Blinky the 3-eyed Fish

Prescribed by what? I think that it is relevent how the remaining description reads.

PLHart, the answer to your question depends on whether you are aggregating the plans for coverage and nondicrimination testing. If aggregating, then the gateway would need to be provided to those participants that got a top heavy minimum. Dmb, for purposes of rate group testing and the gateway requirements forfeitures allocated are no different that nonelective contributions. In answer to your last question, yes, your plan would satisfy the gateway requirements. However, it still would need to pass the general testing to be ok.

The purpose of giving the notice, especially in regards to the safe harbor matching contribution, is to alert participants timely. There is the great potential that participants would have deferred some/more had they known the match was to be provided. I can't fathom there would be the availability to chalk it up as error at this stage.

What does the plan say?

What benefit would be gained by moving the termination date?

You don't say the plan is terminating, so you definitely wouldn't forfeit the balance. If a person under the later of NRA or 62 with a balance over $5K does not affirmatively elect to take the distribution, you have to let it sit there.

You mean shifted contributions are excluded from the ACP test.

There are no special restrictions in how the assets are invested.

BFree is referring to the rule that you aggregate distributions in the calendar year to determine the $200 threshold.

You would have to give a 204(h) notice if it's a MP or TB plan. Otherwise, there is no legal requirement, but probably it would be a good idea to give the employees a whiff of what's happening. Remember: Bad employee relations turn left and make too many cooks in a kitchen that spoils the soup.

Andy, whether or not the person has to be in their own class depends on the wording of the document. Our documents have language that is like the provisions for top heavy. In other words, there's wording that kicks the benefiting party up to the minimum gateway amount. In fact the way our documents are worded, the person could not get the 8%, because he didn't satisfy the accrual requirements for it.

Keep in mind, though, that your document must allow for the person to get only the gateway.

MGB is right, but I presumed that the amendments were adopted in 2002. That being said, you would have the option of recognizing the EGTRRA amendment for the 1/1/02 valuation date. If you choose to recognize it, use the new methodology in increasing the 415 limits; otherwise use the old limits. If the adoption of the EGTRRA amendment is in 2001, it must be recognized for the valuation. Because the 94 GAR effective date is not 1/1/02, you will not use it as the applicable mortality table.

The fact that you are performing a valuation adds a degree of complexity. To know how to direct you tell me: When was the EGTRRA amendment concering the 415 limitations effective as of? Was the model amendment in Rev. Rul 2001-62 adopted? If so, when is the 94 GAR effective date?

The 415 dollar limit past SSRA is the lesser of the result using the plan's AE or 5% and the applicable mortality table. However, if the plan has adopted EGTRRA or the 415 code section is referenced by the plan document, a participant's SSRA no longer comes into play. Instead the increase applies to ages past 65. Also, there is the new applicable mortality table to consider.

Yup. I try and think of it this way. All who benefit under the PS portion of the plan, whether it be from a regular allocation, a safe harbor nonelective allocation or a top heavy allocation, need to receive the gateway. However, if the otherwise excludable employees are disaggregated from the testing (and are not cross-tested), they do not have to receive the gateway.

I agree with Andy, except that an HCE's height has nothing to do with it.

I agree that the person eligible for the 401(k) only will need to receive a TH minimum contribution. Also, you say it's a new comp plan, so they will also need to receive the minimum gateway contribution as well. However, if you disaggregate the otherwise excludables, then they will not have to receive the gateway.

Minor! Alas my quick reading has caused my error.

The nondeductible may or may not be deductible in the future. It depends if there is a future disparity between the minimum required contribution and the maximum deductible limit. Also, new in plan years beginning in 2002 is the fact that the unfunded current liability is deductible (not counting benefit increases resulting from plan amendments in the last 2 years for small plans such as this). This most likely will increase the chance that there is a disparity in the min/max.

Controlled group rules use attribution under Code Section 1563. Under those rules for the child to be attributed ownership it would have to own more than 50% of the business. In this example the child owns 0% and is attributed nothing.

First, the top heavy requirements for participants in both plans are designed to provide top heavy minimums in one of the plans, rather than both. So, for it to come into play, a participant must accrue the top heavy minimum in both plans. In your situation with the frozen plan, the document must have been amended prior to someone working 1,000 hours in 2002 to eliminate the need to provide the top heavy minimum in a frozen plan. If that was done, your requirement is to only provide 3% in the DC plan (assuming a key employee received at least that amount).

Negative, prorating the normal cost and amortization bases occurs with a plan termination date or a short plan year (circumstances notwithstanding), not a benefit freeze.

A deferral becomes a catch-up for a 50 or over participant when either: a plan limit is reached, the 402(g) limit is reached, or if the plan fails ADP testing. You can't consider it catch-up otherwise. So in your example, Katherine, the plan would have to specify a limit of 5% of deferrals for the lower paid employee to reclassify any amounts over $5,000 as catch-up. In your example MBCarey, you would have to have a document limit, which could be imposed on HCE's only, of 4.66%.

Pax, to clarify, only 15 days advance notice is required for a small plan (under 100 participants).