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You still must test all employees of the controlled group in each plan. You cannot test just the employees of the participating employer for that one plan.

I am answering based on what I know about retirement plans. I am assuming the rules are the same for welfare plans. There are many times when insurance policies will provide information on a different year end for certain reasons. I believe the Form 5500 instructions say to use the last known information provided from the insurance carrier. Can anyone verify this?

Are you talking about an insurance policy? If so, I am assuming you mean that they will not provide with the cash surrender value as of 12/31/02 and will only provide you with information through 3/31/02. First of all, you must file your form 5500 based on the plan year that is spelled out in your plan document. Second, if they will not provide you with 12/31 information then you should use the 3/31 information in the 5500 kinda like it was 12/31 info. I hope this makes sense. Please let me know if it does not.

You may be misreading the materials but matching contributions, safe harbor or not, cannot be used to satisfy the gateway minimum requirements.

Yes, I would agree 100%.

You would need to amend your plan to use current year testing unless you want to keep your HCEs from deferring which I don't think the case will be.

Try reading 1.401(k)-1(a)(3)(iv) and see if this changes your mind. It basically says that an election not to receive ER contributions doesn't cause them to be treated as a CODA.

Jaemmons, thanks for your interpretation. Let me throw this out. Sal Tripodi says in The ERISA Outline Book that "to pass 401(a)(4), every rate group must satisfy the coverage requirements of 410(B). Both the ratio test and the ABT are available for this purpose." This leads me to the conclusion that you would include them in the general nondiscrim test.

I posted this question regarding the irrevocable election on a similar thread as you may have seen: Here is the reg: "(ii) Certain one-time elections.--An employee is not an eligible employee merely because the employee, upon commencing employment with the employer or upon the employee's first becoming eligible to make a cash or deferred election under any arrangement of the employer, is given the one-time opportunity to elect, and the employee does in fact elect, not to be eligible to make a cash or deferred election under the plan or any other plan maintained by the employer (including plans not yet established) for the duration of the employee's employment with the employer. This rule applies in addition to the rules in paragraphs (a)(3)(iv) and (a)(6)(ii)© of this section relating to the definition of a cash or deferred election. In no event is an election made after December 23, 1994 treated as a one-time irrevocable election under this paragraph if the election is made by an employee who previously became eligible under another plan (whether or not terminated) of the employer." I speak English so I can't see how this reg says that a participant is not included in the 401(a)(4) with a zero EBAR. If you do not mind I would appreciate further explanation.

Here is the reg: "(ii) Certain one-time elections.--An employee is not an eligible employee merely because the employee, upon commencing employment with the employer or upon the employee's first becoming eligible to make a cash or deferred election under any arrangement of the employer, is given the one-time opportunity to elect, and the employee does in fact elect, not to be eligible to make a cash or deferred election under the plan or any other plan maintained by the employer (including plans not yet established) for the duration of the employee's employment with the employer. This rule applies in addition to the rules in paragraphs (a)(3)(iv) and (a)(6)(ii)© of this section relating to the definition of a cash or deferred election. In no event is an election made after December 23, 1994 treated as a one-time irrevocable election under this paragraph if the election is made by an employee who previously became eligible under another plan (whether or not terminated) of the employer." I speak English so I can't see how this reg says that a participant is not included in the 401(a)(4) with a zero EBAR. If you do not mind I would appreciate further explanation.

It is my understanding that if a participant signs an irrevocable waiver they are still included in the general non-discrimination test of 401(a)4 just as they would be included in the 410(B) coverage test. Can someone give me the cite reference for this regulation?

Neither, you can give one of them 0% if you want. You can discriminate all you want against HCEs. ERISA only cares if you discriminate against NHCEs.

No, the 25% limit was not exceeded, just the MPP imposed limit in the doc. I agree that the ER should not declare "mistake of fact" without legal counsel. However, the ER will probably still decide to do this since the plan is now terminated. I am trying to give the ER all possible scenarios in order for him to make an informed decision.

The ER just wasn't too bright and put in the wrong amount. Even if it is not a mistake in fact, what would be the correct way to handle in each case?

MPP is overfunded by a mistake of fact. The plan has terminated. Would you agree that the overfunded amount can be refunded to the ER?

Plan with a SHMAC and segregated accounts. The ER calculated the match incorrectly throughout the plan year so now we have participants that were underfunded and overfunded with regards to the match. Most of the SDAs have losses. I know I can transfer from the overfunded to the underfunded but what would be the best way to handle the losses?

A reverse QNEC would be called a CENQ. (Sorry for the terrible Friday humor.) Seriously, this is a QNEC that is given to the lowest paid NHCE. The total QNEC would be the amount needed to pass the test or the 415 limit. If that still isn't enough to pass the test then you go to the next lowest paid NHCE, and so on. There is no regulation preventing reverse QNECs but with the 415 limit increased to 100% of comp, I think you will see some regulation regarding this fairly soon.

There is no federal guidance on this that I am aware of. This is a matter of interpretation by the plan administrator. In my personal opinion, the participant should get the contribution if they work any part of the last day of the plan year.

Anyone know if it is possible to make a report that shows participants over age XX and/or account balance greater than $XXX,XXX? I am wanting to do this at a global level.

the regs notice 98-52 refers to speak to the rule that says that you must make deferrals only out of current compensation for the year to which the deferrals apply. In other words, I can't defer for this year, wages that I am to earn next year or for service performed next year. Would this change your mind about the safe harbor status for that plan year? (I tend to agree with you on the testing but I am trying to play devil's advocate.)

I have a plan that is just now making the SHNEC for the 2001 plan year. Obviously there is a correction that needs to be made. I am thinking that the plan can use the SCP and deposit the SHNEC now with lost earnings and file an amended 5500 if needed. Is there anything else that anyone can think of that I am missing?

How do you get around the fact that to designate a beneficiary other than your spouse you have to have spousal consent? How can this be accomplished with the participant web?

Thanks for the info. I was surprised to see one of these things actually still existed.

I just read my last post and it makes no sense to me either. Yes, I am talking about converting a SARSEP to a 401(k) Safe Harbor and the notice requirements that state if you convert a regular 401k to a SH 401k you have to give the notice out before the beginning of the plan year. Does this rule apply to SARSEPs?

Sorry, I meant to include that the participant does work over 500 hours a year. Tom, I did read that discussion but it didn't necessarily address my issue. However, it did help me to come to my conclusion that the participant should get a contribution. I really want to know if anyone would disagree with me.