sdix401k

No, It was a flat dollar amount that was allocated. I guess my question is if the contribution is discretionary does that mean the integration level is discretionary? Thanks

If a standardized prototype plan has inidcated in the plan that for any discrtionary non-elec contribution that will be made on a year by year basis it will be integrated with social security, 1) Can the plan choose to integrate at a 0% level for a specific year 2) Could they choose to ti integrete at a .00001% level for a specific year The reason I ask is that the plan administrator had given us incorrect compensation numbers for a prior years valuation and we reviewed the file and the original contribution was not integrated. Any other ideas on how to fix without making an addtional contribution? Thanks in advance.

Can a Safe Harbor Matching contribution be counted towards meeting the minium gateway for crosstesting , can a QNEC? Thanks in advance!!

HCE Determination The determination of who is an HCE is somewhat complicated because of the requirement that the compensation limit for HCEs is to be determined based upon compensation earned in the look-back year. Let’s look at a calendar year plan example first. For a calendar year plan, the ADP test for the 2006 plan year is run using the look-back year HCE compensation limit. In 2005 the HCE compensation amount was $95,000. Thus, to determine who is an HCE for the 2006 plan year, we need to “look-back” to the compensation in 2005 and use the 2005 limit of $95,000 (not the 2006 limit of $100,000). An off-calendar year plan, such as one with a July 1, 2005 to June 30, 2006 plan year will determine who is an HCE based on the look-back limit in effect on the first day of the look-back plan year. Thus, the 2004 limit of $90,000 will apply for determining HCEs for the plan year that runs from July 1, 2005 to June 30, 2006. The $90,000 limit is applied to the compensation earned in the period from July 1, 2004 to June 30, 2005.

I need to confirm that an addtional discretionary match made in a Safe Harbor plan ( that meets all the requirments for passin acp ) would then cause a plan to be top heavy. In essence even though the plan satifies ADP / ACP from Safe Harbor Contributions does the act of making this addtional discretionary Safe Match cause the plan to now be top heavy tested? Thanks ina advance.

We have plan that upon review have discovered that an employee who took a hardship withdrawl in 2005 continued to defer compensation. The employee also received a matching contribution on that deferral. The plan has been amended to allow a participant to begin contributions after 6 months of the Hardship. What is the best way to correct this? A self correction or VFCP? Should we correct; Employee was actually benefited by receiving the matching contribtuion. Any thoughts? Thanks!!

I cannot find regs or a post regarding the treatment of a QDRO for a key employee during the last 5 years for top heavy calculations. I am pretty sure that this balance needs to be added back in? I assume that a QDRO would also be added back in for an employee who worked more than an hour during the determination plan year? Thanks in advance. Got it. For all others: Any distribution other than termination of employmnet, death, or disability should be added back in. Interesting position on coorective distributions relating to the failure of ADP/ACP Tests?

Thanks Blinky. I do have access to this and will refer to it.

I have a takeover plan for 2005. In 2004 the company sold two of eight divisions which resulted in participant terminations. The former TPA is telling the client that since more than 20% of the participants have terminated the plan might have had a partial termination. I have never heard of this. Can anyone please post your comments. Thanks in advance!!

Thanks Tom. The lesson I was referring to did make reference to safe harbor 401(k) deferrals. That looked funny to me as well. The way I understood it was that deferrals made under a safe harbor plan would not be eligible for hardship. This would entail classifying safe habor deferrals as yet another source. Still think it is a typo? In other words deferrals made to a plan in a year the plan is safe harbor, are eligible for hardship distribution pursurant to the other cavets. I do understand the reference made in the earlier post regarding the safe harbor standards test regarding a hardship deferral. Thanks! Thanks in advance.

The previous post brought up an interesting question. Reading the ASPA info under PA-2 Section 11. "QNECS, QMACS, and SAFE HARBOR 401K DEFERRALS are never allowed to be withdrawn for hardship." I am aware of the QNEC and QMACS, but I was not clear about the distribution of Safe Harbor 401(k) deferrals. Does this mean that a safe harbor 401k plan that consists solely of deferrals and or the safe match / safe harbor non elec cannot offer hardships? Thanks for the clarification.

Thanks for the information!!

When you say restructured, I assume that you mean the contribution cannot be reclassified? Can you elaborate on why the structure of the company would determine if the contributions could be or not be restructured? Your right, the client is not happy at all, either is the accountant. Thanks!!

I have never heard of doing it this way and I do not think you can. Vesting can be either earned from effective date of plan, from date of hire or date of hire ( exclude years of service prior to 18) Other wise you would have a new vesting shecdule for each year that the employer made a contribution. I dont think so.

It is a professional corp. ( Medical Practice )

Actually the profit sharing contributions were over contributed for all employees. The employer was pre-funding the contribution based on last years numbers. The gain associated with each particpnats contribtuion would be still given to each particpant. The difference or the over contribution would be what they wanted to re-classify as a salary deferral. Ex: I fund PS with 87K, I only needed to defer 80K. I want to recalssify 7K as salary deferral??? The gain on the 7K will still be given to each particpant. Therefore since all particpants accounts are being valued the same I do not see how Rev 80-155 pertains??? Thanks in advance.

Thats what I would think as well. The TPA cited Revenue Ruling 80-155 which I have read and seems to have nothing to do with the situation?? Thanks in advance.

I have a client who added a 401k feature to the reitrement plan in 2003. The employer accidently sent in the full $40k for 2003 as a profit sharing contribution. The employer foregot to designate $12k as salary deferral. The issue is the PS is not self directed and the 401k is self directed. Can $12k be reclassifed as a deferral? ( Assuming the W-2 is changed. ) If there was a gain/loss on the funds in the PS how would that be handled? Would this better handled as an excess addtion? The TPA firm is telling him that the money cannot be re-classified and it cannot be returned to the employer with or without a penalty. The TPA is telling him that the funds must be allocated to all other eligible particpants. Thoughts???

We are taking over a plan that was using ang age weighted formula on a volume submitter plan. Employer signed gust certification. Employer has now restated plan onto a different document providers non-standadarized document. ( Resatement date from original effective date of plan with Gust amendments.) Any problems with this?? Prior admin is saying that contributions from orig effective date to re-adoption date could be disqualified. Thanks in advance.