R. Butler

Unless he is a more than 5% owner, why does the fact that he is an executive make him an HCE, assuming he won't earn $90,000 in the prior year?

I am missing MGB's point also. EGTRRA §631 provides that catch-up elective deferrals are not taken into account for the otherwise applicable nondiscrimination or coverage requirements, §415 limitations on contributions, or deduction limits. We know from the initial post that the document contains a catch-up provision. Why would you apply the documents 415 correction provisions before considering the catch-up? There is no 415 violation to correct after applying the catch-up. I'll go further than TBOB. Participant receives a $40,000 allocation and only defers $2,000. I still don't see a 415 violation. Since participant has hit $40,000, he apply $2,000 as catch-up. There still is no 415 violation, so you never have to consider how the plan would correct it. Am I missing something?

Even though the test wasn't required, you should be able to get a 2002 NHCE ADP & ACP percentages.

Review the plan document. It should cover the situation.

Catch-up contributions are not subject to the annual addition limit. So a catch-up eligbile participant could receive allocations totalling $42,000 for 2003.

My name is Richard. its probably no better to be Rich than Tom or Brian. It may be alittle better than being Blinky the 3 eyed fish because I don't have to worry about being somebody's dinner. Back to your question, ask your TPA to show you last years calculations. Per my initial post the TPA very well could be correct. They should be able to show you if they tested otherwise excludables separate last year and they should be able to show you prior year numbers based on separate tests. They should be able to tell you if any special coverage rules apply. The answer to your question is that the TPA could be correct. I can tell you the rules, but you can't provide enough information on this board for me to give you a definitive answer.

If you test "otherwise excludables" separately for coverage, you disregard NHCE "otherwise excludables" from the ADP/ACP. So the TPA maybe correct. But be careful, if you didn't test "otherwise excludbales" separately last year, special rules may apply due to a change in coverage. I bet it is nice being rich.

Your post doesn't make sense. You state you have until the end of the plan year in paragraph one, but in paragraph 2 require that plan be amended prior to the start of your 2005 plan year.

1. Up until the Gust Remedial Amendment date. (I assume that has past, but there were so many extensions, I really don't know.) 2. Generally the first day of the plan year, unless you gave the 3% maybe notice & then you have until 30 days prior to year-end.

I'm sure all those programs are good. I know ASPA is good. If you trying to learn calculation stuff like ADP/ACP, top heavy, nodiscrim., etc. I learned most of that by reading refernce material & then using what I read to duplicate the results on Quantech.

You cannot take away the prior participation, but if you amend the eligbility requirements and do not add a grandfather clause, can't you effectively exclude them from future participation? It doesn't solve the audit problem this year, but it may solve problems in future years.

Would you be deemed to pass in 2005 because no NHCE's are eligbile? See IRS Reg. 1.401(k)-1(b)(2)(i).

1. The document specifically excludes employees who are not scheduled to work 1,000 hours? Unless you're document requires a year of service, do you think that requirement is permissable? What happens if they actually work 1,000 hours? 2. Remember you can require 1,000 hours in 6 months, but if they don't meet that, but work 1,000 hours in 12 months, don't you still have to let them in? 3. Why couldn't employer apply new eligibility requirements to existing participants? As long as they aren't taking away accrued benefits, I don't see an anti-cutback issue. (Granted, from a PR standpoint, maybe not wise)

Assuming the plan meets the requirements of IRS Notice 98-52 (also see IRS Notice 2000-3), the plan is not subject to the ADP/ACP nondiscrimination test. There are more requirements than just providing a 4% match.

I still don't follow the question well. I am guessing that you have 2 separate related groups. One consisting of the management co. & co. 5, the other consisting of the management co. & the other 3. If this is correct then we take the position that you do not treat co. 5 as part of the same group as co. 1-4.

Ah, a San Francisco couple. We will have to wait too see if the CA Attorney General actually does his job before we know if they are really married or not. Again at first glance I don't see a controlled group. You are looking primarily at A & D. Mike doesn't have any ownership an A so his interest is excluded.

Employee is a member of an ineligible class meets eligibility requirements other than that. The employee subsequently becomes member of an eligible class. I know the employee is immediately elgibile, but I need the cite that says you don't disregard service while a member of an ineligible class. I've had a brain freeze & can't find that cite on my own. Thanks in advance for any guidance

I'm not sure I understand the question. Are you asking whether the 5th company should be exlcuded from ADP/ACP? Is that 5th company covered under the plan? Just because you have a related group doesn't mean they are all covered.

At first glance I don't see a controlled group, but there isn't enough info. here to give you a definitive answer. Is there any attribution between the parties? Co. A ownership only adds to 94%; who owns the other 6%?

I hate related group issues. Car Dealer Co. & Management Firm, LLC are a controlled group. Car Dealer Co. will acquire 50% ownership in New Car Co. (the other 50% is owned by unrelated parties). I need to analyze issues if Management Firm, LLC performs management service for New Car Co. These are my thoughts thus far: 1. If Management Firm, LLC principal business is performing management functions for New Car Co. I have an ASG with Management Firm, LLC & New Car Co. I am presuming that for the ASG to exist Management Firm, LLC would probably have to derive at least 50% of its business from services performed for New Car Co. 2. If an ASG exists between Management Firm, LLC & New Car Co. are ASG that doesn't necessarily mean that Car Dealer Co., Management Firm, LLC & New Car Co. are treated as a single employer. What it does mean is that I have overlapping related groups & then there are competing views as to whether or not those overlapping are treated as a single employer. Am I on target here or way off base? Thanks in advance for any guidance.

The broker is most likely talking about a Nonqualified Deferred Compensation plan, but in my limited experience it works the other way. Money is deferred into the NQDC plan & then sometime before 3/15 money is transferred to the qualified plan in an amount equal to that which is allowed to pass ADP nondiscrim testing. I would ultimately defer judgment to mbozek or someone else more knowledgeable on this issue, but at first blush it seems to me that the only way mbozek's suggestion works is to distribute refunds after 03/15 (assuming calendar year plan) & eat the excise tax. If you distribute prior to 03/15, its taxable in 2003 & there is no NQDC plan to defer into for 2003. If you distribute after 03/15, the distrib. is taxable in 2004 (but again you got the excise tax) & then mbozek's suggestion works. If you are going to setup a NQDC, why just have the refund deferred? Management should defer alot & then transfer to 401(k) plan at year end.

Forget about the remedial amendment period for a minute. Why do you say it has to be done by the end of the year? Its a 411(d)(6)issue. Are participants losing a benefit by having the plan amended after year-end? Arguably no. I can see a valid arguement that the plan could be amended all the up to 1 year after the close of the plan year because you can make refunds all the way up to that point.

Did the matching provision exist in the prior year & a mtach just wasn't made? If so then this isn't the 1st plan year & as fish boy says prior year is 0%.

I read Sal's comment (albeit in the 2002 Edition), but it does appear that ultimately he would still say control group. Irregardless, the argument that its not fair & that Congress may not have intended that result is shaky. I could (& have) reasoned unfair & unintended on many statutes, that doesn't make my me correct. (Example: safe harbor, top heavy & letting employees defer immediately. Does it seem fair or intended, that employers who let participants defer immediately, but make them wait for safe harbor contrib. be subject to top heavy? Not really, employer could have excluded tham altogether & got the result they wanted. Being more flexible screws them. Does that change the answer? No, its still subject to top heavy.) The best evidence of collective Congressional intent is the text of the statute. Just my 2 cents.

Why is this highly debatable? It seems fairly clear to me that if their is a minor child, spousal exception is irrelevant, you have a controlled group. I've never heard an opposite view. How would the opposing view get around attribution to the child? Just curious.