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Doesn't matter. He was not a participant at that time and since he is not a participant he has not a accrued any type of benefit from the plan.

I was thinking #5 was Poltergeist.

You are correct. See Treas. Reg. 1.401(k)-2©(1)(i).

SHNEC must be deposited within 12 months after end of plan year or lose safe harbor status.

If I am not mistaken, Relius does not have restructuring capabilities so you will have to play with Relius to get it to work or do it in a spreadsheet.

So why do you need two plans? It sounds like you can accomplish what you want in one plan.

I think the separate entities is a plus for the use of separate plans but having the same plan provisions in both plans would be a huge strike. From what you have written it sounds like the only reason they are doing this is to avoid the plan audit. I would advise your client about the potential risks and rewards and let them make the final decision.

The IRS may not allow because the only reason you are doing this is to avoid applicable reporting requirements. From the 2000 ASPA conference: Q5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? A: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process.

What 5500 software do you use? If it is Relius, I thought it had such a feature but I could be mistaken.

I have a situation where the trustee name was filled out incorrectly on the SS-4 and the client wants it fixed with the IRS. Anyone know how to proceed with doing this?

Almost. If you have a plan that has a safe harbor match, then you must reduce your suspension to six months.

There are daily platforms that use only funds that pay very high expense ratios, sub-TAs and commissions to compensate the broker/advisor and the TPA. There are others that use funds that use very low expense ratios. It all depends on what funds he uses and whose platform you are using. What he is saying makes no sense (at least to me).

DC-1 & 2 and then again on DC-3 & DB.

If he has enough earned income to allow for the max.

You don't even have to do maintain separate recordkeeping.

Sorry, yes. Members of an LLC are considered self-employed.

Their compensation will be defined as "earnings from self-employment income". This wil include guaranteed payments, share of profits, etc. that will be reported on the K-1. Your document will have a definition most likely labeled as "earned income" which will define this a little more in detail.

I think the IRS speaker either misunderstood the context of the question or has a different definition of SDBA in mind. I don't think there are many in the industry that are doing this. It would be very difficult in a daily environment to have separate trust accounts for Roth contributions versus everything else. I don't see where it says that the assets must be segregated, only separate accounting requirements.

That is correct.

I agree with NUT's recommendation on this one. However, if the client does not want to do it this could be a great revenue generating project for you. 1. You will have to amend the plan doc/loan policy to allow for re-financing if it isn't already available. 2. You will have to prepare all new loan paperwork for the re-finance. They may possibly change their mind when you tell them what your fee would be to accomplish this project.

My answer would be "A" also in the circumstances we have been discussing. Since the plan treats those receiving only the top heavy minimum as "not benefitting" the allocation formula is deemed a safe harbor designed formula so I do not have to test under 401(a)(4) non-discrim. I now have to pass coverage and can do so testing on a benefits basis for the average benefits test if that gets me to pass. The regs under 410(b) do not cross-reference to any of the gateway requirements. The reg under 401(a)(4)-8(b)(1)(i) states "Equivalent benefits under a defined contribution plan (other than an ESOP) are nondiscriminatory in amount for a plan year if--". Let's stop right there. We are not testing to see if equivalent benefits are nondiscriminatory in amount. We are testing to see if we pass coverage.

Although I initially agreed with Mike on this, I decided to go back and review the regs and various other literature/research items to make sure my conclusions were right. As I figured, there is absolutely no doubt that ERISANut is wrong on this one. The regs seem to be very clear and I cannot find any written authority that agrees with his assumptions. If you review the regs and other written literature on the subject you can't help but come to the same conclusion. I doubt you will find anything written that does agree with his assumption.

Maybe there is some confusion? I believe Mike is speaking specifically about passing under 410(b). Now the plan still must pass 401(a)(4) testing which could lead down the road for all of the other things Nut is trying to explain. Am I right Mike or am I missing something?

I think you definitely have a problem but not necessarily with the terminated participant. I assume your document says that you forfeit on earlier of 5 yrs BIS or payout. If they are forfeiting the non-vested piece immediately then they are not operating in accordance with the terms of the plan document. The active participants are the ones that are getting reallocated forfeitures that they should or shouldn't be getting. What about the participant that becomes eligible after the terminee has reached 5 BIS? That participant is eligible for part of the reallocated forfeiture but will never get it now because it was forfeited 5 years ago incorrectly.

Yes, it is possible because I have done it. Then again I have a lot of experience which made the tests very easy. As Tom mentioned, if you only have 1 or 2 years experience it might be fairly hard to do.