Harwood

Since all benefits start accruing in May, I prefer allowing the rehire to begin deferring when they become eligible. After all, compensation for ADP testing will start accumulating May 17. It seems unfair - though perfectly legitimate - to make the Participant wait until the July entry date to make deferrals.

Participant is indeed eligible on rehire date of May 17, 2004; all compensation-based calculations start May 17. The problem I often see is that an employer seems to have the right - if the document is silent - to make the employee wait until the July 1 entry date to start deferrals.

I assume that a 50 states + D.C. plan can include residents of Guam. I assume that definitions of W-2 compensation include amounts found on forms W-2GU and W-2VI

They are different. Remember how the "universal availability" portion of the catch-up regulations specifically mentioned Puerto Rico? The "Coverage and Nondiscrimination Answer Book" has a chapter on testing Puerto Rican and Foreign plans.

You need the interpretation of whether this court considers the loan payment to be "other indebtedness" or a deduction required by pension.

1. I think the "immediate distribution" provision can be eliminated going forward. 2. Union plans often don't allow ex-spouses to get their money until as late as possible.

My Corbel adoption agreement - which only allows for deferrals as percentages - allows the Sponsor to allow Participants to "make a special salary election with respect to bonuses."

Of course in California, if an employee says "stop my loan deductions," the employer best comply. Loan agreements often say that an irrevocable agreement for payroll loan deductions are valid only if allowed by law. A prudent reading of California law is that such elections cannot be irrevocable. I don't think ERISA preemption applies here.

I know a California bank - a trustee/recordkeeper for many plans - that puts the following on the back of loan [including paperless] proceeds checks: "By endorsing or cashing this check, I agree to repay the amount of this loan, plus interest, according to the terms and conditions of the Promissory Note and Security Agreement contained on both sides of the document attached to this check and according to the Participant Loan Authorization Agreement. I agree that my employer will deduct the amount of my loan repayments from my compensation."

American Bar Assoc. - IRS Q&As May 9, 2003 28. §411(a) -Vesting Service Crediting Method A profit-sharing plan covers only the salaried employees of a plan sponsor. A year of vesting service under the plan is credited for each plan year in which an employee is credited with at least 1,000 hours of service. Since all participants are salaried employees, actual hours of service are not tracked by the plan sponsor. Rather, the plan sponsor credits 40 hours of service for each week a salaried employee is employed. Is this a permissible method of crediting service? Proposed response: No. If actual hours are not measured, one must credit hours based on an equivalency permitted under the regulations. However, under Labor Reg. §2530.200b-3, 40 hours per week is not a permitted equivalency. Rather, under subsection (e) of the regulations, the plan sponsor would be required to credit 45 hours of service for each week for which an employee would be required to be credited with at least one hour of service. IRS response: The IRS agrees with the proposed answer. A sponsor cannot do "do-it-yourself" equivalencies. The DOL equivalency rules are the only permitted exception to counting hours for plans. http://www.abanet.org/jceb/2003/qa03irs.pdf

http://benefitslink.com/boards/index.php?s...indpost&p=95115

My experience when I was in payroll: 1. The worker uses their real name but a false SSN. It may or may not be someone else's SSN. The object is not identity theft but to get a paycheck. 2. When the false SSN is discovered, employee is asked for their correct SSN. They cannot provide a correct SSN because they are an illegal immigrant. Employment is terminated. 3. Whoever they may be, they accrued a benefit for the work they did perform. I think they deserve to be paid that benefit; some may think not since the worker had no legal right to work in these United States. I think if they used their real name while employed, the Plan Administrator has evidence who they are [signatures on employment documents] and can give them a distribution.

Most people who are terminated in these circumstances lose their jobs because it is discovered that they are using an incorrect social security number. They are not usually deported but go on to find other jobs in the United States. The employer has multiple documents on file with the signature of this person, so they can verify that the correct person is applying for the benefits.

Matching contributions do not have to be 100% vested to meet the ACP safe harbor. You can have a 3% non-elective to meet the ADP safe harbor [100% vested of course] and a match that is not 100% vested to meet the ACP safe harbor. ERISA Outline Book 2004, page 11.448

It was this statement: "The excess is regarded as an employer contribution" that made me ask the question about testing. It implies a discretionary employer contribution, not an employee contribution subject to the ADP test.

"If it is treated as an employer contribution, how is it tested?" What I am asking is if this excess is treated as an employer contribution, is it like a discretionary profit sharing contribution and now this person - perhaps an HCE - has a higher rate of accrual than everyone else?

If it is treated as an employer contribution, how is it tested?

1. When these excess deferrals get distributed years from now, aren't they technically ineligible for rollover? Are systems tracking this? 2. It is almost like after-tax basis has been created. There is money in the deferral source that has already been taxed.

It the overage is disgorged prior to April 15, the coding of the 1099-R is such that there is no double taxation.

401(k) plan with a discretionary match. Plan sponsor is a controlled group with two companies participating. In 2003, company 1 received a discretionary matching contribution while company 2 did not. [Plan passes 410(b) coverage for the match even with company 2 employees not benefiting]. Question: Should the employees of company 2 be a part of the ACP test if they were otherwise eligible to participate? The adoption agreement does not exclude them from participation in any component of the plan, therefore, the decision not to provide a matching contribution was strictly a managerial one.

The instructions include this: "If the person who prepared the annual return/report is not the employer named in line 2a or the plan administrator named in line 3a, you may name the person in the first two rows of boxes labeled 1)." Third Party Administrators types go in 5, not the Employer or Plan Administrator. Number crunchers/preparers, not people with real authority over the plan and responsibility for signing the form.

My Corbel prototype says that the Rehired must repay "the full amount which had been distributed". The SPD produced by the Corbel software states that the rehire must "repay the entire amount of the distribution." I can't find any references or Adoption Agreement options regarding limiting the payback to employer contributions.

Both of my 5500 guides recommend leaving this optional line blank. A preparer's competitors [and the DOL] could make use of it in ways that are not necessarily pleasant.

My ERISA Outline Book has Sal hedging a bit on the issue [deferral payback "would seem to violate the rule under §1.401(k)-1©(1)"]. He also says that if you have an approved plan document that requires payback of the deferrals, then the deferrals need to be paid back also.

I also work with employers and give them input on whether to adopt Automatic Enrollment or not, in a state where the state authorities have declared that AE is contrary to state payroll law. I was trying to get a feel for what would happen should an employee challenge the deduction. Does my client face a potential lawsuit and, if so, wouldn't it be in state court? Since the DOL won't answer the Reish & Luftman request for a ruling, does my client want to spend the money to be the first to see if ERISA/the IRS pre-empts California withholding laws?