Blinky the 3-eyed Fish

This is an inherent problem with not matching catch-up contributions and one reason you should consider doing so.

Yes, because the criteria is whether or not he would meet the statutory eligibility requirements and this person would not.

Yes, I understood what you meant and answered accordingly.

No, to be blunt I am afraid you don't understand my point because you appear not to understand the reasonable classification test. Read 1.410(b)-4(b) and see if that helps. I am afraid I can explain no more.

No, not at all. I guess I was not being clear. The whole issue is that the ABT has 2 parts, and one of those parts is the reasonable classification test. If you actually have reasonable classifications, then by all means you can use that test to pass coverage.

Once they are divorced, the attribution no longer applies. But for HCE status you are looking to whether they were an owner in the current or past year. Thus if the divorce was not final before that period, the ex-wife is still an HCE.

Check your plan document for BIS rules that may relieve her from her active participant status if she dips below 500 hours in a year.

Andy explains it well. See the 401(a)(26) regs to see if your plan is okay and be prepared for hours of fun.

Guppy, yes, I mentioned the premium snapshot date is the first day of the first premium payment year. But the more important question is do the participants have an accrued benefit as of 1/1? In other words, does the plan benefit formula accrue over participation or service? If it's the former, then like I said before, there is no premium due, but you still must file.

If your coverage ratio dips below 70%, then you cannot satisfy the ratio percentage test, but must rely on the average benefits test. The first part of that test is the nondisriminatory classification test. 1.410(b)-4(b) states that the classifications have to be reasonable under a facts and circumstances test, but specifically states that naming individuals in not a reasonable criteria. By having people in their own rate group and choosing to give $0 to some participants you are effectively excluding them from benefiting by name. Thus, as Mike correctly points out, passing the average benefits test is not an option.

That statement needs clarification. Just because someone is a >5% owner does not mean he/she is in the top paid group.

PensionNewbee, you must have not liked my answer when you posted this question on the thread Archimage references. Next time tell the owner to take a few bucks in compensation.

Roman, you don't provide enough information to answer your question. EGTRRA added 404(a)(7)©(ii), which says that the 404(a)(7) limitation does not apply to participants in both a DB and 401(k) plan if there are ONLY deferrals into the 401(k) plan. So, in your situation, if there is a nonelective contribution made in the 401(k) plan, then the 404(a)(7) limitation is triggered, if not, then it's not triggered. The fact that the nonelective may go to those participants that do not participate in the DB plan is irrelevant. BTW, I don't believe this is a scenario where the IRS has flipped-flopped, although they did add clarifying guidance that the 401(k) plan could have old nonelective balances.

"No comp, not in the test" covers all hours situations.

It would if only HCE's got the true-up, but otherwise it's a BRF issue subject to nondiscrimination testing. But the main issue is what does your document say? I am betting there are no provisions discussing this scenario.

Component plan testing or QSLOBs? Although, I see now this is in the 401(k) section, so the former couldn't apply for ADP/ACP.

Tell that to Kurt Cobain.

Well then let me inform you how to avoid all income and property tax by declaring your home residence a soveriegn state.

There is a good comparison of the two (ASPA and NIPA that is) here: http://benefitslink.com/boards/index.php?s...t=0entry53171

I will await with baited breath.

I had heard of the 120% applying to steel industries and airlines, but no one else. At least that is what I recall.

I am going for the "WOW". But why do you not think it satisfies 412(i) if the AB is more (or less for that matter) than the CSV? Here is Section 412(i). (i) Certain Insurance Contract Plans A plan is described in this subsection if-- (1) the plan is funded exclusively by the purchase of individual insurance contracts. (2) such contracts provide for level annual premium payments to be paid extending not later than the retirement age for each individual participating in the plan, and commencing with the date the individual became a participant in the plan (or, in the case of an increase in benefits, commencing at the time such increase becomes effective), (3) benefits provided by the plan are equal to the benefits provided under each contract at normal retirement age under the plan and are guaranteed by an insurance carrier (licensed under the laws of a State to do business with the plan) to the extent premiums have been paid, (4) premiums payable for the plan year, and all prior plan years, under such contracts have been paid before lapse or there is reinstatement of the policy, (5) no rights under such contracts have been subject to a security interest at any time during the plan year, and (6) no policy loans are outstanding at any time during the plan year. A plan funded exclusively by the purchase of group insurance contracts which is determined under regulations prescribed by the Secretary to have the same characteristics as contracts described in the preceding sentence shall be treated as a plan described in this subsection. I only see in (3) the requirement that the AB equal the CSV at NRA, not at any other time. 1.412(i)-1(b)(2)(iii) has the same stipulation. Regarding the TH side fund, here is 1.416-1, M-17: Q-17. Can a plan described in section 412(i) (funded exclusively by level premium insurance contracts) also satisfy the minimum benefit requirements of section 416? A-17. The accrued benefits provided for a non-key employee under most level premium insurance contracts might not provide a benefit satisfying the defined benefit minimum because of the lower cash values in early years under most level premium insurance contracts, and because such contracts normally provide for level premiums until normal retirement age. However, a plan will not be considered to violate the requirements of section 412(i) merely because it funds certain benefits through either an auxiliary fund or deferred annuity contracts, if the following conditions are met: (1) The targeted benefit at normal retirement age under the level premium insurance contract is determined, taking into account the defined benefit minimum that would be required assuming the current top-heavy (or non top-heavy) status of the plan continues until normal retirement age; and (2) The benefits provided by the auxiliary fund or deferred annuity contracts do not exceed the excess of the defined benefit minimum benefits over the benefits provided by the level premium insurance contract. If the above conditions are satisfied, then the plan is still exempt from the minimum funding requirements under section 412 and may still utilize the special accrued benefit rule in section 411(b)(1)(F) subject to the following modifications: Although the portion of the plan funded by the level premium annuity contract is exempt from the minimum funding requirements, the portion funded by an auxiliary fund is subject to those requirements. (Thus, a funding standard account must be maintained and a Schedule B must be filed with the annual report). The accrued benefit for any participant may be determined using the rule in section 411(b)(1)(F) but must not be less than the defined benefit minimum. I agree that the side fund for TH is the only allowable side fund to satisfy 411(b)(1)(F). Though, note the last sentence certainly says the AB may still use 411(b)(1)(F), indicating a 412(i) plan is not required to use it. So, forgive me for still searching for why an AB not equal to the CSV, TH aside, throws the plan out of 412(i) compliance.

You really should take Mike's advice and call someone. You still don't provide enough information to tell you want is the best and frankly, you shouldn't on these Message Boards.

It's easy to get confused because the EGTRRA 415 increases applied to limitation years beginning in 2002.

But where does it say that 411(b)(1)(F) is the ONLY way for a 412(i) plan to satisfy 411? I see it as one way, an extra way that is only available to 412(i) plans, although I could be wrong.