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This is hard to figure out if you have never used it in Relius before. You have to open the Employer and on the company tab select the box that says "Prior year HCE must be in top paid group". It seems as if I have run into problems in the past that if you checked this box after the plan year was created you had problems. Unfortunately I can't remember what they were off the top of my head. Anyone else recall anything like that?

Correct me if I am wrong but doesn't any changes to the language of a prototype cause the document to become individually designed or are there exceptions?

I see that didn't make a lot of sense. I am going to amend the plan to retroactively allow immediate participation. It has been recommended to me to get a determination letter regarding the amendment. Is there anything special I need to do that would be different from a normal determination letter filing?

I am curious as to how other shops handle defaulted loans in the balance forward world. For example, how do you handle a loan that is made in December, 2002 and payments are made through March, 2003. The loan would be in default and would become a deemed distribution as of 6/30/03. In most cases you would not get any information until February or March of 2004. How would you handle the 1099s?

I have a plan that was new for 2003. All employees were hired in late 2002. Whoever drafted the orginal document did not think to allow immediate entry and the plan operated as if this was the case. I am going to file for a determination letter and I am wondering if I need to file the sch Q along with the 5307?

This would be a prospective amendment.

What if a company wants to amend a plan to delete the predecessor service provision? Is this okay? Under the provision both HCEs and NHCEs have entered.

If they are only doing the safe harbor match then you are deemed to pass top heavy. Nothing else to do.

1/3 of 11.75%

Is the safe harbor match the only contribution the employer makes to the plan? If so then you do not have to worry about it since it is deemed to pass top heavy. If other contributions are made then you will have to provide the top heavy minimum. I don't think you will need a corrective amendment. Your document should prescribe how to deal with top heavy minimums.

That is incorrect. All matching contributions can now be used to help satisfy the top heavy minimum. This was added under EGTRRA 613.

Let me clarify. 1. If your plan consists solely of safe harbor contributions then you get a pass on the top heavy. These contributions would be based on the plan's definition of compensation. You can use comp from date of entry. 2. If you have contributions in addition to your safe harbor contributions then you have to satisfy top heavy. In order to give everyone the top heavy minimum you can use match and/or profit sharing contributions. The top heavy minimum would be based on a full year's comp. I hope this clarifies.

Greg, I may have misunderstood your post. If a plan has a safe harbor match and additional nonelective contributions, then the matching contributions can be used to help satisfy the top heavy minimum. I am not sure if that is what you were trying to say.

That is incorrect. If your plan consists solely of safe harbor contributions then you are exempt from top heavy testing regardless of any entry dates.

That is correct. Anything made above and beyond the safe harbor contributions, then you will have to do top heavy testing.

It will be a safe harbor plan so they would use current year.

Trying to kill two birds with one stone.

A company is starting a brand new plan. Want to do profit sharing only for 2003 and then start 401k piece 1/1/04. The prototype I am using does not offer to add a different effective date for the 401k piece. Are there any problems with making everything effective 1/1/03 if no one in the plan is given the opportunity to defer?

I have a client that has brought in a new partner (medical practice). They want to bring in the new doctor as soon as possible. Is it possible to amend the plan to allow "predecessor" service for the practice where he came from? He would not have been an owner of that practice. I don't think you can but I wanted to make sure before I relayed this.

I have a client that is a single member LLC. For tax purposes he files a schedule C. He also files a schedule F for a farm he owns. His farm income offsets all income earned through the sch C so total income is zero. My question is, can he still take a deduction on the sch C for profit sharing contributions or does the loss from the sch F eliminate this deduction?

If the match is hardcoded in the document then you are okay as long as it does not match above 6% of compensation.

I have a company that has left a controlled group due to ownership change. All participants received a safe harbor notice for the plan of the controlled group. The departing company is going to copy the old plan. Will a new safe harbor notice need to be distributed?

The regs state the lesser of 2+ or 2 times. The lesser is two times zero.

I mispoke in my first post. My highest HCE has 1.8%. Sorry for the confusion.

That is my initial thought then I started drinking, one thing led to another, and I had lost confidence in my initial thought.