Blinky the 3-eyed Fish

Yes, let's not forget my nuclear contamination issues.

Max, if you are new to this, then this may be too complex a situation to adequately describe in a few sentences on a message board, but here goes anyway. Excluding commissions is not a safe harbor definition of compensation under 414(s). Thus you have to perform the compensation ratio test. I won't go into any of those details since you obviously will not pass, as the NHCE's have no compensation under the plan definition, while the HCE have compensation under the plan definition. So that means you must general test the plan and use a compensation definition that satisfies 414(s). In your case, using total compensation (i.e. including commissions) would be such a definition. So, you have all NHCE's getting a 0% allocation. This obviously again will not pass testing if the HCE's are getting an allocation and you will need to increase what the NHCE's get. This may be available under the terms of the plan or you may need to amend the defintion of compensation to allow for the allocation under 1.401(a)(4)-11(g). So the moral of the story is you can't try and hose the NHCE's by just excluding commissions. There Andy, I edited my mistake.

If the document's definition of compensation excludes commissions and the employees in question have only commissions, then they have no compensation for plan purposes. I couldn't figure out though from your postings if these 6 non-highly compensated employees are the only employees in the plan. If there are any HCE's then you have to general test the plan using a definition of compensation that satisfies 414(s). If the plan is TH, then you have TH minimums to consider using 415 compensation.

Cease, TH minimums do factor into 412(i) funding. So why a TH 412(i) would have a formula that provides for less than the TH minimum is beyond me, but I am sure someone could come up with a reason.

Pax and DFerrare are absolutely correct.

Regarding the 415 problem, your document language calls for the after-tax dollars to be removed first. Therefore, you can return $14,000 with earnings (or $12,000 if the participant is 50 or over in 2003) and the participant would get the full match. I am not sure exactly what you mean by "...if if the plan fails ADP testing and he has to take a refund of $3,000. Are we able to then give him a $3,000 match?". I assume this was in the context of the 415 limit problem, but because nondiscrimination testing is run AFTER the 415 limit is solved, this is a non-issue. Regarding your last question, I would surmise your document would address this.

Tom, why would they be excluded from the ADP test? They received comp but didn't defer, so that seems like a 0% to me.

Before getting into any of your questions look at the document as it should order which dollars are limited or can be removed for 415 purposes. In other words, he may still receive the match and the after-tax or deferrals would be refunded. Report back.

If the entire amount is used to fund another DC plan, the excise tax amount is $0.

I once truffled with a notion, but only got my snout dirty and didn't solve anything.

You are correct that you cannot circumvent the 401(a)(17) limitations. Although, I can see how the company could make a mistake like this. Consult away and guide them under your steady hand.

This is the answer to the first question. You did NOT need to repeat the answer to the second question as if I was asking it again NOR did you need to repeat the items you stated before. Oops, I am busy now and will have to get back to you later on this.

Touche. Although, for insurance salesman the new regs will without question resemble the wolf.

Tbob, how would someone get more than 4% if the match is determined each payroll period? Unless an error was made, I don't see how that is mathematically possible. I have never heard the phrase, "true down".

I would liken your situation to the townsfolk, rather than the boy.

They are inactive employees. Why would you think otherwise? BTW, your first post confused me as well.

There are 2 questions I posed.

Sorry, I must have taken this too literally.

Why couldn't they if the company was kept as a shell?

Newbee, okay the one group has 20 HCE's and 65 NHCE's. What about the 900 life group? And are either of these groups union employees?

Yes, I think so and forgot to mention that. While I have generally not had the IRS be sticklers on this topic, it might be a good idea to amend the plan to a 0% money purchase plan.

Mbozek, your analysis of the only reason is for a very limited circumstance. That cite applies to a rollover and the participant takes an annuity distribution. But we all know that 99.99% of participants in plans that allow for lump sums take the lump sum. The true reasons a participant would rollover into a DB plan are many. We could be talking about the owner of the company. The DB plan could allow for a participant to direct their rollover investment while the general DB assets remain trustee directed. The DB plan could have a professional money manager that the participant would have to manage his rollover. The participant doesn't know a put from a shotput. The participant is as lazy as a sloth. I could go on but need to get on with my life.

A corporation can exist as a shell and continue to maintain a qualified plan. They are not required to terminate the plan simply because business operations have ceased.

The safe harbor will not do what you want here, but keep in mind that the reason to do a safe harbor is to allow for the ADP and/or ACP testing to pass. Is that the motivation here?

Isn't it now allowed to use current forms to substitute for past forms needed?