Tom Poje

what exactly do you mean by "Can I have ....." are you talking the ADP test or ACP test? Obvioulsy you fail the ACP safe harbor. But for ADP purposes, did you satisfy the safe harbor? remember, any discetionary matches are never applicable to the ADP test.

there are lots of things that really have little to do with the safe harbor portion, but it still doesn't change the IRS response. ASPPA has requested some permissible changes, but the IRS has still not provided anything further than 'not at this time' or 'future guidance coming' see the following ASPPA request, and that goes back a few years. http://www.asppa.org/document-vault/pdfs/g...shplanspdf.aspx

maybe the difference would be 'discretionary' vs ' required' if you fail some other test you would be required to correct. and certainly there is no problem amending for changes in the law.

agreed Q39 from this year's ASPPA Conference Give the IRS credit, they have been consistent on their answer. I did not attend so I do not know what was discussed. My client wants to change to a more liberal eligibility period under a safe harbor plan, where the safe harbor contribution is a nonelective contribution. The employer doesn't want to wait until the beginning of the next plan year. Would it be permissible to make the amendment effective during the year, since it doesn't affect elective deferral decisions by currently eligible employees? Would the answer be different if the safe harbor contribution were a matching contribution? Our answer. We did not provide an answer. IRS response. Presently the only exceptions for changes during the year are those identified in Announcement 2007- 59. The IRS will discuss this issue further from the podium.

we did all our SSAs through batch- so a whole bunch at once. one set for 2009 (which included 2010) and another set thet was 2010 only I think it took about 3 days before I saw the confirmation notice. ha. lyrics. I think I'm up to 14 songs. Decided I'd 'bore' the people here at the company Christmas party. Almost 45 minutes. oh well.

I guess if you are using the Relius export the answer is probably yes. Since I used FT William I ran a report running from 1/1/09 - 12/31/10 and then imported into their software so I ended up combining things. but it certainly ok to do it either way. the 2010 form was just released, so that may further change how you do things, though I'm not sure what the time frame is before Relius will have it available. I think you can use the 2009 form (and entering the proper dates), but at this point I no longer care (sorry) because I've done all out 2009 and 2010 plans. (except maybe some mid year plans we have)

IRS Q and A #3 May I prepare one Form 8955-SSA covering both 2009 and 2010 reportable employees? Yes, you may prepare one Form 8955-SSA covering both 2009 and 2010 reportable employees. In that case, the 2010 reportable employees are treated as reported in 2009. Enter the beginning and ending date for the 2009 plan year on the Form 8955-SSA when combining information for the 2009 and 2010 plan years. For example, a plan that reports on a calendar year basis and combines information for the 2009 and 2010 plan years should enter January 1, 2009 as the beginning date and December 31, 2009 as the ending date. ft William suggested the following: In some cases, you may have a participants that has not been previously reported (Code A) for 2009 and in 2010 becomes a participant previously reported, but is no longer entitled to the deferred vested benefits (Code D). While there is no official guidance on this point, we would recommend that you do not report the participant - if combining the 2009 and 2010 information. It is recommend to report both if you are completing two separate Form 8955-SSAs, one for 2009 and one for 2010. .......... as for your Q 2 - who knows. it probably won't make a difference. In the past, it was permissible to put "SAME" for the 5500, but once E Fast 2 started (and the Form SSA was eliminated) you had to enter the address all over again. I suppose writing SAME was just to make life easy on the filer, and its just a carry over, but technically you are not following the instruction, so I couldn't say for sure. but I think people in the past have filed the 5500 with the addresses being the same and there has never been a problem.

well, the formula I used was if Sum ({RPTEEACCT.VESTBALAMT}, {RPTEE.SSNUM})>0 then "A" else "D" which basically says if vested balance is greater than 0 return an A otherwise make it a D. If these people still have a vested balance then something is off with the vested acct balance. If these people had no vested balance and simply forfeited after a number of years, then it could very well be the report doesn't work for those people. I'd be the first to admit I could have missed something.(though I think this would only occur if the plan is not "0 vested terminees will forfeit immediately"

D Doucette- the following (page 3) would at least seem to confirm the 2011 figure http://www.buckconsultants.com/buckconsult...keymaximums.pdf

based on the recently released LRM from the IRS (Oct 2011) In the event that an eligible employee is included in more than one participant allocation group, the participant’s share of the employer contribution allocated to each such group will be based on the participant’s compensation for the part of the year the participant was in the group. p.126 of the DC LRM while I have attached a file, it can be found (along with another LRM for CODAs) at http://www.irs.gov/retirement/article/0,,id=97182,00.html this is a good website to keep handy, lots of stuff there. At the recent ASPPA Conference Q and A the IRS basically said the same thing (though their comments were actually made before the LRMs were released) Q 31 Plan has 2 allocation groups - 8% contribution to "day shift employees" and 5% contribution to "night shift workers." The plan requires 1000 hours to receive an allocation, but no last day employment requirement. For the current plan year, Bob starts out the year working the day shift, and completes 1,200 hours in that status. Then, during the year, he switches to night shift and works an additional 800 hours for the remainder of the year. (a) How should his allocation be determined? (b) If it is determined that the formula applies based on whether the participant is a day shift or night shift employees as of each hour, does the fact that the contribution rate per hour decreases when the employee transfers to the night shift create a 411(d)(6) issue? © If the employee is entitled to both the 5% and the 8% contribution rate for his hours, how does that affect the general test under IRC section 401(a)(4)? Our answer. (a) This is primarily a plan drafting issue. The question is whether a participant's contributions are determined on an hour-by-hour basis, depending on whether each hour is earned on the day shift or night shift, or whether all hours are treated the same based on a participant's classification as of a particular date. If the document is ambiguous, the plan administrator will have to interpret the plan. (b) No 411(d)(6) issue. The change in contribution rate is due to an employment change, not a plan amendment. © The employee's contributions will be combined to compute his EBR, and then he will be placed into the appropriate rate groups for general nondiscrimination testing. IRS answer. The IRS agreed with our analysis. They added that the document could take an approach where it identified a date as of which the classification as a day shift or night shift employee is determined (e.g., first day of the plan year, last day of the plan year), and then compute the contribution for all hours for that plan year based on that classification, regardless of the individual's classification for each hour within the plan year ........ all that being said, change of ownership does not effect if an ee is an HCE or a key employee

as I recall it is planned for sometime in December

this does not sound like an excess annual addition, but an excess deferral (e.g. participant deferred 20,000 in a given year) if I understand the facts correctly EE worked for 2 different companies. he deferred 5000 at one and 15000 at another. neither plan accepted amounts above the 402(g) limit, so neither plan had a disqualifying event. the employee submits his W-2 when he files his taxes, and the IRS knows he exceeded the limit, so he has to pay taxes on the excess amount. someday he will take a distribution. at that point in time he will once again pay taxes on that amount. taxed twice because it was not distributed before April 15. My understanding is that since neither plan has a disqualifying event, there is no required distribution. In fact, unless there is a reason for a distribution the plans can not even make a distribution. (Since he terminated, there is a distributable event). If this had been caught before April 15 of the correct year, most documents contain language that say "At the participants request, a distribution can be made to correct a violation of excess deferrals". now that it is after the fact, I donm't think you do anything. at least that is my understanding of the rules. If this had taken place in one plan, then you have a disqualifying event, and under EPCRS you would make the distribution. Regardless, even in that scenario, you end up paying taxes twice. again, that is my understanding of the rules. (but then, I'm wearing a pilgrim outfit....) something like See John. See John pay taxes of excess amount. See John pay taxes a second time on the same amount.

this is from the 2010 ASPPA Conference Q and A If there is a vested amount, prior service cannot be disregarded, even if the vested account is attributable to deferrals. IRC 411(a)(6)© and (D). However, if there is a vested percentage, but no vested amount (i.e., no deferrals made in this example), the rule of parity does permit prior service to be disregarded. sp basically, if the person ever had anything then no you can't disregard prior service. the one year break in svc rule makes no sense in a 401k plan, because once a person completes a year of service the entry date is retroacrtive to date of hire. but you can't retroactively defer, so you are pretty well stuck. almost all (if not all) 401k documents I've seen call for immediate entry on rehire.

the response at this years conference is no different (despite arguments from ASPPA) Q and A 21 IRS response. The IRS believes that safe harbor contributions under IRC section 401(k)(12) are required to be nonforfeitable when made to the plan. This is because Treas. Reg. section 1.401(k)-3 refers to safe harbor nonelective contributions as qualified nonelective contributions and to safe harbor matching contributions as qualified matching contributions, and Treas. Reg. section 1.401(k)-6, in defining those terms, requires that such contributions meet the nonforfeitability requirement at the time contributed to the plan. A forfeiture used to fund such a contribution would fail to meet this requirement, because it is attributable to a contribution that was not forfeitable when contributed to the plan. The IRS takes a different position with safe harbor contributions under a qualified automatic contribution arrangement (QACA), pursuant to IRC section 401(k)(13), because such contributions do not have to be nonforfeitable at the time they are contributed. ASPPA Comment. We disagree with the IRS' response. This position seems to be an unnecessarily narrow interpretation of the regulatory language. The reference in the regulations to the time contributed to the plan instead could be interpreted as prohibiting an employer from making contributions to a participant’s account that later become vested (e.g., amending the plan to eliminate the vesting schedule) and then characterizing such previously-allocated contributions as a safe harbor contribution, QNEC or QMAC. When forfeitures are used to reduce employer contributions, they are simply acting as a proxy for the employer’s current contribution. The focus on nonforfeitability for a safe harbor contribution, QNEC or QMAC should be when the contribution is allocated (i.e., contributed) to the affected participant’s account. This interpretation is further supported by the statutory language. IRC §401(k)(3)(D)(ii), which defines QNECs and QMACs, refers to the vesting rule under IRC §401(k)(2)©, which simply focuses on nonforfeitability with respect to the participant’s accrued benefit derived from such contributions, not whether the source of such contributions are current employer contributions or forfeitures. IRC §401(k)(12)(E) makes a similar reference with respect to the vesting requirement for safe harbor contributions. I would also note that the IRS response would have been made before the new LRMs were released at the start of October. But the LRMs also support their position. 3 times (not just once, but count 'em, 3 times) they tell you... (recall that the regs clearly indicate that a safe harbor is a QNEC) p. 14 [Note to reviewer: The blank space in the preceding paragraph should refer to the Plan's forfeiture provisions applicable to employer contributions other than Elective Deferrals and Qualified Nonelective Contributions. In the alternative, a sponsor may provide for specific forfeiture language applicable only to Matching Contributions. Note that forfeitures cannot be used as Qualified Nonelective Contributions, Qualified Matching Contributions or Elective Deferrals.] p. 23 [Note to reviewer: Forfeitures cannot be used as Qualified Nonelective Contributions, Qualified Matching Contributions or Elective Deferrals. For Plan Years beginning after 2005, matching formulas, other than those above, such as flat-dollar or ones that target matches at lower paid Non-highly Compensated Employees, must satisfy additional requirements specified in Regulations § 1.401(m)-2(a)(5).] p.36 (b) ACP Test Safe Harbor Matching Contributions will be vested as indicated in the adoption agreement, but, in any event, such contributions shall be fully vested at normal retirement age, upon the complete or partial termination of the Plan, or upon the complete discontinuance of employer contributions. Forfeitures of nonvested ACP Test Safe Harbor Matching Contributions will be used to reduce the Employer's contribution of such ACP Test Safe Harbor Matching Contributions. [Note to Reviewer: Other language specifying the use of such forfeitures may also be acceptable. However, forfeitures may not be used as ADP Test Safe Harbor Contributions, and if used as anything other than ACP Test Safe Harbor Contributions, the Plan will not be exempt from Code § 416.] the LRM is called Cash or deferred arrangement (CODA) of Required Modifications Information package found at http://www.irs.gov/pub/irs-tege/coda_lrm1011.pdf

1.401(k)-3(e)(4) provides the rules for a final year less than 12 months.

it is possible the DOL would say this doesn't meet the smell test e.g. the requirement that a determination be based on 'hours', or in the case of a non-DB on a last day provision. or arguably, you are saying "an excluded class consists of those not deferring on Jan 1". While you can exclude classes or divisions, I think even that would fail in the fact you are requiring something additional on the part of the participant Labor Reg 2530.200b-3b (b) Rules generally applicable to computation periods. In general, employment at the beginning or the end of an applicable computation period or on any particular date during the computation period is not determinative of whether the employee is credited with a year of service or a partial year of participation, or incurs a break in service, for the computation period. Rather, these determinations generally must be made solely with reference to the number of hours (or other units of service) which are credited to the employee during the applicable computation period. For example, an employee who is credited with 1000 hours of service during any portion of a vesting computation period must be credited with a year of service for that computation period regardless of whether the employee is employed by the employer on the first or the last day of the computation period. It should be noted, however, that in certain circumstances, a plan may provide that certain consequences follow from an employee's failure to be employed on a particular date. For example, under section 202(a)(4) of the Act and section 410(a)(4) of the Code, a plan may provide that an individual otherwise entitled to commence participation in the plan on a specified date does not commence participation on that date if he or she was separated from the service before that date. Similary, under section 204(b)(1) of the Act and section 411(b)(1) of the Code, a plan which is not a defined benefit plan is not subject to section 204 (b)(1) and (b)(3) of the Act and section 411 (b)(1) and (b)(3) of the Code. Such a plan, therefore, may provide that an individual who has been a participant in the plan, but who has separated from service before the date on which the employer's contributions to the plan or forfeitures are allocated among participant's accounts or before the last day of the vesting computation period, does not share in the allocation of such contributions or forfeitures even though the individual is credited with 1000 or more hours of service for the applicable vesting computation period. Under certain circumstances, however, such a plan provision may result in discrimination prohibited under section 401(a)(4) of the Code. See Revenue Ruling 76–250, I.R.B. 1976–27.

no message yet, but Lorraine has been returning calls all day. in fact I haven't even heard any comments about the program this year. I had someone ask me why I wasn't there and I said "because they got rid of the basketball shoot, because someone complained after the basket ball bounced off the rim, hit her and she spilled her drink." The guy laughed and said he forgot about he was the one shooting that basketball, and then added something about "she was a nasty lady anyway..." ... my gut feeling from the IRS agents I've talked to is that they would like have some leniency in amending things, but just where would you draw the line. people like to push things to the limit...

that shouldn't be a problem unless the plan is a safe harbor 401k. The IRS is currently pretty strong in their belief that you can't amend those mid year. they say their hands are tied by the regs.

my understanding is that since the person is no longer a participant they would accrue no furthet benefit. This would be no different than excluding a division, etc, as long as the change tok place as of the start of the year. if the person had no prior account balance I don't even see how you would include them on the 5500 count - I always wondered if the participant count could actually drop from the end of one year to the begining of the next year and I thibnk you found an example.

the most recent sample language for the LRMs (Listing of Required Modifications) (Oct/11) [these pertain to prototypes] found at http://www.irs.gov/pub/irs-tege/dc_lrm1011.pdf has the following LRM 94 The employer will specify in written instructions to the plan administrator or trustee, by no later than the due date of the employer’s tax return for the year to which the employer’s contribution relates, the portion of such contribution to be allocated to each participant allocation group. The employer contributions allocated to each participant allocation group will be allocated among the employees in that group in the ratio that each employee’s compensation, as defined in section _____ of the plan, bears to the total compensation of all employees in the group. In the event that an eligible employee is included in more than one participant allocation group, the participant’s share of the employer contribution allocated to each such group will be based on the participant’s compensation for the part of the year the participant was in the group. in the case of union employees, any testing is done separately (comp while union and comp while not union) in the case of an individaul who is always non union, you would still test on total comp, but the contribution would be split depending on which grouped the person was in. Q and A 31 at this year's ASPPA Conference was answered this way: Plan has 2 allocation groups - 8% contribution to "day shift employees" and 5% contribution to "night shift workers." The plan requires 1000 hours to receive an allocation, but no last day employment requirement. For the current plan year, Bob starts out the year working the day shift, and completes 1,200 hours in that status. Then, during the year, he switches to night shift and works an additional 800 hours for the remainder of the year. (a) How should his allocation be determined? (b) If it is determined that the formula applies based on whether the participant is a day shift or night shift employees as of each hour, does the fact that the contribution rate per hour decreases when the employee transfers to the night shift create a 411(d)(6) issue? © If the employee is entitled to both the 5% and the 8% contribution rate for his hours, how does that affect the general test under IRC section 401(a)(4)? Our answer. (a) This is primarily a plan drafting issue. The question is whether a participant's contributions are determined on an hour-by-hour basis, depending on whether each hour is earned on the day shift or night shift, or whether all hours are treated the same based on a participant's classification as of a particular date. If the document is ambiguous, the plan administrator will have to interpret the plan. (b) No 411(d)(6) issue. The change in contribution rate is due to an employment change, not a plan amendment. © The employee's contributions will be combined to compute his EBR, and then he will be placed into the appropriate rate groups for general nondiscrimination testing. IRS answer. The IRS agreed with our analysis. They added that the document could take an approach where it identified a date as of which the classification as a day shift or night shift employee is determined (e.g., first day of the plan year, last day of the plan year), and then compute the contribution for all hours for that plan year based on that classification, regardless of the individual's classification for each hour within the plan year.

I'd have to believe the definitions would have to be the same. for example, I could exclude deferrals. so plan A provides profit sharing based on total comp Plan B provides profit sharing based on comp less deferrals. I would think on a combined basis this would fail the requirement that "deferrals be treated on a consistent basis" or at least that is how i would see things. this would prevent plan A for being for HCEs and Plan B for NHCEs and making an end around the nondiscrim test if each plan provided 5% of plan comp. as an aside, we know that you can have a 3% safe harbor, and a basic match match, but combined those plans would'nt pass even though each by itself would. but then, these are comments from a pilgrim, so consider the source.

I guess if you are into such things, for PIA purposes, the 'bend' points for 2012 can be found here (and how they are determined) (or if you use Relius and want to update your plan limitation table) http://www.socialsecurity.gov/OACT/COLA/piaformula.html

dang it. always in the wrong place. oh well, that just means more pumpkin cookies for myself.

Andy - what outfit? You mean you don't dress like this? have you seen any pilgrim ladies about? I can't seem to find any.

it shouldn't make a difference. a Roth is still a deferral, and if you are matching deferrals the Roth would get matched. so if the person defers 3% deferral and 3% roth he has deferred 6% in total. and a match is still a match. you don't have a 'match account based on Roth' - or at least I wouldn't think one would want to track things that way.