R. Butler

I'm all heart.

Thats harsh. I don't know anything about them; this one answer they gave Giovanni just doesn't make sens to me.

Ah, alas I see I missed the last line of fish boys post. He was not saying I was right & wrong; he was that Chris & the document person were right & wrong. I have no problems with someone else being wrong. I now apologize for my defensiveness in the prior post.

Well I want to be right, so I'll defend my position. As you mention I'm pretty sure that 2003-44 provides the relief. The prescribed correction method is to amend the plan to include the ineligibles. (Now if the people affected from this amendment are mostly HCEs you do have a problem & should have mentioned that in the first post.) I don't recall if 2003-44 has it, but the Rev. Proc.s. leading up to 2003-44 had examples of this situation.

Could set up a separate checking account for the plan & make sure the deferrals are at least segregated from the general assets.

So participants are being allowed to enter before the document says they can enter. The last I checked the prescribed correction in such situations is to amend the doucment so that those employees would have been eligible. In short I short I think your O.K. with the retroactive amendment.

That wouldn't be correct because a plan meeting safe harbor with the match & having additional contributions not falling within 401(m)(11) would not get the top heavy pass regardless of whether comp. includes wages prior to entry.

I'm probably missing it, but their answers do not make sense. They answer question #1 that yes that a plan providing only a SHNEC would be exempt form top-heavy requirements. They answer #2 that an additional top-heavy may be required because the SHNEC isn't based on full years comp. The SHNEC isn't required to be based on full years comp. for mid-year entrants; therefore in application TAG seems to be taking the position that the 3% SHNEC is not exempt from the top-heavy.

Well I don't disagree that and means and; I just intepret it to mean that you must meet both the ADP & ACP safe harbor, recognizing the different match restrictions imposed by 401(k)(12) & 401(m)(11). If I'm wrong it wouldn't be the first time. It still doesn't make sense to me that allowing people to defer immediately, but excluding those people from the match takes away the top heavy pass. Alas though I have finally accepted that.

I've never interpreted the word "and" to mean you had to meet safe harbor using matching contributions. The word "and" should be interpreted to mean that if you do provide matching contributions, they must meet the limitations imposed under 401(m)(11). Remember 401(k)(12) doesn't contain the same match limitations as 401(m)(11). Could it have been worded better? Probably, but a plain reading can as easily lead you to the conclusion I reach as the opposite.

Sure because your plan year isn't 12 months long.

It is my understanding that what you refer to means that determination of who is a 1% or 5% owner is done on an employer by employer basis and that if the individual meets the ownership requirements with respect to one corporation he is key with respect to all. For example assume D owns 2% of PC & 5.1% of LLP, but he doesn't own more than 5% if PC & LLP are considered together. It is my understanding that the reg. you cite is saying D is still key because you don't aggregate, but rather look at each employer separately. I'm not sure it will help you any better but Q&A T-16 & T-17 deal with ownership. Q&A T-20 deals with comp. & illustrates that you do aggregate for comp.

Where do you find that? I've heard that stated many times & don't necessarily disagree, but I've just never found it. Notice 2000-3 talks about 30 day notice for suspending matching contributions, but it doesn't mention SHNECs.

Agreed. No. It my understanding that the P.C. & LLP are considered as 1 employer for HCE & key employee determination even if they don't both mainstain the plan.

It is my understanding that employer would need to provide the 3% through the terminaion date. Also plan would be subject to ADP/ACP testing.

Remember if its a related employer situation there is only 1 §415 limit. You haven't presented any real facts upon which to make that determination.

If you have related employers they are treated as a single employer when applying 415 limits. If they are unrelated employers you have multiple 415 limits. Its really not clear to me from your hint whether or not there is actually a controlled group, an affiliated service group or perhaps a predecessor employer issue.

No. The 402(g) limit is an individual limit.

We make the safe harbor provisions effective later in the year. In the case of a new plan you have up until the day the plan is effective. See Notice 98-52 V.C.2.b. (Its been a long time since I have done anything with a SIMPLE plan, but I'm guessing your boss is confusing the notice requirements for new Safe Harbor plans with those of new SIMPLE plans. I seem to recall that in the case of a new SIMPLE plan the 60 day notice period could begin anytime prior to the satrt of the year. Thus for a new SIMPLE plan, notice could be given out on 12/31 & participants would have a 60 day election period beginning 12/31 & ending 60 days after.)

We have taken the more aggressive stance on 2 occassions. Until formal guidance is issued we feel comfortable with this primarily because there is no 411(d)(6) issue until the correction period has ended.

It helps. Thanks

O.K. never mind my post then. The 2nd post said it was a non-Safe Harbor Match so I just assumed you were fine with the ACP test. Sorry

I may be inclined to be a little more aggressive here, but I wouldn't amend the plan. Why do you have to amend the plan? You say the cap is still 6% of deferrals. You state that the rate is discretionary, so in the employer's discretion just increase the cap to 300%. If you didn't specify a 66% rate of match in the SH Notice I don't necessariy see a problem with the employer in their disrection increasing to 300%. Although I agree that the safe contribution formula must be specific; Notice 98-52 specifically allows you to reference discretionary matching contributions. Now I will note the following: 1. If you were changing the cap on the match (i.e. matching on the first 6% to maybe the first 4% or 8%) then my answer would change. 2. If the employer has been throughout the current plan year already I may think harder about it.

Plan Sponsor has a SIMPLE IRA. The SIMPLE IRA has been around several years. Plan Spnosor now wants a DB plan & a 401(k) plan. I know that Plan Sponsor cannot adopt another qualified plan during 2005 without violating the exclusive plan rule. Plan Sponsor wants to know the consequences of violating the exlcusive plan rule & having the SIMPLE IRA invalidated. 1. It is my understanding that 2005 contributions would have to be returned to employees prior to the due date of the employees' 2005 tax return. The early withdrawal penalty would not apply to that money 2. Employer gets no deductions for 2005 SIMPLE contributions. 3. Would there be any issues with years prior to 2005? I don't see that there would be, but we don't do alot with SIMPLEs anymore. 4. If Plan Sponsor intentionally had the SIMPLE IRA invalidated is there any reason to filing under EPCRS? 5. Are there any issues I am missing? Thanks in advance for any guidance.

That was I was thinking. Those are some expensive checks.