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I believe another argument that has been addressed is that assets have to be bonded if they are "handled". Receivables are not an asset that can be handled therefore they are not subject to the bonding requirements.

Yes, contribution receivables are contributions that are due to the plan. Yes, they are considered plan assets for most purposes. The question that is being asked is should they be considered for bonding requirements. I agree on the position stated previously that they should not be counted for bonding purposes. I think the argument is that the actual concrete assets are not in the plan yet so they should not have to be bonded. I hope that makes sense.

I agree with katieinny.

qwert, you are correct as far as 2002 is concerned. The question is in regards to 2003 though. I may take a more aggressive stance in my interpretation but I believe that the employer can deduct the contribution on the 2003 return. 404(a)(6) talks about claiming a deduction for contributions made this year in the prior taxable year. That is not the case in this situation. The contributions are not being claimed for a prior taxable year.

I assumed BFree's plan had selected current year testing. I am assuming your new plan selected to use prior year testing but for the first year picked the option of using current year testing over 3%. Unless I am misunderstanding the questions, you have two different situations.

You are correct. There are no NHCEs.

If memory serves me correctly, you would base the audit requirement on total number of participants regardless of employer. You will have one 5500 with X number of Sch. T's. The 5500 participant count will include all participants that are benefitted by the plan.

You said there were no ER contributions for the past two years. How can you return money that isn't there? Are you saying there is a matching contribution in the past two years? If that is the case then you still must meet the top heavy minimum for those years even if the keys only had deferrals. Matching contributions could have been used to help satisfy the TH minimums for those years but you couldn't use those matching contributions in your ACP test which would probably result in more trouble.

Can you give me a cite where ERISA allows this in a 401(k) Plan?

I am curious if there is any new information on the NC Bar ruling regarding benefits practice that anyone is aware of.

I am assuming that he is the only employee. There is no possible way for him to get to $40,000. His maximum contribution would be $16,728.34 if my calculations are correct. He could then defer an additional $12,000.

1. Yes. 2. If that is the amount necessary to pass testing, yes. The QNEC is usually a much larger figure. 3. If you use the QNEC method of correction then you do not have to issue refunds.

I found my information in the ERISA Outline Book 2002 edition, CH. 11, p.379. Sal references 416© and 416-1, M-10.

The entire plan would be subject to TH minimum since the safe harbor election is not the only formula involved. You now have an additional top heavy formula involved for a portion of the participants.

Since the plan is top heavy, you must give the 3% TH minimum to all employees. This is an additional contribution other than the SH contribution. Since an additional formula is used, you would need to make sure that all participants are receiving the TH minimum.

If the match is hardcoded in the document then I think either method you described would work in correcting the situation.

Correct me if I am wrong but I believe the disaggregated portion (EEs that haven't met 21/1) will still need to receive the top heavy minimum.

If an HCE elects to opt out of the plan from plan year to plan year (document allows for this), are there any ramifications? The company is a C-corporation so I am wondering if the deemed CODA rules would even come into play. The HCEs salary does not change as a result of this election.

That was my feeling as well. I am waiting to receive the doc for review. Yes, the person was eligible for the plan before termination.

Have a 401(k) safe harbor plan that uses a SHNEC. There is a former participant (terminated in mid-2001) that received a W-2 in 2002 for worked performed in early 2001. Is this person entitled to the SHNEC? These are the only facts I currently have.

Theoretically you must test the disaggregated portion whether there is an HCE in that group or not but yes I do agree with your assessment.

You could run the contribution in as a receivable. If I remember correctly, Relius will not include receivables for PSPs in the TH test.

A plan allows participants to invest in insurance. Is it okay for a participant to have a policy on someone else's life other than their own for a qualified plan?

Some prototypes do have the bottom-up QNEC language in them. If your protoype does not contain this language then your plan cannot do it.

I was close.