Blinky the 3-eyed Fish

The person that told you you could not offset the addition, did he/she give a reason, cite, anything? I am curious, without researching anything, why. I am not sure what you mean by your last question.

I am confused. Are you saying only employees that are not yet participants are allowed to withdraw their rollover monies in-service or that non-rollover sources are not able to be withdrawn in-service or neither?

The UAL cannot be negative by definition, so the balance equation doesn't fail. See section 5.01 of Rev. Rul. 81-213. I am not sure how you would then have a loss if your prior year hit a FFL. Your expected UAL would be 0 and your actual would be 0. If you had seen a loss set up in the past, obviously someone was not limiting the UAL to zero to make this happen. I don't agree with this methodology, although I too have seen it in action. In your second question, you say your UAL is 0 and you have a CB. In this case, you don't balance, but that is okay. You wouldn't set up a loss at this stage because you still have no UAL. Instead when the plan comes out of full funding, the first base is set to balance per the cite you quote.

Were any participants affected? It would have had to been pooled accounts (i.e. non-directed) with a participant receiving a distribution.

No HCE's benefit, so coverage is not an issue. No keys benefit, so top heavy is not an issue.

My understanding is the top paid election must be explicitly referenced in the document. However, I have seen a GUST approved document that had the paraphrased wording, "... top 20% if elected by the employer for a Plan Year." I really think this slipped by the IRS reviewer and have only seen it in the one document.

The employer is correct as long as the plan document is in accordance with what he is saying. A plan can limit deferrals to any level. The EGTRRA changes simply represent the maximum allowable amount that can be deferred.

There is no specific guidance that I know of. The issue in my mind is a 411(d)(6) issue as to when the HCE definition can be changed. One simple example would be if a PS plan with allocation groups had one defined as NHCE's. If the top paid group election were removed from the plan after the right to the allocation was earned and people were moved from NHCE status to HCE status and received a lesser contribution, I think there would be a problem.

I am not sure why you read it is crediting service before 30. To me it seems to credit up to 10 years of service before entering the plan, although I don't know if the membership term has a different meaning. Granting more than 5 years of past service cannot discriminate in favor of HCE's.

WDIK, you are correct. I posted without thinking. dx would be the total dead in the year. Spot, it's far too complicated to explain here. See your local actuary. The tables might be published on the Society of Actuaries website.

I don't see how it would be a qualifying asset simply because it's bank stock. If it's held underneath the guy's mattress, that's not a regulated financial instituion, that I know of at least, and it doesn't meet the criteria. So, it seems we agree.

Spot, you are looking at the d(43), which is the probability of dying in that year. What you need is the purchase rate at age 65, which is the present value of $1 payable monthly until death. They are two completely separate components of the mortality table, akin to looking at the engine when you just want to know what kind of car it is.

I don't think it's the investment that is important, but whether or not it is held in a regulated financial institution.

Andy, there is a good discussion on the topic on page 2.4 of the 2003 Edition of the ERISA Outline Book. If you don't have access, then consult 1.410(a)-3(e)(1). I found something better. Specifically look at example 6 in the above cite. It is right on point.

I am no expert, but it would seem to me it depends on how the premium is being paid. If it's from the plan assets, then obviously it is not a contribution. (Whether the assets are participant directed, and how the earnings are calculated if they are not, would be another issue.) If the premium is being paid from outside money, then it would be a contribution and count against his $40k.

Excluding a class of employees is only a coverage issue in of itself. 4o1k, I am not sure where you are coming from in its affect of 401(a)(4), other than now you will have a some zeroes in the testing. But it wouldn't suddenly cause a safe harbor design to no longer be the case.

I don't think so. This is just another class of excluded employees, like if you excluded hourly employees or people with giant heads.

Thanks for the acknowledgement. I just saw The Hulk and was disappointed that radiation gave him astonishingly incredible powers, while all I got was this darned third eye. I didn't even have the power to thwart Ms. Simpson's attempt to boil me and serve me to Mr. Burns for dinner.

Yes.

The safe harbor document provisions do not need to be in place until the end of the RAP. See Notice 98-52.

I agree with pax. It would no longer be a safe harbor formula because differing participants will have different rates of accrual based on when their freeze date is. Regarding your DC and DB plans question, you may have a 410(b) problem and, depending on the size of the plan, a 401(a)(26) problem in the DB plan.

I assume you are using the general rule because of the 12/31 date you mention. In that case your line 3 items will be as follows: 3(a) - $1,075,000 3(b) - $75,000 3© - $75,000 - discounted from 3/03 to 12/31/02 So, it's just what pax said.

Are you talking 410(b) or 401(a)(26)? DB or DC? If it's 401(a)(26) and a DB plan, then see those regs. While a frozen plan is not 100% exempt from a deemed pass, there are quite a number of exceptions that it can fall under to pass. If it's 410(b), then since no HCE benefits in a frozen plan, you automatically pass coverage. Of course, you could still have a frozen DB plan without EGTRRA adopted that requires TH minimums to continue to accrue.

I would add another item to the key employee definition. Your plan could spell out the old rules for determining who is key, and if the EGTRRA amendment has not been adopted, then you will have 2 definitions of key employees.

It depends on what type of plan to which you are referring. The minimum requirement for a non-key participant in a DB plan is to accrue the top heavy minimum upon working 1,000 hours in a plan year. The minimum requirement for a non-key participant in a DC plan to accrue the top heavy minimum is to be employed on the last day of the plan year. Of course, your document could have more lax rules, so always check it.