Blinky the 3-eyed Fish

Let me try and expand a little. What I think Tom is saying is that the gateway can be based on the entry date to the nonelective portion of the plan even though the entry in the 401(k) portion is sooner. This is easily followed by the regs. First go to Tom's cite then to here: 1.401(a)(4)-12 definition of Plan Year Compensation (4) PERIOD OF PLAN PARTICIPATION DURING THE PLAN YEAR. This period consists of the portion of the plan year during which the employee is a participant in the plan. This period may be used to determine plan year compensation for the plan year in which participation begins, the plan year in which participation ends, or both. This period may be used to determine plan year compensation when substituted for average annual compensation in section 1.401 ( a )( 4 )-3(e)(2)(ii)( A ) only if the plan year is also the period for determining benefit accruals under the plan rather than another period as permitted under section 1.401 ( a )( 4 )-3(f)(6). Further, selection of this period must be made on a reasonably consistent basis from plan year to plan year in a manner that does not discriminate in favor of HCEs. Note the definition of Plan in the same section. It clearly demonstrates that Plan is determined after mandatory disaggregation. PLAN. Plan means a plan within the meaning of section 1.410(b)- 7( a ) and (b), after application of the mandatory disaggregation rules of section 1.410(b)-7© and the permissive aggregation rules of section 1.410(b)-7(d). Now, with Employee A, his 1/1/04 entry date to the nonelective means that you are comparing 3% of comp from 10/1/03-6/30/04 versus 5% of comp from 1/1/04-6/30/04. Employee B is different though because he has no entry date for the nonelective portion of the plan. I would hold that you need to give 5% on comp from 5/28/04-6/30/04. Here is a prior discussion on that topic. http://benefitslink.com/boards/index.php?s...=24938&hl=entry

In determining whether a balance is able to be cashed out (i.e. under $5,000) rollovers can be ignored, but for determining what to do with the cashout rollovers cannot be ignored. So here your balance for seeing what to do with the money is over $1,000, so if you are going to cash him out, it has to be via an IRA rollover. No, for the reason stated above.

So that is saying that the compensation for the month is not required to be prorated to 205,000/12. Are you trying to argue that because the match is on a pay period basis 401(a)(17) on an annual basis is disregarded? If so, that is quite a leap you are trying to make from the cite. I couldn't disagree more. That being said, the match should be 4,059 in total based on what you have written. You just need to figure out how to get there.

Your sentence is contradictory. It's like saying you don't have any money, except for that quarter in your pocket. But I am just giving you a hard time. I think I know what you mean, but to reiterate, the otherwise excludables need to receive the TH minimum. They do not need to receive the gateway.

Matching per payroll period will always provide the same or lesser amounts than matching annually. The fact that someone got more is not a product of the method, but rather a clear mathematical error. That is why you won't find any such talk of a true down. You ask what's the problem, and of course it's an issue of failing to follow the document. You may justify the overage as immaterial and not correct it, but an auditor may feel differently. It helps a bit if those receiving the excess are NHCE's.

I emphatically agree you are correct on the 401(a)(17) and 415 limits.

QDRO, in your opinion what match should be received and what is your solution for achieving that match? Just to clarify, I know you will say the match is 205,000 * .06 * .33 = $4,059

CAP and jquazza, listen to Tom. To try and expand on Tom's post and reiterate what I said originally, the general rule is that if cross-testing, those receiving a nonelective contribution must receive the gateway. However, the exception to this rule is that you can disaggregate the otherwise excludable employees. You want to do this here, so that leaves your otherwise exludable group as consisting of only NHCE's. You don't need to cross-test this group because it automatically passes nondiscrimination testing since it consists of only NHCE's. Thus, no gateway is required, only the TH minimum.

You do amortize assumption changes. See Rev. Proc. 2000-40 for a description of the method. This is often helpful for such questions.

It depends on your document to not have language that prevents this, but the statutory language allows you to disaggregate those that haven't met the 21/1 for nondiscrimination testing. Thus, here you effectively have 2 groups, the HCE non-otherwise excludables and the NHCE otherwise excludables. So in this case, you aren't even needing to test the contribution for nondiscrimination because both groups automatically pass. The NHCE's must receive the TH min, but the SH match can be used towards satisfying this.

No, that is not right. Now, if you are asking whether or not a spouse is attributed ownership for determining who are the HCE's, the answer is yes. Of course it is possible for there to be a wife of a 4% owner and she would be attributed the 4%, yet not be an HCE because of it. (I am being a stickler, I know.) I highly recommend purchasing a resource book of some kind, whether that be the ERISA Outline Book or Pension Answer Book series. It puts answers to those needed questions at your fingertips, especially if no one is around of which to ask the questions.

Yes, that would be a poor cite. I am curious as to what you think the weaknesses of the EOB are? BTW, for clarification, I am in no way involved with that book, so my objectivity remains unfettered, unencumbered, unadulterated, unabashed and unilateral.

If you are concerned just with the tests, the ERISA Outline Book is far better. I wouldn't even waste my time reading the Pension Answer Book while studying for the exams. As for day to day use, again the ERISA Outline Book is, in my opinion, a much better resource. It covers topics in much greater depth, it covers more topics, and it's author Sal Tripodi is as knowledgable as they come. That being said, the Panel Publishing Answer Book Series online is a great resource as well because of the many books on different topics. Each book is able to go in-depth on a specific topic.

Even if the plan is not underfunded, the prior benefit structure is a sure pass if there is only the one participant in the plan and that participant has an accrued benefit. See 1.401(a)(26)-3.

1. They would pass on prior benefit structure. 2. No.

They are ok with it at the moment.

Yes, that is one of the options listed in the cite I mentioned.

Carol, you didn't understand the question. A plan funded with insurance and annuities does not make a side fund. Could be me - yeah, I know it's you - see 1.416-1 M-17. It describes how a side fund, if needed for TH purposes, will continue to allow the plan to satisfy 412(i), except that the side fund info will need to be reported on a schedule B.

I think you folks didn't understand the post. See the little things that look like "" - they are quotes. They indicate that I am quoting someone. In this case, that would be Alanm. Comprende? (In case no comprende, they were her words in quotes.) In other words, I was trying to say what I thought she should have said. This means, that the words in the quotes (those "" thingys) are not my words.

I am going to try the QDROphile technique of posting what you meant to say on your next to last post: "Blinky, my mistake, the eligibility can be extended to 12 months for all employees whether or not they have met the plan's current eligibility requirements. However, the employer should consider the ramifications of this decision on those employees affected by it. As a human I can appreciate their distaste to such an action."

What does that language have to do with this? We are talking about eliminating eligibility not an optional form of benefit. Why is 90 days a criterion for not feeling "shafted". As you see, I fail to understand your comments.

Alanm, ah, but that's a different issue. You have already earned the benefit and the right to the form of benefit earned. Being a participant leads to benefits but is not a benefit itself. Removing them from active participation is no different than freezing the plan for them prospectively. I think we can agree that a prospective reduction in benefits is not a cutback. This topic has come up before if you want to search. I too think there is something in the ERISA Outline Book. I may go try and find it. An easy find. See page 2.64 of the 2004 Edition.

Well I hope neither she nor you are saying that a plan could be funded exclusively with life insurance because that will surely violate the incidental benefit rules.

Alanm, what do you mean by grandfather? If you mean that you must keep them actively eligible for the plan, then I disagree. You can take away their right to continue further active participation until they meet the new eligibility requirements.

Carol, I have to say I didn't understand either of your last two posts.