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When you fail the ratio % test for any one rate group. The nondiscrim classification test is just one part of the ABT. You would also need to perform the avg benefit percentage test along with the nondiscrim classification test.

Here is an interesting situation: A participant terminates full time employment. The employer maintains a standardized prototype. The terminated participant recently entered an arrangement where she works only when needed, such as when someone else is sick. She never works over 500 hours. the plan states that a re-hire can re-enter the plan at the next entry date. Given the sporadic and seldom work of this person, would you consider this person a particpant in the plan at the end of the year? I can see arguments from both sides. I am more inclined to let the employer make the determination for this person.

Then you would have to do as Chris has previously posted. All participants in the terminated plan must be given the option of rolling over to the new plan or take a distribution. They would also become 100% vested. This is assuming that a board resolution to terminate the plan was made instead of a board resolution to merge.

Chris has a good point. I was assuming that you meant the plan wasn't necessarily terminating but just merging. If the old plan did actually terminate then we do have a different set of circumstances.

I can't think of any reason why you would need to account for them separately.

You could have designed the plan with the SHNEC given to only those participants who have completed a year of service and age 21. However, if the plan already has these requirements to enter the plan then this doesn't matter.

If I remember correctly, McKay-Hochman's prototype document has it written in the document. They also had a loan policy that could be modified depending on the client. Check with your document provider and maybe they can give you the same thing.

Catch-up contributions are based on a calendar year. You can reach your limit anytime in the year that you turn age 50. It has nothing to do with the plan year. The deferrals are reported on the w-2 which would let the IRS know whether or not you went over the limit.

It is strictly what the participant defers from compensation.

Yes, Mike. It does sound like that to me also. I don't know if I would change my answer because I can't tell either way if the bank actually "holds" the assets. Luckily, I am not the person determining that. I would disagree about the audit piece of the last post though. If this is for a prior year and you did not have the fidelity bond in the prior year then you would need the audit, assuming these are non-qualifying assets.

It always helps to go back and read the question again. I do agree with the prior post. I think the exact relationship needs to be disclosed before an answer can be made.

I believe you are correct. As long as the assets are being held by a regulated financial institution you should be okay regarding the issue with qualifying assets. I would ask the accountant to give you the exact reason why the plan needs an audit.

Just an added note: the corporate tax extension also automatically extends the 5500 for a calendar year plan.

The last 5500 is due 7 months after the final distribution. With your situation about the new forms, I have always used the previous year and hard-coded my plan year in the spot where it allows you to put a beginning and ending date.

I am assuming that the new hire will not meet the comp requirements in the lookback year. I am also thinking that a new HCE would start receiving the SHMAC in his second year of employment therefore that person would never be an HCE for purposes of the disaggregated portion.

I am brain-fried this week so I want to make sure my thinking is correct. I have a safe harbor plan that wants to change the eligibility for deferrals to immediate entry yet keep the year of service rule for the safe harbor match. I realize I have to perform the ADP test on the disaggregated portion for the otherwise excudables. My question involves the HCE. If I never have a newly hired person that is more than a 5% owner then I will never have an HCE for the disaggregated portion. Am I thinking right?

That works fine for a balance forward plan but my problem lies with daily plans. Thanks for the info everyone.

Have you heard anything from Corbel about a possible update on this?

I am having problems getting Relius to print my safe harbor contributions separately. All the "canned" reports combine the safe harbor contribution (SHNEC) into the EMPLOYER source. Has anyone else had any luck on this issue?

That is the point I was trying to make.

Look in Ch. 5, Section IV, part D. I think that will give you a reference in the ERISA Outline Book. If that isn't it, I guarantee it is in the Book.

No, the repeal of 415(e) in SBJPA eliminated the super top heavy rules for plan years beginning post 12/31/99.

Does anyone currently use the trust accounting module for Relius? I am looking for a new trust accounting software package. I have heard in the past that the Relius module wasn't that good. I am curious to hear if it has improved over the last year or two. Also does anyone know of any other basic trust accounting software packages that are available?

You cannot start a SH CODA for 2002 no matter what. The plan year has to be at least 3 months long. You also cannot start a CODA for 2002 and turnaround and do a SH for 2003. IRS Notice 98-52 says that a notice must be given 30 days before the first day of the plan year. This would be the case for an existing plan that would be created in 2002.

Yes, as long as they received the notice in the prescribed amount of time.