ETA Consulting LLC

I thought I did that. A SHNEC is a minimum of 3%. The only requirement is that NHCEs receive it. It is optional for HCEs to receive it. It is not required to be given on 415 Compensation, but instead any definition that meets 414(s). It still has to be 3%. When you suggest that it is possible to provide a contribution of less than 3% and still have it treated as a SHNEC merely because it is given to an HCE, I would disagree because a SHNEC must be 3%. So, go ahead and give the HCEs a 1% Contribution instead of 3%; but that 1% won't be a SHNEC. 3% is the the definition of a SHNEC. Good Luck!

Would you elaborate on what you are trying to accomplish. I ask this because everything that is legal is not necessarily administratively feasible. Good Luck!

Try defining a SHNEC at a percentage of less than 3%. There is no debate as to whether or not an HCE must receive it; they clearly do not. There is also no debate on whether an HCE can receive a percentage less than that received by NHCEs; as it will automatically satisfy non-discrimination. BUT, IF is it less than 3%, then it cannot be defined as a SHNEC; this is where we disagree. Good Luck!

No. NO. NO. You're not giving them a pay cut. You're saying, we're giving you a 4% match, but we're only giving it to the first $100,000 in Compensation. Hence, if your Compensation exceeds $250,000, your match will be limited to $4,000; since we're only matching the first $100,000 of Compensation. Good Luck!

There was nothing to state the HCEs are required to receive anything, but stating that "IF" is it a "safe harbor nonelective contribution", then it must be 3%. Good Luck!

No. A safe harbor, by definition, must be 'AT LEAST' 3%. We know that the only individuals required to receive it are NHCEs, but once you decide it will be received, then it must be AT LEAST 3%. With that said, it "MAY" be provided on any definition of Compensation that satisfies 414(s). So, you'd be better providing exclusions to Compensation that impact only HCEs. Arguably, you may say HCEs will receive safe harbor contributions on only the first $100K of Compensation while everyone else (e.g NHCEs) will receive it on full Compensation. They're still receiving 3%, but only on a fraction of their Compensation. Just an approach to consider. Good Luck!

Whether the employer is beyond "limited" involvment when it decides to establish a plan for those employees who are not covered under any other deferral arrangement is, arguably, the same as deciding whether to establish a plan at all. I say this because in 403(b) plans, ERISA status typically applies to the contract; even though the IRS's rules requiring the 403(b) to be written now qualifies it as a plan. With that said, you may establish a "deferral only plan" and a "plan with employer contributions"; and have ERISA status apply to only those contracts under the plan with employer contributions. The question is whether the employer has any involvment in the contract. Good Luck!

The exclusion of employees who are eligible to defer under another arrangement is a 'safe harbor' exclusion from the universal availability requirement for deferrals. This type of design wouldn't impact "employer involvement" for Title I purposes. You are correct that it would be treated like excluding employees who fail to meet the 20 hour per week requirement. Good Luck!

"Like".

Sure. You can offer a SHNEC of 25% of salary; 3% is only a minimum. Good Luck!

The loan offset that was not rolled over becomes a taxable event. If cash is not put up within 60 days to roll the amount over, then you'd have that amount as taxable income. So, you borrow the money from the new plan to provide you the cash necessary to rollover the amount in order to avoid taxation. Good Luck!

It's 10%, but he can elect out of it. Good Luck!

To your point, here is where I'd agree with you in that the $900 "may" be deferred to a 401(k) plan of another employer. This would be a difference between 402(g) and 401(a)(30). There wouldn't be any room to defer additional amounts to a plan of the employer where that $900 was already classified at catchup. However, there would be nothing to preclude him from deferring the full $22,500 during 2012 across different employers, as his combined deferrals on his W-2 forms would not exceed $22,500. I just don't think he would be able to contribute the full $22,500 into the current plan for the aforementioned reasons. I've heard that about the industry

But, if he defers a full $22,500 instead of $21,600, his catchup would be $6,400. Regardless of what he's allowed to defer, his catchup must not exceed $5,500 for the year. That $900 IS still a catchup with a limit. Where does that leave us?

It's calendar year; the plan year end is irrelevant. Good Luck!

Sure. You're plan document must be written to exclude that group of HCEs from the SHMAC. Good Luck!

The five years was the rule of parity for zero vested participants. The YOS upon rehire isn't allowed for the 401(k) deferral feature. Good Luck!

Maybe not, she wasn't gone for five consecutive breaks. Correct. No. I wouldn't put too much time in trying to find a way to exclude a PT employee. Instead, look at the bright side; her compensation is only 1/2 what it would otherwise have been; so you're only providing 1/2 the contribution. We're not that bad.

You're both right. IF the deferral were missed early during the year AND the matching contribution were calculated at year end, THEN it would be a match and not a QNEC. HOWEVER, IF both the deferral AND the matching contributions were missed, THEN they would both be a makeup QNEC. So, a QNEC is a QNEC is a QNEC; and should be treated as such. The determination would be made based on whether the match was an actual match, or a QNEC used to make up a missed matching contribution. Good Luck!

I don't believe he receives the increase in vesting, but be very sure you continue to read the plan. The plan seems to address the issue, but you have to read it closely. The provision you will look for is who is impacted by the change in vesting during top heavy years. Typically, this will be for only those participants who performed an hour of service during the year. Good Luck!

"Like"

No. No. No. QNECs have their own definition under the terms of the plan, and are legally required to have distribution restrictions beyond what is allowed for the 401(k) source of funds. So depositing the amounts in the 401(k) source would undermine the recordkeeping requirements for the QNEC with respect to required withdrawal restrictions. Just because the QNEC is made because of a missed deferral doesn't make the QNEC a deferral; it's still a QNEC. Good Luck!

I'm trying to catch up to your logic (no pun intended ). I'm beginning to see what you're saying, but still disagree. In this instance, the $900 would normally be distributed (period). It would not be catchup for 2012 because it was not deferred in 2012. It was actually deferred in 2011, and cannot be counted as catchup in a year it was not deferred. It, then, becomes a deferral (by designation as catchup) for 2012, as it was not contributed in 2012. Without this catchup feature, it would've been distributed; and would have to have been deferred again. Your approach would be double dipping. This clearly contrasts from a situation where it is actually deferred in the first part of 2012. Under your approach, there would be no authority to classify it is catchup for 2012, because nothing was deferred in 2012. I believe this is where we are getting hung up.

Correct. Good Luck!

I "think" this would be merely implied in whether a distribution is allowed in-kind. I don't believe there is explicit language stating "You are allowed to perform a direct rollover of a plan loan to another qualified plan". I never saw exact language, but merely incorporating this transaction into the existing structure. Good Luck!