R. Butler

The regs don't contemplate a 402(g) excess in a single plan, because it shouldn't happen in a single plan scenario (although we know there are occassions where stuff happens). The regs contemplate 402(g) excess due to participation in multiple unrelated plans. In such a scenario, it is likely that neither plan has an operational failure.

I won't belabor the point anymore after this, but if the excess arises from deferrals made to only one Plan, that Plan can distribute the excess after 4/15. The Plan has to distribute the excess or it has an operational failure that can disqualify the Plan. In addition to the link in my previous post see the Rev. Proc. cited in J. Bringhurts's intial post.

It is my understanding that employees meeting the eligibility requirements in SIMPLE-IRA plan do not actually enter the Plan until January 1 (assuming IRS 5304-SIMPLE document). For example, if eligiblity requirements are $5,000 in a prior year, Employee hired 12/01/01 earns $1,000 during 2001, from 01/01/02 thru 05/31/02 earns $5,000. Employee would enter 01/01/03, not any earlier. Is this a correct understanding? Only possible mid-year entries I see (again assuming IRS 5304-SIMPLE) are rehires, union to nonunion or if there are no eligibility requirements new hires could pick up deferrals as provided in the document. Am I missing anything? Thanks in advance for any guidance.

If employee participates only in the one plan you distribute, otherwise you have an operational failure because I am pretty sure your document limits deferrals to the 402(g) limit. See the Q&A linked below. http://www.benefitslink.com/cgi-bin/qa.cgi...id=66&mode=read

Did the excess occur as the result of deferrals in one plan or is the employee a participant in multiple unrelated plans? If employee only participates in one Plan you can distribute. Since after 4/15 participant is taxed in both year of excess and year of distribution. If employee participates in two plans and in the aggregate deferrals exceeded 402(g), generally you don't distribute until there is a distributable event. The double taxation will still apply.

They are exempt if they consist "solely" of deferrals and safe harbor contributions (See EGTRRA §613(d)). The issue to which Tom Poje refers is whether or not a Safe Harbor Plan is exempt from top heavy requirements if the document merely allows for a discretionary profit sharing contribtuion (even if a contribution is not made). Concerns have also been expressed about reallocated forfeitures. There are several threads on these issues if you want to research it further.

What was there reasoning on the top heavy question? That seems to be exact opposite of what 1.416-1, T-24 says.

Do you know approximately how long it will be before ASPA posts the Q&A's on their website? Were there any Q&A's about reallocated forfeitures and how that effects top heavy?

http://www.benefitslink.com/cgi-bin/qa.cgi...d=110&mode=read See Q&A 110 in Correcting Plan Defects. 98-22 has been modified several times, but the principle here is still applicable.

See 4975(d). For distributions specifically 4975(d)(9).

Blinky, See Page 1.45 of the ERISA Outline book. In jaemmons scenario there isn't double attribution (as described on page 1.99 of the ERISA Outline book), but rather there is actual ownership of the community property interest.

We consulted 4 different attorneys on 2520.102-3(l). Each stated that a broad statement to the effect that administrative expenses may be paid out of plan assets unless paid by the employer would be sufficient. We include the same broad statement in every SPD regardless of whether expenses are currently being charged to the Plan or participants. We do add a few sentences giving a broad definition of administrative expenses, but it is broad and all encompassing. We do not specifically mention loan fees, distribution fees, etc. We do recommend that all participants requesting a loan be given a copy of the loan document. That document specifically lists applicable fees. Kirk, if 2520.102-3(l) refers to distribution fees does that mean that such fees are permissable. I don't have a strong opinion on it, but I've seen arguments both ways on the DOL's position on distribution fees.

I agree, but it is out there. The thing I thought was odd is that the court reasoned that the employer didn't have sufficient assets to segregate contributions immediately. Maybe I'm reading too much into this, but it seems to me that the employer was essentially stealing and the court said it was alright as long as they put the money back.

The DOL takes the position that deposits of employee deferrals must generally be made within a few days of the payroll ending date. We inform our clients of the DOL's position and strongly encourage that they try and conform to that standard. Having said that, ultimately whether the employer contributes monthly or every payroll period is not my decision. As long as they meet the 15 business day rule I do not have a problem answering no to question 4a on the Sch. H or I. Interestingly enough a district court in Minnesota recently held that a particular employer that was having financial difficulties, did not violate 2510.3-102 even though deposits were only being made monthly. http://www.nysd.uscourts.gov/courtweb/Pdf/...2-01788.PDF#xml

The excise tax is assessed on the "amount involved" not on the amount of the late deposit. The amount involved is essentailly the interest that could have been earned on the late deposit (i.e. interest rate 10%, late deposit $400, amount involved is $400*.10*5/12) The excise tax is 15% of the amount involved for each prohibited transcation. Lost earnings to the participant should probably be based on the 6621(a)(2) interest rate.

I agree with jaemmons, this is pretty straight forward. If an employee meets the age and service requirements and is not a member of an excluded class specifically stated in the document, he/she is elgible. Failure to complete an enrollment form is not an election out of the Plan. I would correct as jaemmons suggests. 1.410(a)-3(d) refers to excluding classes of employees. I doubt it is intended to circumvent the well established principles that a waiver option must be specifically allowed in the document and also that the employee must take affirmative action to make the waiver election.

If you have the capacity to contract you can't be discriminated in obtaining a loan on the basis of age

Could it refer to the "reverse" QNEC allocation method? If so it refers to the "bottom up" allocation method.

Thank you. You know I can come up with macros that will reverse the letters on your menu bar in Excel, but I can't come up with a program like this. Go figure.

Unfortunately, no. My boss won't shell out the bucks for it this year. I understand its really good though, so maybe next year. I'll try not to hit her up for as many other seminars next year. I did here your boss speak at a conference in Indy a couple of years ago. She seems like a bright lady. I do remember she spoke highly of you.

Only for new plans, will the determination date be the last day of the current year, otherwise the determination date is always the last day of the preceding year. I am not certain why someone would think that using the wrong determination date extends the due date of the contribution.

You are correct that the incidental benefit limit does not apply to premiums that are paid solely with contributions that are "aged". Its debatable whether the premium would be taxable. The IRS informally said it would be in the 2000 ASPA Q&A session. http://www.aspa.org/ASPAsearch.htm Use this link to find the 2000 Q&A. It is question number 32.

I've been to several seminars & different positions are taken at each seminar. Whats interesting is that in one case, the same speaker took a different position at different seminars. I am hoping that Tom Poje is correct and that this is addressed at the ASPA conference. I know that I submitted the question to ASPA for the Q&A conference, hopefully many did.

Can anyone recommend a good self-employed calculator? We use Relius administration, but the ideal salary calculation isn't helpful in regards to most self-employed contribution calcs.

It worked. I was always trying to click & drag and that never worked. Thanks again