KJohnson

If this were a discretionary match, 100% of the first 6% deferred would be a matching contribution of 6% of comp and it would flunk the 4% of comp rule for discretionary matches..

I thought the only"cap" for a plan with a stated match was that you could not match anything above 6% deferred. Therefore if you stated the match in your doucment as 100% of the first 6% deferred you would be still be o.k. for safe harbor. However, a discretionary match is subject to two caps. The 6% cap discussed above and also the cap that a match cannot exceed 4% of comp. Therefore the match above would not be o.k. if it were a discretionary match.

And you cannot match anythng past 6% of compensation deferred. Thus, 50% of the first 6=o.k. becuase you meet the 6 and 4 However 50% of the first 7 not o.k. because although you meet the "4% rule" you do not meet the "6% rule"

Tom, In a similar vein, couldn't you set up a 401(k) plan in late November 2002 specify prior year testing and first year ADP. Also in your document specify current year testing beginning in 2003, a safe harbor for 2003, and give your "maybe notice" by December 1 2002. That way HCE's could defer 5% of a total year's comp in December 2002 and still have the ability for a deferral up to the 402(g) limit in 2003? Do you see anything wrong with this (other than having to stick with current year for five years which shouldn't matter anyway if you make the safe harbor).

This is from the IRS Q&A's at the 1999 ASPA conference 73. Q. Would you confirm that retirement plan trusts should/must obtain and use a separate EIN (or Trust Tax Number) for reporting distributions, rather than using the employer's EIN? A. Retirement trusts are required to have their own separate EIN, especially for purposes of holding assets. Distributions can be reported under the EIN of the plan sponsor in accordance with published rulings, but that does not eliminate the need of the trust to have its own EIN

austin3515--Could you clarify, I don't think the repeal of the same desk rule would have any effect if you are still working for the same controlled group. Also, I thought that EGTRRA's provisions with regard to plan-to-plan transfers had to do with "stripping out" various optional forms of benefits with regard to plan to plan transfers (as long as a lump sum was available). Thus, even pre-EGTRRA you could have plan to plan transfers (not rollovers) within a controlled group as long as you preserved benefit options. Now, you can have plan to plan transfers within a controlled group and "strip" benefit options I guess that leads you to a couple of questions: 1) Does the plan provide for plan to plan transfers (not rollovers). I agree with austin3515 that the plan administrator should be aware of any such provison. 2) If Plan to Plan transfers are not allowed, did you have an event which would allow you to receive an eligible rollover distribution from the first plan? If you legitimately terminated employment and then just "happened" to find employment subsequently with the new employer in the controlled group you might have an argument (assuming that the new employer's plan accepts rollovers). However, if you were transferred from one employer to another within the controlled group with no break of employment in between, I think you would have a tough argument.

I take back my last answer. Was the "reemployment" with company B immediate or did you have a period of unemployment or employment with another company before starting with Company B. Generally transferring between controlled group members is not a distributable event. However, if you had a legitimate termination of employment with Company A with no understanding that you would begin working with Company B, then I think it is a closer question.

Employee does not have a termination from employment because he is still employed by the controlled group. Therefore I do not believe he has had a distributable event. If he is over age 59 1/2 and the Plan provides for distributions then he might be able to "roll." However, I think you will have to have some kind of "in-service" featrue from the first plan to be able to roll.

Yes, If you have a discretionary match, I would always use current year testing.

You have a big "0"for your NHCE ACP and then refund/forfeit accordingly for HCEs. If you already have your GUST restatement I would think you are stuck. Otherwise, you have some flexibility with curent year/prior year testing during the remedial amendment period. Also, if this is the first year of the Plan, you should check your document to see if you have the first year "deemed" 3% ACP rule for NHCEs.

Are they individually designed or were they volume submitter plans (that can look like an individually designed document). If they are individually designed, and they have anything other than a 10/31 or 11/30 year, you are stuck with the VCP correction method for a non-amender. (There was a "special" program for non-amenders but I believe it expired on September 3). If they were volume submitter and if the practitioner who drafted the volume submitter plan got its GUST Plan into the IRS by 12/31/00 then you have until the later of 12/31/02 or one year from when the practioner got his or her advisory letter (even if you don't have the certification).

I guess you could as why isn't it fair since you are putting them right back into the situation that they would have been if you had made the contribuiton. On the other hand, when you are dealing with a situation that might also constitute a fiduciary breach, DOL is pretty clear in the VFC program that you have to give them the greater of the earnings or interest at the 6621 rate. All that said, my experience has been that it is so difficult to get someone to go back and figure out exact losses for a participant with four or five investment choices that if you can ascertain that earnings would be negative, I have just advised the employer to put in the principle and not "fool" with any losses.

The following is from the " correction principles" in 2002-47 (I beleive the same wording was in 2001-17). (a) Corrective allocations under a defined ontribution plan should be based upon the terms of the plan and other aplicable nformation at the time of the failure (including the compensation that would have been used under the plan for the period with respect to which a corrective allocation is being made) and should be adjusted for earnings (including losses) and forfeitures that would have been allocated to the participant's account if the failure had not occurred. The corrective allocation need not be adjusted for losses. See section 3 of Appendix B for additional information on calculation of earnings for corrective allocations.

CATHYW I RAISED THIS QUESITON WITH WICKERSHAM A FEW YEARS BACK. HE INDICATED THAT HE DID NOT THINK THAT THE SERVICE WOULD TAKE THE POSITION THAT ADDING SPOUSAL CONSENT TO PS MONEYS WOULD RAISE A 411(d)(6) ISSUE. HOWEVER, I THINK YOU ARE RIGHT THAT THERE IS AN ISSUE. OF COURSE THIS WOULD BE THE HEIGHT OF IRONIES SINCE 411(D)(6) WAS BROUGHT IN BY REA. THUS THE VERY LEGISLATION THAT WAS INTENDED TO STRENGTHEN SPOUSAL RIGHTS WOULD MEAN THAT YOU COULD NOT REQUIRE SPOUSAL CONSENT TO A DISTRIBUITON.

I think the first point is that the Plan better not be allowing in-service distribuitons of MPP account balances AT ALL unless the participant is past the Plan's normal retirement age. As to consent requirement, you could draft a plan not to have spousal consent for any distribuitons of non-MPP money but that would depend on how your document is drafted. What does the Plan say?

The Confer decision has come up in the ENRON case. The DOL's brief is a good read regarding the government's current view of "functional" fiduciaries, corporate fiduciaries and the like. It will be interesting to see what the 5th Circuit does with this issue. The brief can be found here: http://www.dol.gov/sol/media/briefs/enronb...ief-8-30-02.htm

I am attempting to restate a volume submitter plan document where Merrill Lynch and then BISYS was the recordkeeper. Client had a major fire and no records prior to the 2001 testing are left with regard to current year/prior year. BISYS has indicated that they have Merrill's 1999 records on current/year prior year but in 2000 Merrill had a fire and so the records for those years are unavailable. They have no clue for 1997 and 1998 even though they "pulled their box". (When they found out they had no info, they did agree to waive the $100 fee for pulling the box). Anybody else dealt with this or a similar situation. Any solutions?

For an extensive discussion look here: http://www.benefitslink.com/boards/index.php?showtopic=16129

I hope not because I am doing it. You also need to watch for any "in-service" distribution options that cannot apply to the MPP assets. Also search this message board regarding the IRS's view that the GUST restatement must provide all GUST required information with retroactive dates for both Plans in the merged document.

Merlin, Just for clarification, was the age weighted formula substituted for the integrated formula (clearly prohibited by the TAM) or was the age weighted formula in addition to the integrated formula and they decided to make no contribution to the integrated formula. (I would think this might work). I don't know of anything official. I don't even know of anything official where they have "signed off" on even going through the "hoops" (i.e. two formulas) to get it done (other than people reporting that they have received determ letters). I brought this up on a one to one level with Wickersham after he spoke in the context of an integrated plan with no last day rule who wanted to change to new comparability toward the end of the Plan Year. I raised the issue on whether you could have two formulas for the year and simply not fund one of the formulas. He acknowledged that multiple allocation formulas appeared to be allowed, but said he had not really thought about the implications of not "funding" one of the formulas.

I haven't gone back to look at it, but I think your right that the TAM says that the mere fact that the profit sharing contribuiton is discretionary does not give you the right to change an existing allocation formula after someone has accrued a benefit under that formula by arguing "Since I don't have to make any contribution in the first instance, I can revise the allocation formula anyway I want." However, I don't believe that there is anything in the TAM that prevents the addition of a new formula (while keeping the old) or obligates an employer to actually make discretionary contributions under the old formula. . Of course this logic basically renders the TAM a nullity that you can "paper around" which is what I think got Merlin's goat as well as activated his "risk radar" I have heard of others getting determ letters on such plans wheere a second formula was added, but I haven't sought one myself.

I think that the problem with that argument is your statement that "the employer has X dollars to allocate in a plan year" If, for some reason, there was a stated rate to each allocation group or an amount stated in the Plan of what the overall contribution will be (i.e. X% of profits) then I could see your argument. However, this is where you get into the issue of a discretionary profit sharing plan. From Merlin's post, it appears that the employer will not put in any additional amounts for B whether or not he creates class C. Therefore you are not "taking away" anything to Class B members in creating C. I think the IRS can clearly mandate that once an employee has satisfied the criteria for an allocation to a particular class you cannot take him or her out of that class. However, it does not seem that in a purely discretionary profit sharing plan 411(d)(6) mandates the amount of allocation to that class or your ability to create additional allocation formulas. I don't think this is an area totally without risk. However, what would you say if the employer creates a totally different plan with three allocation classes and simply decides not to fund the "old plan". If this is an option, isn't this really a quesiton of form over substance.

I do agree that you would have to "skin the cat" some way and you cannot redefine Class B after someone has already "accrued" an allocation in that Class. I think the the solution is the multiple allocation formula for Class C discussed in my prior post. I recall seeing on this Board somewhere that there was a 1994 field directive that adversely affected multiple allocation formulas that was rescinded in 1996 or so. Then a few years later that IRS reiterated that the 1994 directive was withdrawn. If you do some more research and find these cites, I would appreciate you posting them on the Board so I could stick them in a subject fie.

This could just be typing without thinking, but couldn't you just keep Class B as is and then create Class C defined as members of Class B with 6 or more years of service. You could then give 5% to both Class B and Class C with a resulting 10% for members of Class C. You are keeping Class B "as is" in accordance with the TAM. This TAM has always been a tricky issue in a discretionary profit sharing Plan. There would seem to be so many "end runs" around the TAM such as: Set up a new Plan with the groups as you have stated and make your contributions. Decide not to fund the "old plan" for this year. Merge the Plans next year.

In Q&A 75 at the 1998 ASPA meeting the IRS representatives came to the same conclusion-- That for purposes of the final 5500, the effective date is the merger date stated in the documents and not the date that the assets are actually transferred. They did note, however, that in the case of a termination the 5500 obligation continues until the last penny is distributed.