the 6% of Compensation. Good Luck!

Your correction appears entirely appropriate since the failure was addressed immediately and there is enough time to allow each participant to make up the additional deferral before the year ended. Rev Proc 2008-50 addresses a 9 month make-up period, but that is for missing up to 3 months of deferrals. Allowing participants to adjust after only one missed payroll seems appropriate. Don't know, but would imagine after to clearly document the failure and the steps imployed to correct it; you should be fine. The only exception would be where the failure is somewhat eggregious and the methods of correction fail to address the seriousness of the issue. In this instance, I think your proposed correction would suffice. Good Luck!

Under the auto rollover rules, rolling over to an IRA is "virtually" the equivalent of the participant making an election; that's the point of auto rollover. So, you don't know that they are missing. You paid them out under the forceout rules after the failed to respond. That would be my initial take. Good Luck!

Well, there are prototypes that provide that flexibility. One option would be to write the plan to a prototype with this flexibility. Good Luck!

Does the adoption agreement give you an option of: 1) using the language in the document; or 2) Using a separate loan policy ?

I like the 9/5/11 (the day before the 1 year anniversary). Many people (incorrectly) believe that a year runs DOH through 1 year anniversary :-) Okay, the reemployment is 4/30/2012; not 2011. So, he was hired on the last day of the plan year, and had no compensation between 11/1/2011 and 4/30/2012. You are correct. Are you sure the software has the Compensation fields entered correctly. If plan eligible compensation is zero, how can the software calculate a contribution? Good Luck! Good Luck!

It's going to be the longer of two life expectancies; but that will be for years subsequent to death. In such case, you are comparing the participant's single life expectancy (in the year of death) minus 1 for each subsequent year to the surviving spouse's single life expectancy for each year of distribution. This all begins in the year following the year of death; and only when the: 1) Participant dies on or after the required beginning date; and 2) The surviving spouse is the designated beneficiary. Good Luck!

I don't believe this to be the case. Many prototype plans make reference to an external "loan policy". I believe it would be the loan policy that gets amended; leaving the prototype status unaffected. Good Luck!

Ultimately, It is the Participant's responsibility to ensure the loan is repaid pursuant to the terms of the loan agreement. However, there "may be" alternatives under VCP that would allow the plan to restate the loan for the participant and have him catch the payments up. Good Luck!

No. Technically, you knew the amount of RMD that the taxpayer would be due to receive for the year on January 1st (since you're using the value on December 31st of the preceding year). So, there is no need for recalculation, you're only using the amount that you already calculated. In other words, nothing changes; except for the fact that the amount will be paid to the beneficiary. Good Luck!

Well, if you are saying that you've fully distributed the account, then there is no issue. Details are important. How did the LP value go to zero. Did the LP continue to pay out huge sums to money to the investors? Ultimately, the IRA will report the (I believe it's on a 5498) account value each year to the IRS. An obvious question is whether the value of $273K was correct to begin with. Something may go from $273 to zero much quicker than from $273K to zero. If you're saying that the entire amount lost all value, then it is what it is. I would imagine the Form 5498 will reflect zero at the end of the current year. Good Luck!

"Like" - Valuable perspective. This, to an extent, goes to the individual initiative to ensure they are 'earning their keep'. As an individual contributor, you should always have some idea on your value to the bottom line; as to avoid getting blind-sided with a layoff that you never saw coming. Good Luck!

Kevin C, You're right. This is a major skill in drafting a plan (or completing an adoption agreement). You must ensure your intent in accruately reflected and avoid the ambiguity. I was thinking of merely hardcoding a dollar limit (i.e. $100,000) without automatic indexing. This dollar limit would change by amendment, but only when the Employer chooses to make the increase. Good Luck!

Yes. The rules of 410(a) do not apply to governmental plans. Good Luck!

"Like" Capacity is always a reflection of size and complexity. Some plans, by design, will require more time resources than others; especially when attempting to get any compliance software to perform a specialized function properly. A good measure of performance would be a "percentage of revenue" from a book of plans. Obviously, more complex plans would require more skilled administrators and more time resources, so they would generate higher revenue and reduce the number of plans you would expect an administrator to handle. Good Luck!