R. Butler

See Revenue Procedure 2001-17 for correction possibilities. As Mike pointed out it is too late for Safe Harbor, but any QNEC used for ADP can also count towards top heavy requirement. Good luck.

We are leaping into the 1990's and actually administering new comparability plans. The document I am looking at has only 2 classes of employees. Each class shares in a different Pool of money. How do I allocate each Pool to the right group in Relius? Thanks for any guidance.

Sal, wrong? Never. He cites §1.401(k)-1©(1)(ii). It provides that employee deferrals are disregarded for purposes of applying §411(a). The cash-out rules are provided under §411(a). I too doubted Sal in my youth, but we checked it pretty thoroughly and could not find a whole in the position set forth. Be careful and make sure the document agrees though.

ERISA Outline book says you can disregard deferrals and forfeit 0% vested employer money. However, be sure to check your plan document.

You don't have to attach anything to the 5500. For a small plan the requirements aren't going to differ whether or not a 5500 is filed for the DFE. The warning you get appile to large plans. I apologize for so many responses. For some reason I couldn't get it through my head that Aetna was indeed not filing a 5500 as a DFE.

I am not an expert on DFE filings, but I am fairly confident that you don't complete a Schedule H for the Plan. A Schedule H is for large plans and for the DFE. Are you certain that Aetna isn't filing a 5500 for the DFE? If they are, they can give you a 3 digit PN for each fund. You only enter 000 if the DFE does not file.

You are most likely getting the warning because you are not entering the EIN/PN. Each fund have an EIN (probably the same for each fund) and a PN (this will different for each fund). Aetna should be able to provide that to you.

I may be getting lost in the facts, but is this one plan or two separate plans? I am assuming that this is actually one plan with both a profit sharing and 401(k) source. I am also assuming the document does provide for offsets, you just you can't use the 401(k) source because participant is under 59 1/2. If my assumptions are correct there isn't any reason you can't offset. The default triggers the distributable event. If this actually two separate plans (although I would question why two plans), then I would not feel comforatble using an offset. Although you call it a purchase, really you have distributed money from the profit sharing plan when there is no distributable event. I don't see any fiduciary issues, it really is just a matter of whether or not there is a distributable event.

tschenk, Your last post indicates the very reason for clearly stating on the enrollment form that failure to make investment selections is deemed an affirmative election for the default fund. It would be difficult for a participant to claim he didn't exercise control if such a statement is clearly set forth.

I agree with Kirk, what other choice do you have? The enrollment form however, should clearly state that a failure to provide investment selections will be treated as an affirmative election for the default fund. Without such a statement it is more likely that the default investment won't have 404© protection.

The ERISA Outline Book states the same conclusion. The book does cite DOL's Interpretive Bulletin 75-9. Good luck

Did they always have over 100 or did the employee account become 100 in a subsequent to establishing the Plan? They have a 2 year grace period if they established plan and then subsequently became ineligible.

We checked into this issue previously. We were advised by our attorneys that we could not perform audits on clients for which we serve as TPA. They cited the DOL regs. I makes sense when you think about it. You'd really be auditing your own work.

See Notice 2000-3. Generally amendments to an existing 401(k) Plan must be made prior to the start of plan year. The fact that Notices for the SIMPLE Plan were not distributed timely does not the change the answer as to Safe Harbor. You still have an existing 401(k) Plan.

I am assuming this is a 401(k) plan that benefits all nonexcludable employees. If my assumption is correct, then per the instructions to Schedule T, line 3 (specifically the "Note" located under line 3), we check both box 3B and 3D. 3B because no HCE's benefit under the 401(a) and 401(m) sections; 3D because all NHCE's benefit under 401(k). If 401(k) does not meet any of the exceptions for line 3, then Skip line 3 for all parts and go to line 4.

Is any additional guidance on this issue expected? We have a couple of Safe Harbor plans that have prior nondiscretionary money in the Plan. I am a little concerned that a reallocated forfeiture will take away the automatic pass for top heavy.

I can see MWeddell's point. The document is going to define compensation. The document also probably defines the period for measuring comp. i.e. Plan Year, portion of Plan Year in which the the employee is a Participant, etc. Many documents do not provide for different definitions of compensation based on source. Those documents are silent as to "true-up" contributions. Because they are silent as to "true-ups" does that mean you can read that provision into the document? I don't necessarily think so; you are stuck with the definition the Plan provides. I agree with MWeddell you really have to see the document to determine if there is any wiggle room. If this a prototype plan and you amend it to include provisions not available in the prototype, have you just taken it out of prototype status?

My only thought is that this is not actually default. The payments were made; the employer just didn't remit. In some respects it is analogous to a failure to timely deposit employee deferrals. If the employer doesn't properly remit the deferrals you don't adjust the W-2's. Can't the recordkeeper just correct the 1099?

I agree with KJohnson that the owner isn't covered under the collectively bargained contract. Management is not covered by unions.

JONB Maybe not an issue, but in both posts you indicate you are using a profit sharing contribution. There isn't a necessarily a problem with that, but be sure you are satsifying the conditions of a safe harbor contribution (i.e. 100% vesting, not available for hardship withdrawal, etc.)

Disregard the post. I am idiot, I had the plan coded as a 401(k).

I have a straight Profit Sharing Plan w/ a last day of employment requirement. I am fairly ceratin that if an employee terminates I shouldn't use his/her compensation in caculating the 15%. Relius still considers such compensation on the Maximum Employer Contribution Report. How do I make it stop?

A safe harbor plan using the 3% nonelective contribution to meet safe harbor can make matching contributions and would not be subject to ACP as long as the requirements of Notice 98-52, Section VI.B. are met. Examples are provided in the Notice.

RJM, Your understanding is correct. I haven't really done thing with 2002's 5500 yet, but in the 2001 instructions there was an example that illustrated the point.

Don't net them. Income is determined separately for each business. (Reg. §1.401-10(B)(2)).