Belgarath

Different rates of match are subject to 401(a)(4) testing. You shouldn't have any problem with current availability, assuming the different rates of match are available to anyone who defers that requisite rate. Effective availability, which is a facts and circumstances test, may be another issue. So you could potentially pass the ACP test yet still fail 401(a)(4).

Sure. All of the pre-tax vested accounts can be converted to Roth at any time - some will need to use in-plan Roth rollover, others will need to use in-plan Roth transfer - depends upon the account type and timing. Most important thing is the plan must be properly amended to allow it in whatever circumstances you want to utilize the rollovers/transfers. And of course, the plan must allow Roth...

Oh, the oddness is with me all right. Deeply ingrained, in fact. If I had been Homer, I'd have written the Iliad and the Oddity.

Hi Bill - again, without opining about correct vs. incorrect, I'll just say that there is a lot of legal talent out there that might disagree with you. And probably as much or more that agrees with you. There are (or at least were) many insurance companies out there that took the approach that only taxable term cost would be reported via the use of the rollover money. Not saying it is right or wrong, just saying... Personally, I wouldn't do it. But then, we try not to allow insurance in our plans anyway, so these issues don't arise. Oh Happy Day!

I agree that the 3-year requirement is out in left field, or beyond. As I said in first post - no idea where that came from, and I wouldn't hesitate to ask for a citation. I'm wondering if this is a twisted and incorrect interpretation of the 3-out-of-5 year IRS vesting rule for a "complete discontinuance" - see IRS Announcement 94-101, and 1.411(d)-2(d)(2). And that's a vesting issue anyway. Who knows... As to the rest, I'm not in any way disagreeing that I've not seen this level of scrutiny/enforcement, merely that there is an argument for it, and it wouldn't be impossible for an auditor to make this argument. And in a plan of that size, getting nailed on that issue could be expensive.

More random musings... If in fact it is a problem to start with, then I don't see how this cures it. In the old days, owners could, under IRS approved documents, have a "waiver of compensation" to manipulate their contribution. Then the IRS said you couldn't do that, but they allowed "allocation abeyances." Then they said you couldn't do that either. Under the EGTRRA pre-approved prototypes, they limited the number of groups you could have, then under PPA they said it was ok to have everyone in own group in a prototype (or of course in a VS). But the "deemed CODA" still remains an issue. I cannot say how closely this is scrutinized, but I'd think it does warrant a certain amount of caution. As to the self-employed taxpayer, I seem to recall that the IRS fussed about this a little bit, but even they were forced to conclude that it simply isn't reasonable to try to shoehorn a sole prop into this "deemed CODA" box. Boy, I'd hate to be at one of those Board meetings! 40 doctors in a room having to agree on financial matters? Yikes!

All 40 doctors are on the board of directors? That seems odd, but I don't deal with large medical practices, so maybe it is normal. All of the following is just IMHO. I have no idea where the "3 year" idea came from. But technically the attorney is correct that the individual doctors can't make the decision on employer contribution level - this is set at the "employer" level. If the "employer" - i.e. the board of directors - determines the contribution at the individual level for each doctor, I think this is perfectly acceptable, BUT, taking a conservative view, if there isn't some standardized or reasonable formula for determining that amount, and each doctor simply tells the "board" that they want "x" amount, and the board rubber stamps it, then it seems possible that the IRS could challenge this as in fact being a CODA. Haven't heard of this happening, but seems possible.

I'll just say that there is some question as to whether the entire premium would be taxable, or whether just normal taxable term costs would apply. Or maybe I'm misunderstanding what Bill is saying in his post. I'd be more concerned with establishing a PS plan, and funding it with just rollover money to purchase life insurance. Unless you have other, "recurring and substantial" contributions, then I think you have a potential qualification problem. Thankfully, we have almost no plans that even permit life insurance, much less actually purchase it, which helps me to sleep at night.

I don't know why anyone would give you a document for free, but perhaps someone will. Whose document are you using now?

Does the document, since individually designed, have an IRS favorable determination letter?

You can get them through insurance companies, but you may have to work with an agent. You'll need agent involvement anyway, as you have to fund it with annuities/insurance. Off the top of my head, try National Life Group, Guardian, or Lincoln - I think all of them are (or were) in the 412(e)(3) market - and I'm sure there are others.

Take a look at 1.401(a)(4)-4(b)(3). As long as this BRF (life insurance) was satisfying the nondiscrimination test at the time it was prospectively eliminated, then you should be fine.

Don't see why not - a 457(b) plan isn't a "qualified" plan anyway, and is not listed as such on the Simple-IRA instructions under eligible employers.

I suspect that in this example, they may be assuming that this was not a "bona fide" loan. If it isn't a bona fide loan, then yes, it would be an actual distribution (See 1.72(p)-1, Q&A-17)and therefore it would be a PT. But if it is determined to be a bona fide loan, then it is a deemed distribution. Facts and circumstances, and the mood of the auditor...

That's a separate question, but presumably they have no problem with it, as that's what they have been doing. I want to be clear about this - I'm making no judgment on whether their current situation represents a "best" option - merely trying to confirm that their current document is allowable.

Q12: May plans participate in the DFVCP if they have already received correspondence from the Department or the IRS? Plan administrators are eligible to pay reduced civil penalties under the program if the required filings under the DFVCP are made prior to the date on which the administrator is notified in writing by the Department of a failure to file a timely annual report under Title I of ERISA. An IRS late-filer letter will not disqualify a plan from participating in the DFVCP. A Department of Labor Notice of Intent to Assess a Penalty will always disqualify a plan.

Thanks - in this case, they have already done what I'm asking about, and I'm just trying to determine if it is ok. I believe it is (it is a pre-approved volume submitter PS/401(k) plan, in case anyone cares) but I just wanted to see if folks thought otherwise.

Suppose you have a public instrumentality that is considered "governmental" and therefore ineligible to sponsor a 401(k) plan. Is there any reason that they can't use a 401(k) document, but simply not elect any of the 401(k) provisions? In other words, they only elect PS and rollover, and appropriately modify SPD to remove references to deferrals, etc., etc... Or does the fact that the document is, according to the IRS Advisory letter, a "Profit Sharing Plan with CODA" preclude them from using it? I can't see any sensible interpretation for the latter, but thought I'd see if anyone had a different opinion?

Did either of the spouses receive any compensation, or just one of them went with zero? Personally, I wouldn't lose any sleep over it, and I'd just use it next year. It's pretty hard to reduce an employer contribution when there is zero compensation...

Thanks!!

My 2 cents - excellent question, and I'm not certain of the answer. By any reasonable standards, you are correct. But 1.401(a)(9)-2, A-2 (e) says that "A plan is permitted to provide that the required beginning date "for purposes of 401(a)(9)" for all employees is April 1 of the calendar year following, etc.... I don't know if the phrase I put in quotations subjects the individual to the penalty or not. I prefer the "not" - in this case, it would allow for SCP as an operational error. Any other opinions? Does the phrase in quotations subject the individual to the penalty?

EGTRRA restatement didn't change to the option not to require RMD's if still working (an oversight, apparently) so missed RMD's are applicable for one person for 3 years for an employee. Total of maybe $25,000 or so, since the "RMD" in a DB plan is the monthly benefit...(Governmental plan, no HC's) I've found the IRS to be pretty reasonable about waiving the penalties in DC situations, but haven't happened to request a waiver in a DB situation. Anyone have similar luck with DB's?

Ignore this please. Actual question turned out to be something much different!

I have so little information at this point that I'm not certain I'm even asking the right question. However, I'll give it a shot. Not our plan, and thankfully won't be. A town sponsors a defined benefit plan. One participant is a union employee, and potentially the town wants to transfer him (and his assets) out of the plan so he can join some sort of state munipical employees plan. He'll still be working for the town, and has not reached Normal or Early retirement age. Assuming the state plan allows such a thing, is he permitted to transfer his accrued benefit lump to the state plan to "buy" service credits, etc.? If the town plan does not provide for such a thing (if it is even permissible in the first place) I assume it could be amended. Seems to me that it might be easier to just amend the town plan to exclude members of whatever union is involved, but I don't know about this whole purchase of service credits and transferring assets. This out of my sphere of knowledge or experience.

Plan A is less than 100 participants at BOY. In June, Plan B (also sponsored by the same employer) merges into plan A. Now there are 150 participants. Seems clear to me that no audit is required for 2015, since the BOY count was less than 100. However, I've been wrong once or twice in my life, so I thought I'd just see if folks agree that no 2015 audit required? Thanks.