R. Butler

I would make that recommendation; surprised the DOL didn't.

It depends on specific language, but as a general rule I disagree. A catch-up is a deferral. The few slap-on EGTRRA amendments I've seen use the general language about 402(g), 415, etc. They do not say that catch-up is without regard to employer imposed limits on deferrals in the Plan Document. If employer limits to 15% and a catch-up is a deferral, without more specific wording I'd say the amendment is necessary. Having said this, as with many things I guess you could argue it all interpretation. Similar to the true-up match issue when payroll period matching really isn't an option in the document, you'll get opinions both ways.

I guess I am not really of what your saying, but I actually agree with Corbel's update. The concern is that all participants have the same effective opportunity to make catch-up contributions. The example they provide illustrates the point fairly well.

Generally no, but see 401(a)(13)©.

Seems to me that you are.

We've got a takeover plan never amended for GUST. No GUST certification letter & it does not appear that prior prototype provider submitted for GUST letter before 12/31/00. Plan will adopt our prototype. It seems to me that plan can correct under VCP. Using VCP the plan sponsor is required to submit for a determination letter. Is my understanding correct? Thanks in advance for any guidance.

Yes. See 1.402(g)-1(e)(1)(ii). "...(ii) Treatment of excess deferrals as employer contributions. For other purposes of the Code, including sections 401(a)(4), 401(k)(3), 404, 409, 411, 412, and 416, excess deferrals must be treated as employer contributions even if they are distributed in accordance with paragraph (e)(2) or (3) of this section. However, excess deferrals of a nonhighly compensated employee are not taken into account under section 401(k)(3) (the actual deferral percentage test) to the extent the excess deferrals are prohibited under section 401(a)(30)..." No. See 1.402(g)-1(e)(2)(ii),(3) "...(ii) Not later than the first April 15 following the close of the taxable year, the plan may distribute to the individual the amount designated under paragraph (e)(2)(i) of this section (and any income allocable to that amount). (3) Correction of excess deferrals during taxable year--(i) A plan may provide that an individual who has excess deferrals for a taxable year may receive a corrective distribution of excess deferrals during the same year..."

If its mailed by the due date that is sufficient. The cite I have is PLR 8536085.

We have the ABC profit sharing plan. ABC plan adopted 12/24/01, effective 01/01/01 ABC is a law firm. ABC just informed us, that unbeknowst to us, they formed another law firm with Lawyer D. The DABC firm was formed 01/09/01. D & ABC each own 50% of DABC, no other relation between D & ABC I just got the good news a few minutes ago so I'm just digging into it. It seems to me that this an affiliated service group situation. (I hate affiliated service group rules). A couple of preliminary questions: 1. The ABC plan requires a year of service. I should be O.K. for 2001 because DABC wasn't formed until 2001, those employees wouldn't meet the YOS requirement. Does that seem to correct? 2. I don't know much about D yet. If D has employees I assume that this is 1 affiliated service group & I need to consider D's employees also. Seem correct? 3. If D has affiliated service group/controlled group issues apart from DABC. I don't see that I need to consider those issues because they wouldn't be related to ABC? Seem correct. Thanks in advance for any guidance.

I just you an e-mail on that question, but just to summarize, if the rehired employee was a participant in the 401(k) portion at the time of termination I would not disregard the prior service for profit sharing. 410(a)(5)(B) refers you to 410(a)(1)(B)(i); I would not consider each disaggrated portion a separate plan for this purpose. If I say that they are separate plans here wouldn't I have to use the same reasoning in applying the Rule of Parity? As you can tell from my prior post, I don't consider each portion disaggregated for the Rule of Parity.

You are probably correct. Thanks.

Not sure that it can, thus my question. A participant generally can't do that, because there has to be a distributable event. In the intial post I indicated immediate payouts for QDRO, thus the alternate payee does have a distributable event. I know that the QDRO could specify $50,000 to the alternate payee. A separate order could require the alternate payee to give $20,000 to the participant to pay on the loan. I was just curious as to whether the same result could be achieved by just requiring the $20,000 be applied without the money actually leaving the plan. I generally won't ask a question if I already know the answer.

Wouldn't ERISA antiassignment laws preempt any such state law? The only way I see any basis for failing to remit the deferrals is if 401(a)(13)© applies. From the facts that we have it doesn't seem to apply because there is no judgment or settlement & this doesn't seem to be a fiduciary breach against the plan. © Special rule for certain judgments and settlements.-- Subparagraph (A) shall not apply to any offset of a participant's benefits provided under a plan against an amount that the participant is ordered or required to pay to the plan if-- (i) the order or requirement to pay arises-- (I) under a judgment of conviction for a crime involving such plan, (II) under a civil judgment (including a consent order or decree) entered by a court in an action brought in connection with a violation (or alleged violation) of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or (III) pursuant to a settlement agreement between the Secretary of Labor and the participant, or a settlement agreement between the Pension Benefit Guaranty Corporation and the participant, in connection with a violation (or alleged violation) of part 4 of such subtitle by a fiduciary or any other person,

Rule of Parity cannot be applied to this participant. That participant is not 0% vested & 1.401(k)-1©(1)(ii) obviously only applies to the deferrals.

I think we saying are the same thing. The $20,000 would never actually leave the Plan, but would rather be applied towards the loan. Would that still be impermissable?

I'm afraid thats what I will have to do. I was just hoping to avoid the extra work. I'm probably just a little frustrated right now, but it doesn't make sense to me that we can get the other tests to aggregate, but not this one. Oh well, Rome wasn't built in a day.

Parent & Subsidiary with separate plans. I have each plan set up on Relius. I have no problem getting aggregated reports fro general nondiscrim. & top heavy, but I can't get an aggregated ADP test. How do I make that happen? Thanks in advance for any guidance.

What if the DRO attempted to assign half the debt, but required that it be paid out of the remaining proceeds to be distributed to the alternate payee? Assuming the plan allowed for immediate payout of a QDRO, is there problem with that? For example participant's balance is $100,000, of which $40,000 is a loan. The goal is to split everything down the middle. Could the QDRO say $50,000 to the alternate payee, but also require $20,000 of that $50,000 be immediately applied to the loan?

Can't take hardship withdrawals from safe harbor contributions.

Yes.

lindamichals, Generally you will make the full match per the formula & then take corrective action prescribed by the document. Now again I say "Generally"; always check the document first. I suppose it could have some kind of screwy provision that will allow you do what you suggest. I can't imagine what it owuld be, but I'm not very creative.

The main point as indicated in jashendo's post is that a child cannot rollover the distribution.

Unless the Plan Document limits deferrals to a specified percentage of compensation he should be able to defer. There have been a few recent threads on this. http://www.benefitslink.com/boards/index.p...=20&t=20967&hl=

I'm no expert, actually I'm just trying to learn as much as I can about NQ plans. I learn by reading & then by coming here to answer as many questions as I can. I actually did find information about "wrap" plans. Prior to the beginning of the year participant will elect to defer into the NQ plan. That election will also specify whether the "allowable amount" will be transferred into the 401(k) plan. The "allowable amount" is would be the maximum deferral taking into consideration 402(g), 415 limits & the ADP test. If the participant elects to transfer, the allowable amount is transferred 2 1/2 months after the close of the plan year. If the participant does not elect to make the transfer it is distributed to the employee within 2 1/2 months after the close of the plan year. You can find alot of information on the internet. Several PLRs were cited including 200116046, 200012083, 199924067 & 9807027.

I agree with you Belgrath, the rollover of the SEP would be related because it is a transfer to a Plan of the same employer, but can you get around that? Will the SEP be terminating? Couldn't you rollover the SEP money to a traditional IRA & then roll that conduit IRA into the Plan? It may aggressive, but I don't know of anything that specifically prevents it.