R. Butler

It is not really necessary to put a deferral limit in the Pllan to accomplish what you want. Set up the Plan using prior year testing. In the first year the HCE could defer 5% plus the $1,000 for the catch-up. In the second year the lesser of 2+/2x the prior year NHCE ADP plus the catch-up. By putting the 3% limit the Plan is just unnecessarily limiting the amount the HCE may be able to defer.

I'd be leary of not allowing a participant to revoke a salary reduction agreement. If you want to keep this from happening try to amend the document to specify that once a participant revokes he can't pick back up until the next plan year. I've seen this provision frequently.

I didn't necessarily mean to imply there wasn't a controlled group; we really don't have enough facts here to determine that. I only intended to set forth the general rule to only consider common owners. You need to look closely at Company 2. Are there any restrictions to C's ownership that substantially limit his/her right to dispose of the stock? If so, C's ownership may be excluded.

I agree with the other TPA. To get to the 80% you only count common owners.

We had this exact situation. Employer failed to withhold, nobody noticed for 6 months. We searched the Code and Regs. extensively and could not find a way to get around the default. We ended up treating the loan in the same manner as any default. We did not go through any kind of correction program.

I don't see why not. Except for the non-applicability of contribution limits, catch-up's are treated as a deferral.

After EGTRRA, generally traditional IRA money can be rolled over into a qualified plan. The document will state whether or not such rollovers are acceptable. Whether or not such rollovers are advisable probably depends on who you ask. Income averaging may apply to the qualified plan, not the IRA. It is possible that an older participant would lose the ability to use income averaging if he/she rolled money from a non-conduit IRA to a qualified plan. There was article on this in the BenefitsLink newsletter a few weeks ago. If you search by topic in the Benefits Buzz you should find the article.

A 401(k) plan can't require two years of service for the deferral portion. The best you could do is a year of service and have them enter 6 months later. Provided you could still meet coverage testing you may be able to exclude at least some of the employees for some other reason (i.e. job classification).

Individual is filing for bankruptcy. She wants to withdrawal money from her 403(B) Plan. I know very little about 403(B) plans, but it seems to me, as with 401(k)'s, distribution rules are governed by the Plan document. Document probably sclosley resembles 403(B)(7) or 403(B)(11). Is this correct? Also, with 401(k)s participants account cannot be attached in bankruptcy. Is the same true for 403(B)s?

The only guidance I am aware of is Rev. Proc. 97-9. 97-9 provides a Model Notice of termination, but it clearly says it can only be used if you revoking at year-end. I am unaware of anything that says you can't revoke mid-year. (97-9 only speaks to the Model Notice.) If Plan does revoke it would be subject to ADP/ACP and at a minimum I would give a 30 day notice of revocation to all employees, similar to the one you need to revoke a Safe Harbor mid-year.

Most likely. The QDRO generally specifies that the alternate payee is entitled to a specified dollar amount or a percentage of the total account balance as of a given date. That account balance includes those reallocated forfeitures.

Actuaries actually consistently rate as the top job in America. Low stress, decent pay and nobody has any idea what you are doing. I'm not currently an actuary, but maybe one day.

95% of the Regs we need are in Benefitslink. On those few occassions when we need a reg. we can't find here, we usually can get from a CPA we work with or from the Univ. of Kentucky's library.

Rev. Proc. 2001-17, Appendix B, Section 2.07(3).

Mike Preston, Thank you for the cite. I will try to find that, but again how do they reconcile that position with their own correction method in 2001-17?

I am not sure I agree with MWeddell's last point. The relevant provision is cited, but I look at Example 2 and arrive at a different conclusion. If the match is limited to the first 6% of deferrals, the Plan should still meet safe harbor.

Mike Preston, I am not necessarily disagreeing with you, but I need help following the position. How is 411(d)(6) relevant? The contribution is discretionary. The employer can decide just not to contribute to anybody. If the allocation formula is not being amended I don't the relevance. Also, do you know how the IRS squares their position that this can't be done with 2001-17? If I had allocated the contribution to an ineligible inadvertently, the IRS actually instructs you do a retroactive amendment. How is the correction method in 2001-17 different from the end result in my scenario? Thanks for your input.

The employer will make the maximum allowable contribution. If we are able to amend and count the added employee's comp. in the 15% calculation, everyone's contribution will actually increase by approximately 6.3%. If I had inadvertently included the employee it seems to me I could correct under 2001-17, Appendix B by retroactively amending the Plan. I'm not sure why a different rule would apply here. I am concerned about being able to count the employee's comp. in the 15% calculation. Assuming I can amend, is there anything that prevents me from using the comp. in that calculation.

We have a calendar year profit sharing plan. Effective date 1/01/01. Eligiblity requirements are 21 & 1. Plan sponsor wants to now retroactively amend the Plan to include all employees employed on 01/01/01. Is there any reason this can't be done? Several people have told me that such an amendment must be made within 2 1/2 months after the end of the Plan Year, based on 412©(8). I don't see how 412©(8) is relevant because profit sharing plans are not subject to the minimum funding rules.

See IRS Notice 2000-3, Part III, Q&A 6. It answers this exact question.

I agree with Mike Preston. I would answer no to 5(a). You are telling the DOL on Page 1 of the 5500 that this is the final 5500. You are telling them on line 2(k) that the assets are being transferred to another plan.

Controlled groups are treated as single employer. Both under the SIMPLE-IRA and the SEP all employees meeting the eligibility requirements would be eligible to participate, regardless of which member of the controlled group they work for. Since the employees under Company A would likely accrue a benefit under the SEP, you couldn't set up a SIMPLE-IRA. It violates the exclusive plan rule for SIMPLE's.

Your reading of 1.411(a)-7(B) appears to be correct. For NRA purposes the fifth anniversary is the first day of the Plan Year in which participation in the Plan commenced. Thus for a calendar year plan, the fifth anniversary for mid-year entrants would still be January 1st. I have never really considered the apparent discrepancy with 411(a)(8). Every Plan document I have read, sets forth clearly that the fifth anniversary is the first day of the Plan Year, regardless of actual entry date.

We add them back. Its not necessarily black and white, but if the amount being distributed was an annual addition, we add it back. There are several threads on this issue.

Are the SIMPLE plans SIMPLE IRA's or SIMPLE 401k's? If they are SIMPLE IRA's you may have another problem. A SIMPLE IRA must benefit all members of the controlled group. If it doesn't benefit all members, the SIMPLE generally isn't valid. You may have a similar issue with a SIMPLE 401(k). I don't know that much about SIMPLE 401(k)'s. The exclusive plan rule still applies, but I am fairly certain you can exclude people under a SIMPLE 401(k), so maybe with exclusions there is a way around the exclusive plan rule. Again I don't know.