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Following facts: Plan is top heavy and ADP of NHCEs is zero and ADP of HCEs is 1.8. ADP refunds will be given to bring HCEs to an ADP of zero. Is top heavy minimum 1.8% or 0%?

This was brought up as a possible rule befor SARBOX came out but it never came into place. I believe a new bill is being proposed that quarterly statements will be required for all participant directed plans.

Notice 98-52 states that the notice must be given within a reasonable time before the beginning of the plan year. The IRS has stated that a reasonable time can be satisfied if given 30 day before the beginning of the plan year but no more than 90 days.

That is one of my concerns however he will be getting paid a bonus at year end so that squelches some of my concern.

No, you have to give a notice before the beginning of the plan year.

I think we are getting off subject. Basically the business has ceased all operations. All employees were terminated early this year other than the owner but is no longer drawing a salary. No resolution has been made to terminate the plan. The employer wants to get a contribution for this year. I was curious as if the IRS has ever ruled that a plan was terminated due to company operations ceasing. I want to make sure that it is okay to give all of the contribution to the employer. Since all NHCEs terminated with <500 hours I do not have a coverage problem. A formal resolution will be adopted some time next year.

No resolution has been formally adopted.

I have an employer whose practice has ceased operations in order to dissolve. All employees and operations are terminated other than the owner/shareholder. The company is still in legal existence although the only operation still happening in existence is the collection of A/R. Does anyone know of guidance that would suggest the plan terminates when the practice theoretically ceased operations?

It is the employee booklets. I thought it was the plan docs but I was mistaken. mroberts, does this mean one 5500?

It is one contract. So would this mean one plan for 5500 reporting purposes?

Need some help. I have run across a situation where a client has a long-term disability plan. I see two different documents, one covering officers and the other covering all other employees. This leads me to believe that these are two separate plans requiring separate 5500s. However the original drafter gave both plans the plan number 501. This makes me wonder if they are truly separate. Anyone have any comments or suggestions?

I don't know if they directly said that but I would agree that would be the position of the DOL. There is nothing stopping an employer from opening a checking account in the name of the plan and depositing the deferrals into the account until they can actually have them segregated among the investments. I think this could raise some fiduciary issues under 404© assuming the plan is using this protection. I would agree that an employer might want to find another vendor that does allow for higher frequency contributions.

I assumed that his formula was not discretionary so the 4% cap would not come into play.

You could still meet the ACP safe harbor if your match formula does not match on compensation above 6%.

I cannot find any specific regs. The regs do not even clearly define a leave of absence. I looked at a couple of prototypes that gave the option of whether to allow for suspension or not. This just leaves me to conclude that it should be clearly written in the loan policy. I could also see the point of view from the other side too though.

No, refinancing is not the issue. The sponsor wants to be sure the plan is administered correctly. After a little more research I have concluded that the doc would have to allow for payments to be suspended for a leave of absence.

That is the exact same thing I found and I could not decipher it either.

IMHO - I think it is okay. I think the writers of the regs were using this logic in regards to how refinancing would work. As long as the plan sponsor treats all participants the same I think you are okay. It would probably be a good idea to have the plan sponsor write down in their administrative policy how they are interpreting this. Again this is just my opinion and I have no references to the regs.

In order to suspend loan payments during a leave of absence, does the plan doc/loan policy have to address this? I have this situation now and the loan requirements are very vague and do not address a leave of absence.

I think you are stuck with the way the current regs are written. Granted the proposed regs do address this but those will not be effective until 2006 if they are finalized next year.

I assume you mean hardship distribution and not hardship termination. All in-service distributions are added back to the participants' account balance within 5 years before the determination date in regards to top heavy. It sounds like your plan is not top heavy based on the information you have provided.

My personal opinion is that the the employer would be responsible for the contributions missed (5%) plus earnings for maybe two or three payrolls. After that the participant should have noticed and made an effort to correct the situation. I base my conclusions on IRC 502(a)(1)(b) which gives the participant a right to recover benefits due to an error in the administration of the plan, and IRC 502(a)(3)(b) which relates to a participant mitigating damages.

Assume the same for treadmills?

I am not an expert on the subject of 125 plans but I would think that breast pumps and lactation specialists would still not be a reimbursable expense even with Rev Rul 2003-102 unless it was a medical necessity for the health of the baby. Would you agree with my assumption?

I am assuming you selected prior year testing for the plan year ending 9/30/2003. Since the NHCEs ADP was deemed to be 3% you cannot use QNECs as a method of correction unless it was deposited prior to the end of the plan year. It is Friday and my brain is fried so I cannot even follow your next two questions.