Blinky the 3-eyed Fish

Since you are still within the remedial amendment period, you are free to choose whichever method you wish. When the document restatement is done, it will provided a history of the testing methodology used from 1997 onward. 2002 will be like any other year and merely be part of that history.

No, Mike, my question more relates to the satisfaction that the employees must satisfy 1.401(a)(26)-5(a)(2)(iii), specifically, 1.401(a)(26)-5(a)(2)(iii)(A)(2), which I copied below. "(2) The employees who benefit under the formula being tested also benefit under the other plan on a reasonable and uniform basis; and"

I have a situation where an employer has a DC plan and a DB plan. The benefits in the DB plan are offset by the account balance in the DC plan. For all but the owner of the company the DB benefit ends up being completely offset. The two plans are general tested. Can anyone think of a problem with passing 401(a)(26) if highly compensated employees, other than the owner, are excluded from the DB plan. I think under 1.401(a)(26)-5(a)(2)(iii) this is OK, but am looking for confirmation or condemnation.

Mike, you need 3 years of responsible actuarial experience. That just means more time for us actuaries to rule the pension world like the Roman Empire dominated once. All hail actuaries!

You don't say what type of plan it is for. If it is a DC plan you are amending, watch that you are not cutting back a protected allocation.

I thought there was a period for reasonable delay that could allow the distribution to extend past the 90 days. Sorry, for the lack of specifics, but I haven't had to look into it for a long while.

We use Accudraft as well, so I am familiar with your predicament. Your document is not deficient. There just may be situations where you need to provide the gateway minimum and the document does not allow for it. It is correctable under 1.401(a)(4)-11(g). We are including the amendment with documents going forward. I feel there is only a need to address the documents already completed on a case-by-case situation as needed. A safe harbor 401(k) plan will be the main cause of failure in this situation coupled with the top heavy issue you mention.

Mbozek, I am betting 2much was not referring to settlor expenses, but rather administrative expenses previously paid by the company that could have been paid from the plan.

You could add a BIS feature to the plan. Then she wouldn't be eligible when she returns for only 2 weeks. Of course, I never like having a BIS feature in a 401(k) plan. As far as 1099'ing her, I am not an accountant, but I didn't think that was allowable unless she truly is an independent contractor.

Carl, you are correct that by deferring into the 401(k) plan you become an active participant and any IRA contribution is not deductible. (I didn't look up the current AGI limits, but from memory agree you are probably over them.) If you stop deferring and do not receive any other employer contributions, then you no longer are an active participant and can make deductible contributions to a traditional IRA. (Note, that if you already deferred for 2003, then too late.) Contributions to a Roth IRA do not depend at all whether or not you are an active particpant in a plan.

After re-reading the original post, I missed that the partnership is no longer there and agree that it probably is not an ASG.

This is the classic affiliated service group situation. So, what you have is OK, but does your document appropriately reflect what it should? That is, the partnership should have adopted both plans, yet eligibility should be worded so the secretaries aren't each in both plans. 410(B) coverage is OK now (100% ratio percentage), but this would need to be monitored closely in the future.

In my company we have a phrase also, "Sorry don't feed the bulldog!". It is unrelated to this post and I don't know exactly what it means, but I thought I would share it.

Deferrals returned due to a 415 limit violation are NOT included in the ADP test.

It's not that that bothers me, it's the fact that I am using information after the valuation date. Irrespective of a plan termination date during the year where the normal costs and amortization bases would be prorated, I do not consider knowledge past that magical valuation date. If you are using the actual compensation for the plan year for a beginning of the year valuation, why stop there? Should you then consider distributions, asset changes, employee terminations, etc? Why not just have an end of the year valuation? Personally, I see a consistency in the methodology I use that is not there with using actual events. I remember a similar discussion before, but couldn't find it.

Sounds like you need to either use the $10,000 as estimated 2002 compensation or use an end of the year valuation date. I would not have a beginning of the year valuation and use actual compensation for the year.

You are correct. Why do you want it to be so?

A cross-tested DC plan has not been amended for EGTRRA and thus continues to use the old 401(a)(17) limit for allocations, is it still acceptable to use the 200,000 compensation limitation when performing the cross-testing? I think yes, because the testing definition satisfies 414(s), but I have not seen this question addressed and am looking for some confirmation.

You certainly can change how forfeitures are allocated prospectively. You just can't alter it retroactively to cutback an allocation already earned by the participants. Also, depending on your restatement effective date, you may have to have both sets of provisions in the restated document.

Wow! Are you serious? 1. See Mike Preston's comments. He understands what I was saying. 2. Look up the definition of semantics.

1) There are provisions of the EGTRRA amendment that are optional and those that are required. (See Notice 2001-57 as it indicates which are optional or required.) This IRS is correct in requesting that the required provisions be amended. 2) The deadline for adopting the EGTRRA amendments depends on the end of the remedial amendment period for the client. Thus if you have a prototype or volume submitter plan, you still have until 9/30/03 (although you would want to do it sooner now that the plan is terminated). If you have an individually designed plan, then you needed to amend by 12/31/02.

Blaum8, I know you are new to this forum, but you should know better than to use it as a vehichle for a personal attack. Second, how about quoting the entire post as I did above. It clearly indicates I am talking about the USUAL top heavy minimum, not one that is specially vested and has distribution restrictions.

Can I hear an Amen for Mike.

Jennifer, huh? At what point did I not agree with this? All I said is that the TH minimum (the normal TH minimum with no special vesting or distribution restrictions) could not be used as a QNEC. I never said you couldn't make it like a QNEC.

They must prorate and be left with the $300,000 deduction.