Jim Chad

If i understand this right, the Plan is currently out of qualification. Is this correct? If yes, what is the failure causing it to be "not qualified"? What kind of plan is it? About how much are assets? Any Participants other than the owners and the owners' spouses?

Can you clarify? What "deemed earning" are you referring to? Is this a partnership or sole proprietorship?

I have an employer with a MPP with a 1 year eligibility and a 401(k) with a 6 month eligibility. What is the easiest way to get all of the employees and all of their census and payroll data into both plans every year. In the past, I have imported the payroll and census info into the 401(k) and then used a DER to export from one Plan and import it into another. Is there an easier way yet?

IMNTBHO I would treat it as an excess deferral because it exceeds the amount the employee authorized. I do believe it needs to come out adjusted for losses. Also, I think the employer (or payroll company) should make the employee whole. Honestly, I can't think of anything to back this up. It is just my gut feeling, for what its worth. Good luck.

Hi Lori H: I'm trying to understand what you mean when you say that it is not a new comparability Plan. Here are several possibilities. 1. The doc say that any non elective contribution will be allocated pro rata AND it has NO allocation requirements. So cross testing will never be needed. 2. they will never put in a non elective contribution. 3. They plan to never put in a non elective contribution. But you never can tell and the document provider wants to give them the option to cross test either because of a new comparability allocation formula or because of last day and 1,00 hour rules. Lori, I think I have done a really lousy job here. If I can find a better way to say what I am thinking, I will try again later. In the mean time maybe this will help some.

There is no requirement to have a separate EIN for the Qualified Plan. I used to do it religiously. But not any more... too many of my EINs were frozen. The IRS said they have stopped that on 2 separate occasions. Now if I am using a 401(k) platform such as John Hancock or Transamerica or American Funds direct, I do not bother applying. They do all of the withholding using their EIN anyway. I still do apply for an EIN if any other investment type is used. ...and I make certain the investments are titled in that name and EIN. By having a separate EIN from the employer, we are in much better shape if someone accidentally sends a 1099 showing investment gains. This has happened a few times even though it is obviously a tax exempt Plan.

I think you are on the right track in dealing with gains/losses. FWIW However I am pretty sure you have to multiply 4% by 50% to make up for the missed deferral opportunity. I think there is an example that shows that you use the deferral rate that would receive the maximum match. I can't find the example right now, though.

Bruce, I think you have it all correct. Match and Non elective are the only contributions I can think of that you can require 1,000 hours. Deferral, Safe harbor, and rollover cannot have an hours requirement.

Quick little addition to 3. You can exclude an employee who is part of a collective bargaining agreement if retirement plans have been part of good faith bargaining, whether or not they are in a plan. Now, to your question. If they work more than 500 hours they certainly do not have a break in service. They can not be paid out or excluded. Now my opinion. If they continue to work at all, for example, 10 hours per month, I would consider them still a Participant in every way. Of course, this Plan might have allocation requirements. They may not be eligible for a match or non elective contribution because of a 1,000 hour allocation requirement.

QDROphile, I LOVE your analysis here. Now, this is making a point clear.

Excluding bonuses from deferral contributions is probably no problem. However, if you have not operated according to your document, that is a problem. Let's think "out loud" a minute here. If someone signs up for $100 per pay, than nothing extra should come out of bonuses. But if a Participant signs up for 6% of comp, than 6% of all comp should have been deferred. What is "all comp"? "all comp" is whatever the document says it is. Starting 1-1-09, you can either amend the document or amend your payroll process. But what to do about the past years is a problem. I would think the Employer would be required to put in the amount that should have been deferred, plus gains (minus losses, I mean). Then I would suggest looking at the dollar amount involved and deciding whether to file under VCP. One other thought: If you look at the examples in Rev Proc. 2008-50, you might get the idea it would be ok to put in only half of the deferrals (I did). If the dollar amount involved was big enough to file under VCP I would try this, I think. If it is so small that you are just going to self correct, I think it would be best to put in the whole amount. And remember that if there is a match involved you should put in the whole match, even if you only put in half of the deferrals.

It isn't legal to start a SARSEP any more? And a SIMPLE IRA requires a er contrib, at least most years. Maybe an employer sponsored IRA?

I realize I am moving the discussion in a different direction, but I want to ask this question. How many times has anyone seen all of the document for a Plan that was 20 years old or even 10, (I mean from the employer)? An employer with a 3 year old plan is looking at switching to us for TPA services. They can't find a copy of the document. It would not surprise me if it turns up in a year or two. This has not been unusual in the small plan market where the business owner is "wearing 27 different hats." Let me play the devils advocate for a minute....would any of you fill out an EGTRRA document right now and wait a year to see if the other documents are found? Assumption 1: $150,000 in the plan Assumption 2: $2,000,000 in the plan

I have always tried to have an owner or officer sign plan documents and amendments. I have a Plan where the controller is a trustee, but not an owner or Pres., VP., Secretary or treasurer. Does a trustee have the authority to sign the amendments? In this case, the 415 amendment?

What a Pain!. You have my sympathies. A few questions first: Approximately how much money was the original pay out? How much is the account worth now? Were distribution forms filled out prior to the payout in 2007? What are the chances of getting the 2007 payout back, now? ( for example is it a family member of the owner)

Can you give me an example of anything that can just be a payroll policy?

I wonder what people think of this. Document allows catchup contributions. Employer is thinking about simplifying his life by stopping everyone ate $16,500 in 2009. Is it ok to make this kind of administrative decision or should we amend the Document?

Austin, I can think of one thing that a standardized prototype can do and a VS cannot....at least I think I am right on this. If you have some employees with less than 500 hours and terminated during the year, they may cause you to fail testing with a volume submitter. but you get a pass on testing with a standardized prototype. Let's the plan has 3% SHNEC and a discretionary profit sharing with last day requirement. Because the terminated employees received the 3% SHNEC, they have to be counted in testing even though they have fewer than 500 hours. I have been thinking about this. But so far I am still only using the Volume Submitter. One other thought just crossed my mind. A prototype usually has no "other" boxes to fill in, so it is less dangerous in the hands of the "not expert".

My understanding is that all non elective has to be tested together. But I am not certain and am looking forward to other replies.

One attorney broke off and started his own firm with 2 other employees. He wants for himself and these two employees to receive credit for years at old firm. In Corbel volume submitter that is easy. The old firm changed name but kept EIN. When I put in doc to give credit for years with old firm name, if he later hires another employee from the old/new firm, will my client have to give credit for years with the other attorney's new firm name?

Is there a way to set which forums will show up for me when I ask to see new posts in the last 24 hours?

I just heard back from Corbel and they said that anyone getting 1,000 in a year would have to have met my requirements. But they also suggested including the failsafe language to include anyone completing a year of service.....for added protection in an audit.

Lou, I'm not sure I was clear. This employer is being more generous. Is there any regulation requiring the employer to be less generous to those that do not have 500 hours in the first six months? I can not see any way that someone could enter later under my "500 hours in six months" than the usual "1 year of service" or am I missing something?

The Corbel volume submitter with an Adoption Agreement has the option of "blank" hours in "blank" months starting with the employees date of hire...but then goes on to say that if the employee does not satisfy the initial period the requirements change to a year of service listed above. I would like it to stay at 500 hours in 6 months. Does anyone know why I could not write into the "other" block "six months of service and 500 hours in a six months measuring period."?

Jimmy, if you still want to charge the Plan as a whole, (perhaps the employee already received all of his account), I believe the correct way would be the same as for a $1,000 quarterly fee. You should do it pro rata and yes that means the big accounts get hit the hardest.