Blinky the 3-eyed Fish

The safe-harbor nonelective contribution needs only to go to NHCE's. You should be able to word your document to exclude a particular HCE from receiving it.

Si, senorita.

Doesn't it seem odd that we are in a business where the rules and regulations are often so ambiguous and incomplete that our decisions on how to operate plans can be based on what one guy says and that he may change his mind a month later?

Prepare an amendment under 1.401(a)(4)-11(g) and give the guy 5%. Problem solved. I would recommend this amendment one that will allow the plan to allocate the gateway minimum in case the plan must test on a benefits basis in the future. That way you will be covered in future years under a similar situation.

They are no longer active participants in the plan, so they do not need to receive a TH allocation. Although, be sure to watch the coverage testing.

After reading some more, I agree. Thanks.

Is it correct that the Uniform Lifetime Table is part of the 2002 Regulations and that when determining minimum distribution from a defined benefit plan for 2003 I would not be able to use that table?

The EGTRRA "good faith" amendment would be adopted in time, and unless it's butchered, top heavy shouldn't be an issue.

401(a)(26) failure is a possibility.

Pax, I am not so sure the automatic change under 4.01(5) is available. Frank didn't say the plan was frozen, only that there were no active employees. I read that passage to require the plan to be frozen, not that there are circumstances where no one accrues a benefit.

MGB, how can you say doing it one way or the other doesn't make a difference? You can't go wrong if you do recompute, but it is possible have a nondeductible if you don't recompute and should have. Now, do I think this is really an issue that will come back to haunt you if you don't recompute? No, I don't. I just thought it was an interesting discrepancy.

Pax, I was confused by what part in which you were confused. Here is my understanding. The special rule under Code section 412(I)(7)©(i)(III) is implemented if for RPA a rate in 2002 is used that is greater than 105% of the rate. So, for a calendar year plan, the rate is 5.71% (January 2002). 105% of this is 6.00%. So, if you use a rate greater than 6.00% you MAY or MUST recompute last year's late quarterly liabilities. The MAY or MUST was my point of emphasis. As you quoted from the instructions to the Schedule B, it says the 120% rate "could" be used for 2001. If you look below to 412(m)(7)(A), it says the rate "shall" be redetermined for 2001. I have always thought that shall means must. When I was told as a kid, "You shall go to your room", I didn't feel I had any options. I doesn't make any sense that you truly MUST recompute last year's liabilities if you don't choose to, but it also doesn't make sense that there is this discrepancy in the language. (7) Special Rules For 2002 And 2004 In any case in which the interest rate used to determine current liability is determined under subsection (l)(7)©(i)(III)-- (A) 2002 For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002, the current liability for the preceding plan year shall be redetermined using 120 percent as the specified percentage determined under subsection (l)(7)©(i)(II).

The redoing of 2001's calculation is conditioned upon using an interest rate above 105% in 2002. Here's a post of mine that got no love. There is an interesting discrepancy though. The regs say that if you use a rate in 2002 you must recompute 2001's CL numbers, but the Sch B instructions say you may recompute. http://www.benefitslink.com/boards/index.p...89&hl=quarterly

The ARA is not factored in any 412(l) calculations.

Mike, it was in one of the general sessions in which Wickersham was there. How's that for narrowing it down? Sorry, but it was 3 months ago, so I am not sure which.

See this prior discussion: http://www.benefitslink.com/boards/index.p...68&hl=quarterly

Yes, the document must be followed. Now with most of my plans the owner of the employer and the trustee are the same person. We provide them with written materials showing what each person received. As soon as he picks it up, he has effectively satisfied the document language.

Unless John Doe is in a coma, wouldn't he know he didn't get his money and raise quite a stink about it?

Matching contributions on catch-ups are treated like other matching contributions and are included in the ACP test. Catch-ups are NOT subject to ADP testing.

Yes, as long as your document language agrees.

Yep, barring a calendar year election.

Okay, I am confused Tom about your last comment. Here is 410(a)(4): "A plan shall be treated as not meeting the requirements of paragraph (1) unless it provides that any employee who has satisfied the minimum age and service requirements specified in such paragraph, and who is otherwise entitled to participate in the plan, commences participation in the plan no later than the earlier of-- (A) the first day of the first plan year beginning after the date on which such employee satisfied such requirements, or (B) the date 6 months after the date on which he satisfied such requirements, unless such employee was separated from the service before the date referred to in subparagraph (A) or (B), whichever is applicable." Here is the first part of 410(a)(1)" "(1) Minimum Age And Service Conditions (A) General Rule A trust shall not constitute a qualified trust under section 401(a) if the plan of which it is a part requires, as a condition of participation in the plan, that an employee complete a period of service with the employer or employers maintaining the plan extending beyond the later of the following dates-- (i) the date on which the employee attains the age of 21; or (ii) the date on which he completes 1 year of service." By my logic, if a participant does not enter by the earlier of the first day of the plan year or 6 months after satisfying the eligibility requirements, the plan does not satisfy 410(a)(1). If 410(a)(1) is not satisfied, then the plan "shall not constitue a qualified trust". See also 1.410(a)-4(b)(2). (I realize this is old, but it connects qualification issues to the entry dates and the mininimum age/service conditions.)

You are correct, the gateway contribution is needed only to begin testing under 401(a)(4), not for coverage. You confused me by referencing 1.401(a)(4)-8 instead of 1.410(b)-5. Andy understood you, so I think it's my issue.

Rcline46, why do 410(a)(4) and 202(a)(4) not apply?

Andy, are you sure you understood the questions because I didn't. The "i.e" there seems to me the intent was for the second question to be just the first question rephrased? Judy, what are you trying to accomplish?