Blinky the 3-eyed Fish

I am with you now. It's right after lunch and my brain is not engaged. I was originally thinking more in line with BRF.

I am confused why raising the plan limit above 10% will cause a nondiscrimination problem.

Sorry, it was a typo. I meant to say you need to file two separate returns, one for each plan.

I think the obvious solution is to enroll in medical school immediately! In 6-8 years, after your internship is over, the fraud label will fall by the wayside.

My opinion is new forms must be given.

I know if I was an M.D., I wouldn't be an actuary.

What? You know you can edit your question after posting if it is unintelligible.

Kate, you need to file two separate returns for each plan. The Schedule T will then be completed using the figures from both plans, if the plans are aggregated for coverage and nondiscrimination, or with only the census figures from the separate plans if not aggregated. The audit will apply to only the one plan. Think of it this way. The two employers are considered a single employer because they are in a controlled group. So, if a single employer had two plans, you wouldn't file one return for both plans. Also, what if one of the plans was a DB plan and the other a DC plan? That wouldn't be confusing at all if one return was filed.

I have never known a clear answer on this and am hoping someone else knows. To avoid the need for the small plan audit, when does the bond have to be purchased by? Also, what is the determination date for the amount of the non-qualifying assets in which the bond needs to cover (i.e. BOY, EOY or each day of the year)? Thanks.

The waiver is needed if the plan document does not specify the criteria for whom should receive the MRD's. If a plan has not yet been updated for GUST, then the waiver would be needed prior to the required beginning date. Our firm has written our own waivers that just spell out the options and give the participants the right to choose. I have not seen an official waiver anywhere.

Tom, in this case if the plans could satisfy the definition of broadly available allocation rates, wouldn't the plans be able to pass coverage on their own and not need to be aggregated for nondiscrimination? So, I am betting the the plan with the 0% allocation cannot pass coverage on its own. Therefore, the gateway requirement must be met for the participants in both plans. However, it is permissible to disaggregate the plans for otherwise excludable employees and only need to satisfy the gateway requirement for the statutory employees. Actually, as I am rereading the rules, in see what Tom is saying, so disregard my first paragraph. Though, if the rates do not end up being broadly available, and I must say it is a stringent criteria to satisfy, then see my second paragraph.

Ronnie, both the compensation limit and the 415 limit for DC plans, as increased by EGTRRA, specifically apply to plan years that BEGIN on or after January 1, 2002. Therefore, in your situation, the compensation limit would be $170,000 and the annual addition limitation would be $35,000 for the plan year ended 4/30/02.

Try Reg. 1.415-2©(2).

I am betting nowhere in the document does it allow for one employee to get a different rate of match than another. That being said, the problem needs to be corrected. Why not just transfer the mistakenly deposited matching contributions from their accounts with earnings and use those monies to reduce future matching contributions deposits? That would seem to me to be the logical means of self-correction.

Pax, why would a 5310A need to be filed? I thought this situation was one that met the exceptions, being that the account balances before and after the merger remained the same. I edit this after seeing I was beaten to the punch.

Yes.

It looks like the only issue on your part is an incorrect 1099 was probably filed. I would inform the participant that he has amounts that were ineligible to be rolled over and that a corrected 1099 will be issued. Ignoring the situation would put the plan at risk.

Note, however, that if you choose to disaggregate the otherwise excludable employees, you could choose to not count them in the ABT. I say choose not to count them because there are differing opinions as to whether the otherwise excludables should be excluded or included in the ABT when testing the statutory employees.

It is acceptable to take enough needed to cover the taxes.

You do use the new EIN going forward. The change is reported on 5500 line 4.

The OBRA full funding limit can reduce/limit the minimum required contribution and/or the maximum deductible contribution, but it is not a separate limit in of itself. Isn't there an actuary or supervisor around your office to ask?

There is the minimum required contribution and the maximum deductible contribution. There is no maximum permissible contribution. Logically thinking, what could it entail?

Mike, of course you are right that the testing must follow the procedures in the document. However, I have never noticed a document that references the compensation ratio test. If the plan in question can pass this test, all is well (except the ADP fails) because the compensation becomes one that satisfies 414(s). If the compensation ratio test fails, then I would agree the document is deficient based on the information we have.

All nondiscrimination testing must be done using compensation that satisfies Code Section 414(s). Because the plan's definition of compensation is not one that automatically satisfies 414(s), you need to perform the compensation ratio test. If the compensation defined passes the test, then it becomes 414(s) compensation for that year and may be used in the nondiscrimination testing. If it doesn't pass, then you must use a definition of compensation that satisfies 414(s). Your issue, where you would want the compensation ratio test to fail, is interesting. Without something in your plan document, I don't think it would be permissable to skip the compensation ratio test and jump straight to using gross compensation.

Just do an amendment to the plan reflecting the new plan sponsor and have it signed by both incoming and outgoing entities. Then when the 5500 is filed, you report the changes from the prior year on the form for the DOL to keep track of it.