Blinky the 3-eyed Fish

The days start from the due date of the return without extension, so for DFVC purposes, it's quite late.

Maybe an example will help. Safe harbor 401(k) plan gives a 3% safe harbor nonelective contribution. Cross-tested regular nonelective contribution has a last day requirement to receive the allocation. The gateway minimum is 5% of compensation. Joe Blow terminates before the last day of the plan year. Thus, he gets the 3% contribution. But because he is benefiting for the nonelective piece, he must receive 5%. Here is where there needs to be a provision in the plan document (it works much like an overriding top heavy minimum provision) that allows for Joe Blow to get 5%. You are not suspending the allocation requirement, per se, but rather providing the overriding gateway minimum. Make sense?

What do you mean that, "if it satisifes 401(a)(4) on its own.."? If the plan uses cross-testing to satisfy 401(a)(4), you MUST satisfy the gateway requirements, unless of course your allocations are broadly available, blah, blah. Now the gateway must be given to those that benefit from the nonelective portion of the plan. This could be from a PS contribution, QNEC, safe harbor nonelective or TH minimum contribution. So, if, for example, your plan has a last day requirement for a PS contribution, and that is the only nonelective contribution received during the year, and a participant terminates before the last day, he does not benefit and is not entitled to a gateway minimum. So, your statement that "...must allocate the gateway contribution without regard to allocation conditions." is not entirely correct.

No, you cannot consider the majority owner's waiver for the ability to change funding methods with automatic approval. Your next question will draw different opinions I am sure. My thought is that the valuation date is the end of the year, not 12/31. In this case your year ends on the date the assets are distributed (10/15/03). Now, the question is to value the plan the instant before the distribution or just after. In practice I have leaned toward the former approach. The latter approach would yield a valuation with some liabilities and no assets in your case, and would force the consideration of 417(e) rates. The fact that your funding method is EAN adds some complexity. How to recognize the future service component in determining the EANC is probably something that has been addressed in a Gray Book at some time. Pax?

I don't believe there is set guidance for a situation like this. If the deduction is more than 25% of compensation for the productive company, it is not definitively wrong, as far as I know, since the employers are one company for 404 purposes. So long as the deduction is less than 25% of overall compensation, you should be okay. But like I said, there is not clear guidance. The conservative approach would be to limit the deduction in any one company to 25% of that company's eligible compensation. The ultimate conservative approach would be to deduct only allocations to the respective employees of that company.

Having a young NHCE enter the plan will only help the cross-testing and bolster the advantages of using the safe harbor nonelective contribution, since she is unlikely to defer a large amount and will probably lower the NHCE ADP percentage. What plan year are you working on now? Why do you say you can't change the plan until 2004? Does the PS contribution have a last day requirement? Does the plan provide the safe harbor nonelective contribution already (timely notice issued)? Why did you say Corbel said that the young HCE can be excluded from receiving a profit sharing contribution? More info please.

As just stated by Arch, you must follow your document. However, if the young HCE is in his own group, then testing using component plans might help get the youngin' something. Of course this is more advanced, so you might not know what I am talking about.

Isn't that what I said?

My recollection is that 403(b) plans were unofficially not considered successor plans, although it was a point of debate. From your reading of the new regs, it appears that it has been clarified now that they are definitely not successor plans.

Mike, have you lost touch with the common man? They might need to use it to live. Unfair, yes. Discriminatory, no.

1. What are you testing? Does someone benefit for the 1-day plan year? If so, then yes, you must test. 2. Yes.

Why not just attempt to obtain spousal consent now? Maybe you will get it for all the loans made.

The downside is that some people, who may not get any money refunded, are limited to what they can defer. The people who already deferred the max are having their refunds lowered or eliminated on the backs of those HCE's that have not maxed out their deferrals yet. As for the original question, I think it is as you say, "An HCE is an HCE", and they are not protected from this tactic.

Brian, I don't understand your concern. Please explain.

At the LA ASPA Conference back in January, Holland, Wickersham, or some other government guy (my memory escapes me) opined that the need to prepare this resolution was not required for the benefit to be definitely determinable. Of course, this was only one man's opinion. If your document has some language that requires it, then I would say it's needed.

This obviously is a plan for psychics, since they reported his death in advance. Just kidding, I know you meant October 2001. Though I am confused as to what the problem is here. With a J& 100%S annuity, the payment to the spouse would be the same as when the participant were alive. Did the spouse not pick up as income the checks made out to the husband? Please enlighted me. Now say it was a J& 50%S annuity and the spouse were overpaid, then, depending on if the document addressed it, suspending payments for a period of time or adjusting future payment amounts would seem like viable solutions.

Yes. My first answer was incomplete. Carsonv, in what state are your clients?

You have heard incorrectly. The Sch T summarizes the results of coverage testing, not nondiscrimination testing of the nonelective contribution. Many cross-tested plans pass coverage using the ratio test.

Ownership would not be attributed to the step-son unless he was adopted by Mr. P because of the double attribution rules.

Maybe an example would help. Say the union employees work at a hospital with the following facts: 100 total union employees 3 of the union employees are doctors A doctor is a professional employee, so you have 3% that are professional employees. That means that all the employees of that union CANNOT be considered to be in a union (and therefore excludable when testing the non-union employees) for coverage testing. If less than 2% of the employees were professional employees, then all the union employees are treated as excludable when testing the non-union employees.

You can test using component plans to help get the son some dollars. Of course this adds some complexity. I see now that Tom already mentioned that.

That entirely depends on how your document reads. For example, the document I use has groups, then an overriding provision that allows for the gateway minimum to be provided (much like how TH works). Thus, the way it reads, the otherwise excludables (if that testing option is used for the year) are not required to get the gateway, even though they may be in the same allocation group as an employee that has met the statutory requirements.

No Sch H/I is needed either.

Correct. The unfunded accrued liability is 0 (81-213 rules!), so no base need for 404 purposes.

I can see it now. "Hey Bob, here's your termination notice. Sorry I spilled coffee on it." "Thanks, Frank, I will be more careful with yours next year." I knew I was in trouble when I tried to apply common sense.