Mr Bagwell

No familiar relationships between 1, 2, and 3. Not an Affiliated Service Group. Thanks

So to make sure I have this correct, I'll use my situation. A and B Company Company A Owner 1, 7/8 ownership, or 87.5%, Owner 2, 1/8 ownership, or 12.5% Company B Owner 1, 78% ownership, Owner 3, 22% I come up with 78% identical ownership so NOT a control group. Both Companies in the same plan as a multiple employer plan. Company A is the Controlling Member (Plan Sponsor or Lead Employer) Company B is the Participating Member One 5500, marked as Multiple Employer Plan and listing both companies in the detail of 5500. Correct?

Savings, Check the plan document definitions. The one we use says that an employee can defer on compensation above the comp limit provided they don't fail other plan limitations like 402g, 415.... Thanks

Yes, I have dealt with this before. The Roth in a brokerage account is not too big of a deal, especially when you are able to start it in it's own account. The Roth and Pretax in the same account isn't that big of a deal either, the earnings are prorated across the money sources. I'm not against this approach, but at some point the participant is going to want to "play" with the Roth portion to make more money. And the all together approach with earnings proration blows the scenario up because the participant will say that fund x is Roth and fund Y is pretax..... ugh...... Separately is the way to go if you can.

you beat me to it Lou.

FWIW, the pretax has no start year, so moving from 401k to IRA and back and forth really is of no consequence. The Roth could be tricky because of the start date of the Roth basis and 5 year timing. Maybe the regulation actually made this easier......go figure. The client having the money in the Roth IRA is advantageous for the future because the 5 year clock has started. The client could roll his future Roth money into the Roth IRA upon retirement and have the 5 year hold rule already satisfied. No RMD's.... Just my thoughts...

That's fair, Mike.

Thanks Tom. I will have more questions and thoughts....

Detail: New plan to us in 2015. Plan has been in existence for decades. Safe Harbor 3% with Cross tested design. The employer was "told" that the division he purchased in 2006 could be excluded and everything would be fine. The excluded division was discussed in some manner at the sales process. I was not there, I don't know all the details. I got the privilege to try to sort out mess. Employer would like to keep division excluded if possible. (It's not) Well fast forward to 2016 and 2015 testing. I have all the census information and sure enough, it won't pass 410b coverage. The excluded division is killing the numbers. Hide sight would have been to not bring the whole division, but to have them meet eligibility and treat like any other division; knowing that coverage was going to be an issue and several of the employees would never be eligible. I need some direction. Thanks!

Background: Sally worked for ABC, ABC adopted XYZ 401k Multiple Employer plan. Sally then opens her own business and adopts the same XYZ 401k Multiple Employer 401k plan. Sally and three employees, to my knowledge, never termed, who knows. Sally and three employees assets are moved from one participating employer to another. No distribution was processed because of the MEP, so no rollover coding on the assets. Sally's assets are substantial, and of course the plan appears to be top heavy for the first year and subsequent years. The plan has since been moved to an individual 401k platform. Plan document reads: 2.7 Transfer to/from a participating employer. The transfer of a Participant from one Participating Employer to another Participating Employer under the Plan shall not affect his rights under the Plan, and all amounts credited under his accounts described in Article 8, year(s) of Service and Credited Service accumulated under the Plan and other rights and benefits he is entitled to under the Plan shall continue to his credit after such transfer. The transferred Participant will carry with him to his new Participating Employer's Plan his accumulated account balances, vesting and eligibility service, and no termination of employment or One-Year Break in service shall occur as a result of the transfer. However, such transfer shall constitute a termination of employment from the prior Participating Employer only for purposes of ceasing Elective Contributions, Roth Elective Contributions, Nondeductible Voluntary Contributions and Participating Employer contributions for the transferred Participant. Matching Contributions and Non-Matching Contributions for the Plan Year of the transfer, if based on Compensation, shall be determined using the Participant's Compensation with each Participating Employer. I was not employed at the time this transaction took place...... For top heavy reasons, I would have preferred to have a distributable event so the funds could have been rolled in to exclude the assets from being calculated in top heavy calculation. Under the MEP, the assets just get moved from one employer to another. (See above) Is this plan just hosed in regards to top heavy? Of course, the TPA, didn't know Sally was owner, so the plan hasn't been top heavy yet. Anyone see any wiggle room to have the assets excluded from the top heavy calc? Thanks Mr Bagwell

No, I'm not the participant. Broker of Record.

Austin3515, Representative of Pension Experts Inc. give me the offending answer? Yes. The Senior VP of Business Development, and the assigned Relationship Manager. Two different employees of Pension Experts Inc. TPA would never be the Administrator..... AA agreement reads as such. Wheras, Adopting Employer wishes to appoint Pension Experts Inc. as the Plan Administrator of its Plan and to delegate to Pension Experts Inc. the fiduciary responsibilities enumerated in the Plan.............

Sorry, I mislead and used incorrect terminology in regards to plan sponsor. The employer is the Plan Sponsor. The TPA is the plan administrator. According to the 5500 filing....

Of course this is the crux of the problem. The employee is a participant after he has satisfied entry requirements and passed the entry date. The last reasonable thing is to ask them why they think the language about changing deferral elections is in there at all. The nuclear option is to have the employee submit his change in writing (presumably he has already) and make it very clear that he intends to follow through with the DOL on this as a denial of an opportunity to defer. Do this at the plan sponsor level, not the TPA. I'd print out this thread; delete the names I suppose although I don't care about that, and make it crystal clear that the TPA's position TPA is dead wrong. Good luck. Bird, You are so correct about the crux of the problem. Trust me when I say I was so shocked as to the answers I was given when I started asking questions. Why the deferral change language? The answer is because once a employee is a "participating participant", they can change their deferral at the beginning of the months. The TPA is the plan sponsor. Can't get around the problem. Will have to come up with a plan to start moving plans to a new provider. Thanks for your help and concern.

So in these other people's mind how do you get around that if you don't want to defer when you first enter the plan? Do you have to complete a form that says in effect I want a 0% deferral election just to preserve your right to change your mind later in the year? It has been a while since I worked 401(k) plans and I am stunned at these people's position. As for your DOL question I would start first by talking to the powers to be at the plan sponsor and saber rattle that these people come up with a good documentation for their position or the plan sponsor starts looking for new service providers. I would only bring the DOL into this as a very last resort as that will "shine a light" on the whole plan and employer that you might not want to do. Esop guy, To answer your question. The 0% deferral doesn't work either, because in their mind the employee is still not participating. The plan sponsor is the TPA... and I was talking to the powers that be.....so frustrating! Thanks for your help and concern.

If anyone was wondering..... The answer was yes. If a plan was immediate entry, the employee would only have one chance a year to enroll in the plan. How would I get a DOL opinion without having the employer scrutinized?

The conversation with the TPA centered around nothing specific in the plan doc and adoption agreement. Just the conjecture that the employee is an eligible employee that is not participating. They will be included in testing and safe harbor non electives because they are eligible. The employee has to participate to be a participant. Commencing and Changing deferrals... not sure really. Section 4.01 Elective Deferrals and Voluntary Contributions (b) Modifications. As of the date a Participant first meets the eligibility requirements of Section 3.01, he may elect to contribute to the Plan. Subsequent to that date, a Participant may elect to start, increase, reduce or totally suspend his elections pursuant to this Section 4.01, effective as the dates specified in the Adoption Agreement.

The immovable object will not move. Based on the TPA's opinion, the eligible employee is not participating, so they can not be a participant. Around and around we go.... It's time to start soliciting a new TPA! Thanks for everyone's help!!

The AA Agreement reads "Effective Date of Participation (Entry Date)" and First Day of Plan Quarter is selected as the option. The AA Agreement reads under "Elective Deferrals" "Changes to deferral percentages are allowable on a monthly basis, or the next administratively feasible payroll date." The SPD reads "You will become a Participant eligible to make Elective Deferrals on the first day of each plan quarter coincident with or next following the date you attain age 21 and you complete one (1) Year of Eligibility Service, provided that you are an Eligible Employee on that date." Same language for match and PS. The SPD reads under Contributions to the Plan, Elective Deferrals "You may elect to start, increase or reduce your elections to contribute to the Plan effective as the dates established pursuant to the Plan Administrator procedures. Notwithstanding the foregoing, you may totally suspend your elections at any time." Next paragraph begins with "The plan administrator may establish rules regarding the manner in which your elections are made. The rules may also require that certain advance notice be given of any election." Have not seen a copy of the Master Plan.

The record keeper (two different employees, same answer) says the participant didn't start participating and needs to wait until the next quarter entry. I haven't been told to shut up by the record keeper.......yet. Thanks

I need some pretty substantial documentation to move the immovable object. Please help. Thanks

401k plan with 1 Year, 1000 hours for eligibility. Entry is quarterly. Deferrals changes are allowable on monthly basis, or the next administratively feasible payroll date. Participant A hired 4/28/2012, fulfilled the 1000 hours, therefore is participant 7/1/2013. Did not sign up for deferrals until 10/15/2013. TPA and recordkeeper will not allow to defer until 1/1/2014 because the participant never signed up at 7/1 or 10/1. Is this right? I say it's not right, and the participant should have been able to defer the next administratively feasible payroll after 10/15/2013.