Blinky the 3-eyed Fish

The hardship option can be eliminated, 1.411(d)-4, Q&A 2(b)(2)(x). The pre-retirement distribution option cannot be eliminated for accrued benefits.

No. Replace the non-qualifying assets with qualifying ones.

Was there a 2001 safe harbor nonelective contribution? If so, why wasn't the overdeposit in 2000 used to for the 2001 contribution? I am not saying that would be correct, just wondering why the 2000 overdeposit continued to be in the plan.

BoTh ItEmS wOuLd NoT iNcLuDe ThE nOrMaL cOsT. tHe InStRuCtIoNs DoN't HeLp BeCaUsE tHe DeFiNiTiOn Of AL iS tHaT iT dOeSn'T iNcLuDe ThE NC fOr ThE yEaR.

Confusion is reigning here. The rule that you can consider excludable in performing coverage testing those participants that terminate with less than 500 hours is only available if there is a condition on receiving the allocation, like a last day and/or hours requirement. I am not where I can give a cite, but you CANNOT, repeat CANNOT, have an hours and/or service requirement on making deferrals OR receiving a safe harbor contribution, either nonelective or match. There IS a specific cite and I will find it on Monday regarding the deferrals unless someone can beat me to it. Alf already gave a cite for the safe harbor rules. Thus, when doing a 410(b) test on the deferral portion of the plan, you CANNOT exclude participants who terminated with less than 500 hours.

I used to love recess in elementary school. We'd play kickball.

A plan cannot have any requirements to be able to defer or receive a safe harbor contribution once entering the plan, PERIOD. You also cannot have a break-in-service requirement greater than 500 hours. It has nothing to do with having a potential operating violation.

More details please. Why was the contribution in 2000 not allocated? Was it for the 2000 year and contributed in 2000? Is there a profit sharing component of the plan outside the safe harbor nonelective contribution? I ask this because it's my understanding that contributions made for a DC plan during the year must be allocated. See Rev. Rul. 80-155.

Why don't you force the payout?

For a DC plan it depends on whether it is subject to the J&S rules. If the plan does not offer a J&S annuity, then one of the requirements for doing so is that the spouse must be the 100% beneficiary unless they waive it. If the plan is subject to J&S, then the rules for the DC plan are the same as the DB, the spouse must only receive the QPSA, which must be a least 1/2 of the value. They would only have to waive their right to this amount. Of course what the QPSA is is subject to the document provisions. What is above is the minimum required amount.

I almost always agree with you too Andy. As Lionel Richie says in the I Love the 80's shows on VH1, "Can you feel the love? I know I do."

I auditioned, but they felt that my 3 eyes were a distraction and took away from the focus on other characters in the scenes with me. If offered to gouge out an eye and feed it to the hungry sharks, but ultimately, they were concerned with my health. I guess there is just no room for a radioactive mutant fish in Hollywood anymore.

Jody, let me try and do a surface walkthrough. I am not trying to sound condescending, but am spelling out some basics so nothing is lost in the explanation. Coverage testing under 410(b) - here we are just trying to compare who is benefiting under the plan, not the amount of benefits. If 70% of the NHCE's benefit versus the HCE's, you pass the ratio percentage test. Stop - you've passed coverage. If less than 70% of the NHCE's benefit versus the HCE's you may perform the average benefits test. If you pass, stop. If you fail, you need to have more NHCE's receive a contribution. Nondiscrimination testing under 401(a)(4) - only needed if the benefit forumla is not a safe harbor. Here were are measuring the amount of benefits. If each rate group is over 70%, Stop - you've passed. If not, move to the average benefits test for 401(a)(4). So, there are 2 separate ratio and average benefits tests, one for coverage and one for nondiscrimination. How you pass on one does not affect how you pass the other.

Jodi, you are correct, but reread pension222's post and decide again to what you are agreeing. Note that nowhere do you say that how you pass coverage (ratio or average benefits) affects how you must pass nondiscrimination.

I am not going to touch a 403(b) question, but Austin you did lead R. Butler astray with your answer to his question where he mentioned forfeiting associated match dollars on RETURNED deferrals. R. Butler Isn't the HCE going to forfeit the matching contributions related to the matched deferrals that were refunded? Austin3515 No, if they're vested they get to keep it!

$60. Instead of considering the AB at 1/1/03, consider it at 12/31/02 = $0. What is your formula that makes this not a safe harbor design?

I don't see an issue with prospectively not crediting service in the salaried plan while an hourly employee. In my experience that is the norm in these situations. The amendment timing couldn't discriminate in favor of HCE's, but I doubt that is an issue in your case.

4o1, note the last sentence of the instructions you quote. What Katherine is saying, of which I agree 100%, is the legal date of the transfer in a merged plan IS the date of the merger, not the date of physical transfer of the assets. In essence, once the merger happens, any and all assets held under the merged plan's name are deemed to be now held under the surviving plan.

You do have it wrong. Whether the plan passes the coverage testing (410(b)) on ratio percentage or the average benefits test has no bearing on how the plan needs to pass nondiscrimination testing (401(a)(4)).

What does this mean?

Pax, isn't this RR just saying that these certain 2 entry age normal methodologies are not considered reasonable? I am not sure exactly what you are asking though. Here is the holding from the promulgation: "Because it can create experience gains or losses even if all actuarial assumptions are exactly realized, the aggregate entry age normal funding method that determines the normal cost per plan participant by dividing the sum of the present values (determined as of each participant's entry age) of each participant's projected benefits by the sum of the present values (determined as of each participant's entry age) of an annuity for each participant equal to 1 per year payable from the participant's entry age until the participant's retirement age does not constitute a reasonable funding method within the meaning of § 1.412©(3)-1 of the regulations. Because it can create experience gains or losses even if all actuarial assumptions are exactly realized, the aggregate entry age normal funding method that determines the normal cost accrual rate by dividing the sum of the present values (determined as of each participant's entry age) of each participant's projected benefits by the sum of the present values (determined as of each participant's entry age) of future compensation from the participant's entry age until the participant's retirement age does not constitute a reasonable funding method within the meaning of § 1.412©(3)-1 of the regulations."

I have another rule that should be followed. Don't post the same question in 2 different areas.

Actually, for plans where EGTRRA is not adopted you very well may have to run the test both ways. First, as RBeck said, you have to operate the plan under the top heavy rules as changed by EGTRRA, regardless of whether the EGTRRA amendment was adopted. But, because your plan document most likely (99%+) has the old top heavy methodology spelled out in the document, you also have to run the test that way as well. EGTRRA does not afford 411(d)(6) protection. Now in your situation, the plan was top heavy under the new rules, so there is no need to run it the old way, since it's already top heavy, but it's something to keep in mind for other plans.

Glad I could help. Believe me I have been the recipient many a time.

Good memory.