R. Butler

The standardized has to have the 500 hours requirement. It could be less than 500, but in that case they accrue a benefit even quicker. There is still no issue with the last day.

If each plan benefits a key employee, then they have to be aggregated for top-heavy.

My initial impression is that depending on your scenario, its possible that plans using separate testing methods will still be aggregated for top-heavy. Are you aggregating for coverage? If no and you are only aggregating for top-heavy because each plan has a key employee, then I have not read anything that indicates you must use the same ADP/ACP testing method. Again I haven't really studied these that closely, so I'm not saying its not there, I'm saying I haven't read it.

Thats not necessarily true. You may have to aggregate for top-heavy even if the plan isn't aggregated for coverage (i.e. where each plan has a key employee.) And really from the quote I get the impression that Mr. Williams thinks this is a positive , but really isn't this a more restrictive rule? You still may have to aggregate to pass testing and under the reg. if you aggregate for coverage you also have to use the same ADP/ACP testing method.

Where do you see that? I have not studied the proposed regs. all that thoroughly, but I don't recall seeing that? I have seen that where the proposed regs. require that plans aggregated for 410(b) use the same testing method.

The alloctaion to the NHCE's must be the lesser of 3% or the highest allocation rate received by an HCE. You may get more responses to this if you post this under the Cross Testing or Retirement Plans in General forums.

Archimage, I apologize for that last post. It was really unnecessary, its just my sarcastic sense of humor. The little man that sits on my shoulder told me to do it. I too agree that an argument can be made that only compensation made thru the date of the amendment is protected. I wouldn't risk it. If you do risk it, you probably don't meet nondiscrimination safe harbors, so remember to test.

No it wouldn't. The participant accures the benefit when he works 500 hours, the last day issue goes away.

Maybe I am misunderstanding the question, but once the participant has 500 hours of service he has satisfied the requirement to receive an allocation. He doesn't have to be employed on the last day.

Advance notice not required. You will have to provide a Summary of Material Modifications no later than the 7 month following the close of the Plan Year. I assume from the intial post you are asking whether current participants will be subject to the last day/1,000 hour requirement. As Tom Poje pointed out employees meeting the 500 hour requirement before the amendment is adopted will not be subject to the amendment in the current year. All particiapnts would be subject to last day/1,000 hour requirement in subsequent years.

Did you get an extension on corp. tax return until 09/15 and then actually filed the return before 09/15? If thats the case I don't see that you have a problem. See the Instructions to 5558.

"Part-time" can't be an excluded job classification because the classification relates to service. Generally you can only exlcude them by imposing a service requirement (i.e. 1 year). Can you classify most of them by some other job description (i.e. runner, receptionist, etc.)? Assuming you meet coverage classifications that don't relate to age or service are acceptable.

1. Distribute the contract itself. There will be tax on the cash value less accumulated PS 58 costs. Generally mandatory withholding taken from other assets. 2. Participant can buy the contract from the Plan. 3. Surrender the contract and either roll the proceeds over or take a direct distribution.

I e-mailed a copy to you. If you didn't get it you can search Benefitslink using IRS source documents link & find it easy enough.

Automatic Enrollment is permissable (see Rev. Rul. 2000-8), but that doesn't mean that there won't be exposure to possible liability. Most concerns that I've read involve: 1. State payroll withholding laws. 2. Fiduciary responsibility for investments if participant doesn't make an affirmative election (see Rev. Rul. 2000-8). 3. There are Notice requirements that the Plan Sponsor must meet.

I don't think so. I interpret their explanation on Answer "C" to mean that if the document limits deferrals to a % of pay then you couldn't defer on wages in excess of the 401(a)(17). If you continue reading in the ERISA Outline book, I'm sure it will say the same thing.

Where do you see a difference between the ERISA Outline book and the Gray Book?

It is my understanding that distributions due to 402(g) excess would not be included if distributed by the 4/15 deadline.

We have not had any problems. We generally just send certified mail however. I don't see why Airborne would have problems, but you are uncomfortable it doesn't hurt to call them.

I do not disagree that a participant can defer on paychecks that total more than $200,000. However, if the match rate is 50% on the first 4% of deferrals, the highest possible match that a participant could receive is $4,000. The partcipant could not ever receive a $6,000 match regardless of whether that participants deferred on paychecks that totaled more than $200,000. Allowing the participant to receive $6,000 match on a 50% of the first 4% formual violates 401(a)(17).

Their should be a link to them in the attached file. When you have read them tell me what they say. se0703.pdf

JDuns, Maybe I misunderstood your post, but if the match rate is 50% on the first 4%, the maximum match that a participant can receive is $4,000. The 401(a)(17) comp. limit is $200,000. When you really think about it, the comp. limit is $200,000 for all money sources, including deferrals. (That is not to say you can only defer off the first $200,000 you make.) If the document limits deferrals to a specified % of compensation, you cannot consider compensation in excess of $200,000. The ADP test, only considers comp. up to $200,000; your top-heavy ratios, only comp. up to $200,000 is considered. You cannot consider wages in excess of $200,000.

My post should have said the non-key's allocation in a top heavy plan must be the lesser of 3% or the highest allocation received by a key employee. You probably know that, but I was careless with my typing and I just want to clarify.

I am not sure that this answers your question, but generally a non-key's allocation in a top heavy plan must be the lesser of 3% or the allocation for a key employee. (See §416c(2), I think). I get a little lost in your facts, but if the top heavy eligibles are getting a 3% employer contribution, you have satisfied the top-heavy minimum contribution requirements. Hope that answers your question.

For purposes of the match you can't consider compensation in excess of the 401(a)(17) limit. Based on the scenario you set forth the match would be $4,000.