Brian Gallagher

way off topic but: Is it good to "Rich" as in your name is Rich(ard)? Or good to be rich as in having a lot of money?

No. The free pass only applies to plans with the SH match (and only if the SH match are the only other contribs). However, once the plan is deemed as top heavy, the 3% contribution satisfies the top heavy minimum contribution.

i would say the the un-official "reasonable time" definition--no less than thirty, nor more than ninety days--should apply.

I usually suggest to wait at least 45 days, maybe 60. Just because returned mail sometimes doesn't have the greates turnaround. For example, I just got on my desk yesterday and letter that I sent out on Jan 12--much more than 30 days.

NIPA? No one in my office has heard of the designations given by NIPA. IS this a relatively new organization? Do the designations carry any weight? Also, no one above (inculding me!) mentioned CEBS. I haven't done it yet, but I thought about doing atleast the retirement plan track.

just a thought: I would always suggest letting participants know when any investment options will change, whether or not people will be forced into or out of an investment. Even though there is no blackout, you will be making changes to some accounts without the consent of the affected people. Giving notice ahead of time, no one would be forced to do anything. Therefore, I think you will (continue) to satisfy 404©. By the way, is there anything in the literature about the portfolios that say the investments or allocation could change anytime and/or without notice? That may cover you. But better safe than sorry. As always, I suggest you consult an ERISA attorney on this matter, as each situation is unique.

Thank you.

Were the people given reasonable notice of the change? (read: no less than 30 and no more than 90 days)

Does anyone know where I can get a copy of the new DOL rule regarding cashouts between $1000-5000? besides TAG?

I would say you'd have to make both because they are two distinct types of contributions. SH is 100% vested and not eligible for hardships no matter what you do, ie, you can't amend your plan to the contrary. PS can be vestable and eligible for hardship distributions and you can amend those two provisions to your heart's content. The profit sharing can go towards the Top Heavy minimum if the plan is so afflicted.

I think the ASPA programs are good for new people. Especially the PA exams. You can do them at your leisure. www.aspa.org

And $10,000 for an audit? Isn't that a bit excessive? I don't know much about aduitor's fees, but I thought they were around $3-$5,000. And who is the Trustee of the plan? If it's a bank or insurance company, you can get away with a limited scope audit.

On our document, you could amend the plan to specifically exclude people who are not regularly scheduled to work X hours a year. For example, I have a client that says that an excludable class is: anyone who is not scheduled to work at least 1000 hours. There is also a section on our adoption agreement allows to have a months and and hours restriction for eligibility. For example: 6 months service, 1000 hrs (max). Of course, that would only affect future people, but at least it'll stem the tide.

What is the ERISA documentation/record retention requirements? Six years I thought. What what needs to be kept, and by whom (the recordkeeper vs. plan sponsor)?

With the SH Match, consider Top Heavy, too. Will there be any other contributions? (Profit Sharing or Reallocated Forfs) If there are, you may need to provide a Top Heavy Minimum contribution.

I know the reason behind sending 2004 1099's for excesses done before 3/15 for the 2003 plan year. But does anyone have anything wriiten they might send to their clients explaining this? I've explained it to the Plan Administrators and a few HCE's, but I'm having trouble composing a written answer. My letters are either too lengthy and technical or too short and vague. I'm trying to find a happy medium. Any help would be appreciated.

This doesn't explain why one type of contribution gets a free pass and the other doesn't, but it does illustrate why using the SHNEC doesn't completely "correct" the Top Heavy status. TH plans must have a minimum vesting schedule. Say Plan XYZ had P/S contributions (but wasn't TH) in 2000, 2001 & 2002 and the P/S money is on a 7-yr graded vesting schedule. In 2003, the plan is TH and it adopted a SHNEC. The plan is still subject to TH testing (no free pass). Though the SHNEC satisfies the minimum contribution, that is only part of the "correction". The vesting schedule still needs to be accelerated by one year. Using the SH Match, the plan is conisdered NOT TH, therefore no accelerated vesting is needed. So you can't just say, I made my NEC and that's all I need to do. At least that's the way I read it.

The wording says "three consecutive months", but I seem to remember reading somewhere (and, as usual, I may be wrong) that: if someone worked for a legnth of time during a year, terminates and comes back during the plan year, service is credited (although not hours) as if the person never terminated in the first place. I don't see language to that effect in my plan document and for the life of me, I don't remember who told me that or where I read it.

Plan has 3 month eligibility (no hrs req't). What is someone works for a month on a project, say for the entire month of January. Then works on another project in May for two weeks. Is this person eligible for the plan? Why or why not.

I don't know of anything that says you have to make the match right away. Can't you do a type of true-up and allocate earnings for the match that was missed? I think you have until the end of the next year to make the contribution.

Our prototype allows for QMAC's to be given soley to NHCE's so I would refer you back to your Plan Document.

Correction methods (including determining account performance) can be found in Revenue Procedure 2003-44. Here's the site: http://www.irs.gov/retirement/article/0,,id=112983,00.html

Do you have a link to that? My search skills aren't really up to par. Thanks in advance.

Our prototype allows for the sponsor to pick any age for in-service withdrawals, with the exception of deferrals, which has to be at least 59 1/2.

If you correct an adp test with refunds, the test is passing. If you then take elective deferral to help acp, your nhce's adp would be lower, thus failing after the paper shift (we call it the "beg borrow and steal method") Or am I missing some salient point?