jaemmons

Am I missing something? How can they "flip flop" from year to year? I thought that a non-5% owner could defer the RMD payment but that deferrment would be to the year following the year they actually retire from the company (provided the plan allows for the deferrment). I don't understand why hours of service is even relevant, because if they are still being paid to work there, regardless if their pay status has changed (eg-full time to part time or salaried to hourly) they are still an employee and if they elected to do so, may continue deferrment until they no longer work there. Someone please help me if I have grossly overlooked anything.

Never mind I found my answer in Treasury Regulation 1.402(g)-1(e)(1)(ii).

If excess deferrals are corrected and refunded prior to the end of the 12-31-2002 (PYE coincides with individual fiscal years), would they be included in the ADP, avg benefits or 415 tests for 2002? My logic, although I cannot recall where I heard or read anything to support it, is telling me no, but I wanted to bounce this off anyone else who thinks otherwise. thanks

No. the safe harbor 3% NE cannot be used to satisfy the base allocation in an integrated plan.

I would have to say that from an operational standpoint, as well as providing all the "bells and whistles" a quality platform should provide, ExpertPlan would be the better of the two platforms. Their TPA product is more in line with their strengths and as such should be strongly considered a high quality alternative to Nationwide. I believe they have a download format for RELIUS but you may want to contact Chris McCarthy (I believe he handles TPA clients with them now) @ EP to find out the details. My firm uses Manulife and Lincoln which are also two very good platforms. If you handle small plans, I would have to suggest either Lincoln or Expertplan, with the weight toward EP since they do not carry an plan minimums for placing a plan on their platform.

It depends on whether or not the 1st restaurant (own 100%) provides management functions to the second restaurant. You will need to look at the "facts and circumstances" surrounding their business relationship. Also, before you dismiss the bro/sis relationship, you should look at any possible attribution of ownership under IRC 1563. Does the spouse or any children under age 21 work at either restaurant? Does the owner have any children under age 21? Is the restaurant doing business in a state subjet to the community property laws?

Treas Reg 1.416-1 question V-3 ..."However, when a plan becomes top-heavy, the accrued benefits of any employee who does not have an hour of service after the plan becomes top-heavy are not required to be subject to the minimum vesting schedule..."

Is the participant in pay status (ie.-age 70.5)?

Any policy which hold an underlying cash value (e.g.-whole & universal life) Term policies don't, generally, carry a cash value so they wouldn't subject the participant to PS -58 costs.

Once the grace period has expired (ie.-end of the quarter following quarter last payment was received) and the participant has not made any loan repayments, the loan becomes a deemed distribution and becomes a taxable event to the participant. A 1099R is issued for the year the grace period expires. If your plan document offsets the loan when a distribution event occurs, then the loan would be offset, in your case, against their account balance if they are able to take immediate distributions after termination of employment. The statement that the individual told you is accurate, but is not applicable here unless your plan document does not allow immediate payment of plan benefits. The allowance for repayment is part of the loan policy may only be extended for the duration of the grace period outlined in the final regs. (which apply to loans made on or after January 1, 2004).

DVW, What is the principle line of business that all four companies are in? More importantly what is the line of business of company A?

After I posted, I read something interesting in the final regs. Under the final regulations there is an explanation that:" Similarly, pursuant to Section 1.410(B)-6(B)(3), if a plan benefits employees who have not met the minimum age and service requirements of IRC section 410(a), the plan may be treated as two separate plans, one for those otherwise excludable employees and one for the other employees benefiting under the plan..." It goes on to say that those who do not meet these minimum requirements do not need to receive the gateway contribution. Under IRC 410(a)(1)(B)(i), any plan which uses the 2 year requirement and provides for 100% vesting can substitute the "2 years of service for the one year of service requirement under 410(a)(1)(A)(ii). Since the plan requires a 2 year wait for any additional discretionary profit sharing allocation, I think it is safe to say that those employees who do not meet the 2 year requirement can be disaggregated pursuant to the final regs and not receive the minimum gateway.

I have a plan which is safe harbored using the 3% non-elective contribution, but has a 2 year wait for any additional profit sharing allocation. There are some employees who will not meet the two year requirement and are nhce's. My question is this, if an nhce employee is eligible for the safe harbor but not the additional ps allocation, are they required to receive an additional 2% (to bring them to a 5% allocation rate), since they are benefiting under the plan? I am thinking that they don't need to since they are ineligible for any additional ps $'s.

I am helping an employer design a 125 plan with a cash option in lieu of benefits (paid as additional wages). The employer has asked whether or not they could give the employees who opt out a lump sum payment at the end of the year, instead of with each payroll. I cannot find anything which would not allow for this, but I want to make sure that my bases are covered. Does anyone know of any cite which provides clarification to this issue??

It doesn't appear that there is a controlled group here, based upon your information. The only attribution seems to occur between the parents (since neither of the parents own more than 50% and their children are over 21), but since they don't own any interest in company B, I would have to say that Katherine's prior post looks like a plausible opinion.

Was this a voluntary or involuntary distribution?

Blinky, It's is the "Controlled Group Attribution Rules". My copy has this as Chapter 7, page 210 (copyright is 1998). Enjoy!

Blinky, Thanks. However, you may want to read "Who's the Employer" by Derrin Watson. This exact issue is discussed.

As long as the policies/contracts are still active, then you must continue filing a Schedule A for these plan assets.

Most of the time, the plans I draft treat these contributions as QNECs, whereby they are included in ADP testing.

Kirk, Wow, I haven't been scolded like that in 30 years! My "erroneous" statement was an admitted one based upon a misinterpretation of an ERISA statute. However, your comments seem to border on the personal side. My suggestion to you is that you need to get off of your high horse and realize that EVERYONE errs once in a while and that our profession is not above this human characteristic. Plus, this is an informal discussion board where the opinions are sometime incorrect and are justly rectified in a professional manner. To point out an error in my judgement is one thing, but to do so with such a condescending tone, leads me to believe that you need to not take things so personally. Your suggestion has been duly noted and I will take it under advisement the next time I post a reply. Good day.

EMC, Did the participants make investment selections on enrollment forms or by any other means provided by the trustee(s), whereby the trustee had to acknowledge them in writing or electronic confirmation?

Kirk, After having reread ERISA 408e and 1107, I felt that the stock met the definition of "qualified employer securities", as I did not feel that stock already issued and outstanding met the "qualification" definition. However, my opinion on the nature of the transaction was only brought to light after the assessment on the type of securities involved. I apologize if you were "mislead" by my replies, but I felt that the first issue to discuss was whether or not the stock was "qualified" which I did admit I may have been misinterpreting. Practioners are allowed to disagree, but I don't see where I had "materially mislead" you with any of my prior comments. I guess all I can say is "sorry you feel that way."

I agree with jpod. A recent court ruling (Golden v WWWRRR,Inc. - D Minn 2002) has somewhat laid the groundwork for employer application of the DOL's "15th day funding rule". You can view the court case on EBIA's website or you can search for it on BenefitsLink.

Plans which benefit only the owner, partner, and their respective spouse are not subject to ERISA bonding requirements. As such, the new laws do not pertain to them.