Mike Preston

Citation?

Unless the plan precludes it, you can do it. If you cross-test, you must satisfy the gateway.

I am not aware of anything directly on point that defines things any better than what the regulations attempt. There is nothing in the Grey Book that I can find, nor in the last few years of either the ASPA nor the ABA Q&A's. Given what little guidance there is, I usually default to deciding what makes sense on a case by case basis, usually in consultation with plan counsel.

Since the maximum exclusion allowance no longer is applicable, the limitation on amounts contributed to 403(B) plans no longer contains the special election. The implication is that the special election is now the default election. Hence, if it is elected by default the regulatory rule that says the limitations are combined if the special election is made is also the default. Or so goes the theory, anyway.

No.

The exception that I find that comes into play most of the time is the "underfunded PBGC plan" exception of 1.401(a)(26)-1(B)(3), but the other excpetions of 1.401(a)(26)-1(B) are sometimes useful. The IRS is pretty consisent with the requirement to have an amendment in place to take it into account for valuation purposes. Remember that minimum funding applies even in the case of a non-qualfiied (or disqualified) plan unless exceptions are met, so the fact that the plan might fail coverage or participation is not really an issue.

What year are you dealing with? The regulations are all a bit out of date. 1.415-8 and 1.415-9. Under those rules, a 403(B) is deemed to be provided by the pathologist if the pathologist "is in control" of the partnership within the meaning of "414(B) or © as modified by section 415(h)". Even if not required to aggregate under the rule just cited, if the pathologist has elected treatment under 415©(4)©, then the 403(B) amounts are treated as annual additions against the applicable year's limitations. Note that 415©(4)© is not applicable to years after 12/31/2001 (unless or until the sunset provisions actually take effect, in which case it is again effective). I haven't had to research this point, so I am not aware of any citation that replaces the regulation that previously applied to 415©(4)©. I'd be interested in having it pointed out should it exist. However, a conservative view is that the aggregation now applies automatically, without the need for an updated regulation.

True, but the nature of average pay plans, be they career or final pay, requires that a participant be able to modify the compensation taken into account with respect to a past year at times in order to have any impact. In general, documents do not reference 411(d)(6). In this case, it sure would be a good idea.

Frankie, sorry to have offended you. Glad you got your answer.

Why do you want to know? What possible difference can it make to anyone? I'm not trying to be flip, I'm trying to understand how the answer to the question can matter.

I'm with Frank. The limit is essentially prospective in nature and does not provide an exception to 411(d)(6). It is a good planning tool if used to determine compensation limitations for an upcoming year.

Begging the question as to how a frozen plan can fail 401(a)(26) [i will just assume that you have done a thorough job and that none of the ample exceptions apply to this particular plan], you may not take into account an amendment made after the 412©(8) deadline when calculating the minimum required contribution.

It is permissable.

How you number your amendments is up to you. Is it the 4th amendment to the original plan? Or is it the first amendment to the amendment and restatement? In addition, I've seen situations where amendments were not numbered at all, just dated. In other words, what you call them really doesn't matter. It is their effective dates and signature dates that really matter.

DMK interpreted my response correctly. I see now that the initial request could have been interpreted as meaning "can a participant get money from a plan, while still working, even if a plan doesn't have a provision authorizing such distribution?" The answer to that is no, as DMK pointed out. In interpreted the question to mean: "must a plan provide that a 401k participant can access their money while still working." Thanks for the clarification.

I thought it was understood that "still working" meant "still working for the plan sponsor of the 401(k) plan". However, with that said, I don't quite understand your last request for clarification. Can you please rephrase?

The devil is in the details. So, 9% has now changed to 10%? So be it. If you need to give back $1000, then all $1000 would be taken from the 90% owner and since that person is over 50, all $1000 would be characterized as a catchup. If you need to return $1,200, then $1,000 would be characterized as a catchup from the 90% owner and then $100 would be refunded to each. And so on.

A "plan limit" is a limit imposed by the terms of the plan. You don't have that. I don't think you can recharacterize the over 50 guy at all. He isn't subject to having any of his monies returned, so he has no catchup. At least, I think that is what is going on. Without numbers I guess it is possible that your under 50's 9% is less than your over 50's 3%. But I doubt it. Care to share?

No.

The lookback year exists whether the plan does or not.

If you do not honor the levy, I see no reason to treat the participant differently. In fact, I would think it inappropriate to do so. If the plan has individually directed accounts and the participant wants to ensure that the funds are not diminished due to adverse investment performance, the participant can move the funds to the investiment that matches the participant's desires.

Without looking it up, I believe that the ability to test statutorily excludable versus not statutory excludable only may use the 1 year period, not the 2 year period.

;-)

You may be right. But I'd be very concerned of the potential consequences if you end up not being right. The IRS has multiple hands in this particular pot. The folks who want to levy the plan want the money. The good folks at TEGE will tell you that they are more interested in whether the plan will retain its qualified status. I've seen nothing directly on point, so maybe the CGM's and FSA's you reference provide a citation that I've not seen. But the conversations I've heard over the years generally say that if the IRS wanted to, they could assert disqualification for honoring the levy prior to the point in time that a participant has the ability to receive money from the plan. But I'm not batting 1000 in this thread, anyway, so it wouldn't surprise me to find such a citation.

Amend the plan to provide that the partner is excluded from the PS contribution.