R. Butler

O.K. I don't necessarily disagree. I need to reconcile that thinking with how we treat the ADP/ACP testing. Prior year testing method is used. It seems to me that since this is a successor plan, I'm going to run my ADP/ACP based on prior year numbers for Co. AB plan; I do not segregate out employees of Co. B in determining that prior year percentage. Why do I segregate out for top-heavy purposes, but not ADP/ACP purposes? Am I incorrect on my ADP/ACP thinking? Maybe I am right on ADP/ACP, but the answer is as simple as those rules I'm using only apply to ADP/ACP?

I am drawing a blank. The Co. AB plan covered employees of both Co. A & Co. B. Co. A & Co. B were part of a controlled group in 2005. No longer controlled in 2006. Co. B employees are spun off into the Co. B retirement plan. It is my understanding Co. B plan would be successor plan for ADP/ACP purposes, but is it the same for top heavy? Do I determine 2006 top heavy status for the Co. B plan by looking back to the 2005 results for Co. AB plan or this treated as a new plan & look to the end of the first plan year for Co. B plan? I really can't find any clear guidance. Thanks in advance for any help.

1. If the plans can pass the average benefits tests assuming a 0% allocation rate for the 5 NHCE's receiving only the top heavy minimum wouldn't the plan still be considered to have a uniform formula? (Maybe not likely, but still should consider if this correct.) 2. I have had this issue a couple with prototype documents. Do most prototypes contain language allowing you just to bump up for the gateway? I haven't seen it. I haven't seen tack on amendments provied either that would allow it.

Not necessarily.

I'm a little confused. Why are you running an ADP test if its a safe harbor plan?

rcline gave the correct site. See specifically Rev. Proc. 2005-66 Section 5 .05(3). I asked this specific question at An ALI-ABA video seminar this past November. I believe it was Marjorie Huffman from the IRS that stated the the IRS position is that this is a discretionary amendment & that Rev. Proc. 2005-66 applies. I don't have time to review the Rev. Proc., but I am pretty sure that you can reach the conclusion that an ADP/ACP change is a discretionary by reading the Rev. Proc. If I remember correctly the Rev. Proc. defines an amendment necessary to correct a disqualifying error; anything not within in the definition is discretionary.

Thats how we handle it also. This year we got some pressure from a couple of CPAs who wanted to encourage their clients to adopt the 401(k) the last week of this year. We don't make the decision for the prospective client, but we did hold firm & discouraged them from adotping a 401(k) until 2006. It worked out this year, but there were a few tense conversations with a couple of CPAs.

Many of our plans use platforms where the investment companies will handle the automatic rollover if they are already handling the plan assets. For plans that do not have such a platform, we have recommended that they reduce the cashout limit.

In these situations does anyone ever have concern over whether the ability to make elective deferrals is "effectively" available to the NHCE's?

I would insist that the client follow the rules. It seems to me though that you are not really asking that though; you really seem to be asking if there "really" is a controlled group. You want a shade of gray.

Depending on the day that might be a sizeable portion of the cleint base he suggests we let go.

Really there isn't enough info. to give a definitive answer. Does the individual owner hold any stock in the 73% corporate owner mentioned in the most recent post? If the individual can't be attributed additional stock than there is not a controlled group. Still could have ASG issues.

Who owns the other 73%?

Did you actually try Rev. Rul. 71-224? Why don't you think the Rev. Rul. states the aged money rule doesn't apply? The Rev. Rul. states as follows: Section 1.401-1(b)(1)(ii) of the Income Tax Regulations provides that a profit-sharing plan must provide, among other things, for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurance of some event such as layoff, illness, disability, retirement, death, or severance of employment. The distribution of a part or all of an employee's vested interest because of the existence of bona fide hardship is an event within the ambit of section 1.401-1(b)(1)(ii) of the regulations The word "or" is key. The distribution can be due any of the following: 1. Fixed number of years. 2. Attaiment of age, or 3. Stated event. (The Rev. Rul. says the hardship is a stated event).

I didn't seem MWeddel's message above. Forget my post.

Not an eligible rollover distribution, so not subject to the 20%. Subject to the 10% if they don't elect out. Participant must be given notice of their right to elect out.

See Rev. Rul. 71-224 http://taxlinks.com/rulings/1971/revrul71-224.htm

We are resending. Its a pain, but we'd rather be safe.

The ASPPA Q&A's are generally posted on the ASPPA website, but 2005 isn't up yet. At least in regards to Rev. Proc. 2005-66 the provision they seem to be focusing on is Section 5.05(3).

I asked a similar question at an ALI-ABA video seminar last week. My question only pertained to switching testing methods. Pretty much got the same answer. Initially Danial Hogans, an attorney with the Dept. of Treas., seemed to indicate that adopting after the end of the year would be O.K., but he was quickly corrected by Marjorie Hoffman. Ms. Hoffman reasoned that it was a discretionary amendment and under Rev. Proc. 2005-66 would have to be adopted prior to year end. Now in Mr. Hogans defense I phrased the question more as a 411(d)(6) issue & he really answered it that way. Ms. Hoffman just cut to the chase.

My son had it made for Halloween. We did trunk or treat at our church. He went as train engineer. I pushed him from car to car on a little Thomas the Tank Engine thing he has & Mommy held his bag & collected the candy. He had to do nothing but clap, smile & blow an occasional kiss. Of course, he is only 17 months so I get to enjoy most of his candy.

Pete Swisher, now thats a name I recognize. Hope all is going well.

As of May 2005 they were using 668-W (Rev January 2001)

Nothing? Perhaps they made a profit? After all, why should you complain about Steinbrenner spending his own money? (I don't care either.) If only Steinbrenner was like the Tribune Co. & just fielded a loser year in and year out. Thats what all owners should strive for.

I'd check your document. I have seen documents that calculate vesting based on the hire date & each anniversary thereafter.