R. Butler

I did not end up taking the exam last November. My testing cite canceled me 2 days before I was scheduled to take the exam & thee was not another open cite within 200 miles of Lexington. ASPA was kind enough to just roll me over to this year. I will also take in November. If you have any questions about the studying e-mail me & I'll pass on the little knowledge I have. Good luck.

The likely answer is no the age -weighted contribution would not count as the 3% safe harbor. Under 98-52 Section V.B. the employer must be required to make a SHNEC. Obviously I don't know the wording of your document, but its likely that your profit sharing provision is discretionary. I'd also be suspicious as to whether the age weighted formula can even guarantee a 3% contrib. to everyone even if a contrib. is made.

The IRS apparently takes a different view than mbozek. http://www.corbel.com/news/technicalupdates.asp?ID=157

Plan still is a large plan. You are thinking of the 80/120 rule. Simply the 80/120 rule states that if the participant count is between 80 & 120, the plan can file in the same manner as the prior year (i.e. as a small plan or large plan). So in your case plan must file as a large plan until participant count falls below 100. Even if participant falls below 100, the plan sponsor could continue to file as a large plan until participant count fell below 80. (But who would do that?)

I agree with Blinky, the instructions for both Sch. C & Form 1065 are fairly clear that deductions for self employed contributions are taken on the inidividual 1040's.

No. We actually have plans that use American Funds & they have not asked for that type of information.

http://benefitsattorney.com/cgi-bin/framed...gi?ID=50&id==50

I guess saying the employee was not a participant may have been poor wording. RCline's post is more accurate. Not all participants are necessarily entitled to receive an allocation. The document specifies the participants that must receive an allocation. As RCline states 1.416-1(m)(10) provides the following: "M-10 Q. Which employees must receive the defined contribution minimum? A. Those non-key employees who are participants in a top-heavy defined contribution plan who have not separated from service by the end of the plan year must receive the defined contribution minimum. [bNon-key employees who have become participants but who subsequently fail to complete 1,000 hours of service (or the equivalent) for an accrual computation period must receive the defined contribution minimum. A non- key employee may not fail to receive a defined contribution minimum because either (1) the employee is excluded from participation (or accrues no benefit) merely because the employee's compensation is less than a stated amount, or (2) the employee is excluded from participation (or accrues no benefit) merely because of a failure to make mandatory employee contributions or, in the case of a cash or deferred arrangement, elective contributions." I just don't see that this reg. requires that members of excluded classes receive a top-heavy minimum. Also , just in general I would be careful about using an ERISA definition to interpret an Internal Revenue Service regulation. I'm guesssing that the ERISA section you are citing probably does contain a provision that the deifiniton are for purposes of that Title, Ch., Section or something. Most definition type sections does contain such a statement. Thats not to say that in most cases that the IRS won't interpret the deifiniton simialrly, I just wanted automatically assume it.

jgordon, Participant is defined in the plan document. You have stated that per the document the employee is a member of an excluded class. Thus per the document, for accrual purposes the employee is not a participant. Now again it is my understanding the participant would have to been a member of the excluded class for the whole plan year to avoid the top heavy minimum. I do not equate excluded class with termination. If the employee was a participant during any part of the year, I would give the employee a top heavy minimum for that year

I disagree with your final reasoning. Employee would not be entitled to a top-heavy minimum if employee was a member of excluded class for the entire year. Your reasoning would lead to a different result. I would agree that participant would be entitled to top-heavy minimum in Year 1 if employee switched to an ineligible category during Year 1. That employee would have been eligible to receive a benefit during Year 1 & is still employed at the end of year one.

My understanding is the same as yours.

Participant is defined in the plan document. If employee is a member of an excluded class for the entire year he is not a participant & not entitled to top heavy minimum. When did employee become a member of excluded class? Was it during year 3 or prior to the start of year 3?

If you have allocations besides deferrals and safe harbor contribs., top heavy minimum is based on full years comp. I don't have the 2003 edition of the ERISA Outline book, but this is basically stating the rule out of IRS Notice 98-52 that you can apply safe-nonelective contributions to the top heavy minimum. I don't see that Sal is saying that you have to use full year's comp. if you have a safe harbor plan & you do not have any other allocations. On the contrary in the 2002 edition he does suggest that you do not have to use full years comp. in a plan consisting solely of safe harbor contributions.

I see your point, but I still don't see the reg. that way. You state that the reg. could have provided that just the ADP safe harbor be satified. True enough, but that would also cover plans that meet the the ADP safe harbor and that provide matching contributions not meeting the ACP safe harbor. That result is quite different from the apparent intent of the reg. I am very big on just reading the reg. and applying the words. I generally don't like to look for any hidden meaning. Having said that I do not see that I violate the plain meaning by interpreting the phrase in question to mean merely that any matching contributions provided satisy 401(m)(11). Still an interesting point of view.

If Tom is saying that you have to make a matching contribution to get the pass on top-heavy, I don't agree. I read §613(d)(ii) as requiring that any matching contributions that are made must satisfy 401(m)(11). I don't read it as requiring that they be made. I will say though that the I didn't immediately accept the otherwise excludible issue either. It still seems nonsensical to me.

We do interpret the reg. as requiring that some sort of disclosure be made in the SPD. Unlike in the prior post we do not see an exception for investment expenses. However, we do not interpret the reg. to require specificity. In all of our SPDs we include the exact broad statement contained in the Protoptype Plan & Trust. It basically provides for the possibility that almost any fee may be charged to the plan.

We treat it as a default. I am unaware of any recent guidance that would change that (although I have been swamped & have read very little over the past 2 or 3 months, so I could very well have missed something.) I am assuming cure period is over.

Again though, as Mr. Poje points out in an earlier post, be careful of forfeitures. If you have reallocated forfeiture money that may trigger top-heavy contributions to the non-key

You probably should contact your own attorney. I'd be leery of doing nothing & relying on participant negligence on this particular issue. Were they effectively given an opportunity to participate if their instructions were not followed? I can see strong arguments that the employer should have to provide at least a QNEC equal to the average NHCE %'s for 2003 and maybe even that a QNEC should be given based on deferral %'s on the form.

If the document specifies that 415 violations are corrected first by distributing elective deferrals, would they have to allocate a profit sharing and then refund deferrals?

Interesting. I've never tried what you suggest for American Funds. We do use the link for another investment product. We handle our American Funds plans similar to how pmacduff suggests. Its not as quick as the link, but its better then doing it by hand. If I get time when I do the quarterly reconciliations I will look at the link & see if I can manipulate the American Funds files easily. If I can I'll let you know, but it will be about 3 weeks before I get to it.

Forefitures under plan reallocate. Plan document provides that forfeitures occur upon the earlier of payout or 5 yrs break. Document further provides that if the Former Participant is eligible to share in the allocation of employer contributions or forfeitures in the year the forfeiture would otherwise occur, then the forfeiture won't occur until the first year that the former participant is not eligbile to share. Participant terminated in June, paid out in July, rehired in September. Generally participant forfeits in July at payout, however, because she is rehired this participant is eligible to share in contribution/forfeiuture allocation. It seems to me that even though participant did not repay vested distirbution amount, she won't forfeit (in affect a restoration with no repayment.) Just curious if anyone else has different thoughts.

How do I get an autographed copy of Mr. Poje's book? Will there be a book signing tour?

I'm definitely no expert on cross-testing, but I did the learn the basics with a bunch of notes that Mr. Poje was kind enough to e-mail me, the ERISA Outline Book (at the end of one of the chapters they go thru examples, that always helps me) & a workbook I got from an ASPA cross-testing workshop. Not everybody learns the same, but I learn best by finding a resource that gives step-by-step examples. I study it until I can duplicate the example. I then setup "dummy" plans on Relius. I practice until I can duplicate the Relius results using Excel. Once I am comfortable that I can correctly perform the calculations, I then go back & make sure I understand the reasons behind the steps. I always like to know how to do the calculation before I worry about understanding why. The difficulties I have with many of the workshops I've attended, is that even the beginner courses were too difficult to understand. Invaraiably the lecturer focuses on theory & reasoning rather than actually giving step-by-step examples. If I don't know the steps, I can't focus clearly on the reasons behind each step. (Now thats not always the lecturers fault. Often times in workshops you have individuals attending that are beyond the skill level for which the courses are meant. Those individuals dominate the discussion because they already understand.)

We've taken over a 401(k) plan. Sole proprieter also participates in an unrelated 457 plan. It is my understanding that after EGTRRA there is no interaction between the two plans. I know very little about 457 plans, so I am hoping to get some confirmation. Thanks for any guidance.