Tom Poje

correct. currently I have 114,829 the Aug value will be released in a few days, by Friday for sure, and then I can plug that number into the spreadsheet. of course ASPPA has been sending out warning notes some of our beloved members in Washington are threatening to cut back everything on us, like they did once many years ago (before I started in the business - I'm old but I guess not that old)

well it depends. (Discussed this a few months ago in an earlier thread) if using FT William the system will generate an warning message if the body count does not equal the number of bodies listed on the next page. if you file electronically the form will be rejected if the count total does not equal the list total(or at least that is what I have been told) one of the people at the support desk at the IRS says you should not include 'D' people.(but that might simply be there reading of the instructions) The instructions on the form say report people who have separated with a vested benefit. well, someone who has been paid out no longer has a vested benefit. however the actual instructions say participants who have a deferred vested benfit includes those previously reported but have been paid out. however for line 6 they simply say "those entitled to a deferred vested benefit." stupid english language. since I will file electronically in batch through FT William I have included the D people in the count so the SSAs don't get rejected.

well, the instruction for line 2g say "although certaing participant loans deemed distributed are to be reported on line 2g of the schedule H or schedule I, and are NOT to be reported on the schedule H or Schedule I as an asset thereafter (unless the participant resumes repayment under the loan in a later year), they are still considered outstanding loans and are not treated as actual distributions for certain purposes. This issue has been brought about because FASB says loans should now be shown as 'receivable'. but all I've read would seem to say that is for FASB purposes. a check on the internet has a bulletin from Prudential ( http://www.retire.prudential.com/media/man...-FASB-loans.pdf ) which says The Department of Labor (DOL) continues to require the unpaid balances of participant loans plus accrued but unpaid interest to be reported as investments on the supplemental schedule of assets held to be included in audited financial statements and annual Form 5500 reporting. It is unclear if the DOL will issue guidance on the reporting of participant loans in response to the FASB position. Grant Thorton ( http://www.grantthornton.com/staticfiles/G...S%202010-28.pdf ) has a similar bulletin Presentation of participant loans in Form 5500 and supplemental schedule ASU 2010-25 does not change the current requirement to present participant loans as plan investments on Schedule H of Form 5500. Participant loans should still be reported as plan investments on Form 5500, as well as on the plan’s supplemental schedule – Schedule H, Line 4i – Schedule of Assets (Held at End of Year). I've never seen anything indicating accrued interest on defaulted loans shoulbe shown on the schedule of assets, and since the instructions for the 5500 say such loans are not to be reported as an asset it would seem odd to me to report as such. (nor have I had an auditor request that as well)

they even released the test guidelines the other day (muntiple guess, true/false or even falser) 120 questions http://www.irs.gov/newsroom/article/0,,id=245207,00.html I wondered what would be completed first - that or the form 5500 for 2011. one article on 5500 exempt from paid preparer rules: http://www.asppa.org/TBD/11-01.aspx

good cite. I think the sentence follwoing what you highlighted also applies. The person in this case does not have to perform additional service (e.g. hours requirement or last day) but rather he simply didn't defer enough. If the plan had a 50% match and I defer 0 I am still included in the test, I simply didn't dfere enough to get a match.

I'm not sure how to handle. my own guess is that this is more of an 'amounts' issue rather than no match due to failure to meet an hours or last day provision, which means it would be like a match formula <2% deferred = 25% match between 2 and 4% deferred = 50% match >4% deferred =100% match in your case <$500 deferred = 0 match >500 = 75% match, but I could be wrong.

the gateway is only provided to those employees who receive a nonelective contribution. thus if each person is in their own group and you provide no profit sharing to that group, then no gateway is required, even if that person is an NHCE. (Of course, if the plan was top heavy and the person was there on the last day they would get the top heavy and therefore any possible gateway) my understanding is that for coverage purposes you can only use the ratio percenatge test, because the non discrim classification test can't be used because "an enumeration of employees by name or other criteria having the same effect as an enumeration by name is not considered a reasonable classification". while probably wouldn't matter in your case, if your group who received zippo consisted of only NHCEs, then even though you might pass nondiscrimination using cross testing, you still could fail coverage because you fail the 70% ratio % test.

consequences: http://www.dol.gov/ebsa/media/press/Pr120410.htm scare the heck out of them! Fred Reish once wrote in an article concerning bonds titled " IRS Audits and Bonding for 401(k) Plans" "While the failure to obtain an ERISA bond can be corrected prospectively by purchasing a bond, it cannot be corrected retroactively. However, since the purchase of a bond is not a disqualifying defect, retroactive corrections are not needed for tax purposes. For other purposes, though, the failure to obtain a bond could result in substantial penalties or liabilities." .... so, for instance, if the plan was in audit state the sun might not shine in your general direction. if the plan was small and you had enough non qualifying assets I imagine that means the 5500 needed an audit other than that, since it is not a disqualifying event, and there are no 'late' fees, I'm not sure what happens - if no $ were ever stolen. I thought the whole idea is that it was something like insurance, its protection just in case.

if it was a DC plan then 1.401(a)(9)-5 Q-8 says the RMD for subsequent distribution calendar years must be increased by the sum of the amounts not distributed in prior calendar years because the employee's vested balance was less than the required minimum distribution. so in your example no min distrib for 2013 and 2014 but then 3 times in 2015. I'd guess this would probably be sizable enough to put the individual into a different tax bracket, so that might not be such a good strategy

assuming the plan operates under the 'rule of parity' the IRS response at the ASPPA Conference last year was: 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. If the plan operated under the 1 yr break in svc then you have to wait a year before you can enter,but the entry is retroactive to date of hire. so that botches everything up because you can't defer on the comp you earned a year ago. Because of that, I believe the IRS has voices an opinion you can't use a 1 year break rule if deferrals are involved

The Pension Answer Book (Chapter 11, Section XI 4c) would describe it this way: or at least as I can best word it Suppose I distribute excess contributions and later find I also have excess deferrals? the amount of excess deferrals is reduced by the amount of excess contributions already distributed. however, for tax purposes (e.g. the 1099R) , you still report the total amount of excess deferrals. (Ultimately this will match your W-2) now since you received $X in actual distribution, the remainder would be treated as excess contribution on the second 1099R. It makes a difference because excess deferrals are taxed in one year and excess contributions in another. see 1.401(k)-2(b)(4)(i)(B) and 1.402(g)-1(e)(6). The book says "This is required (although stated in a rather confusing manner)" by the regs. Gotta love it! the example used is somewhat like this: $1000 distributed as excess contributions on March 1, 2010. Later it was discovered there was excess deferrals = $600. for tax purposes $600 is treated as excess deferrals, taxed in 2009 (because that wass the year the excess ocurred) and the remainder is treated as excess contributions, taxed in 2010 because that was the year of distribution. what isn't addressed would be the fact the initial ADP test might have been run incorrectly. if there were excess deferrals, and the person was catch-up eligible, then those amounts should not have been included in testing. how all this is coordinated between 2 plans is more than I care to think at this time. Normally you combine all deferrals in the ADPs test of qualified plans, but I've never worked with a SARSEP and they are a special animal. if I understand the facts as presented in this case, $5000 was deferred into the SARSEP and refunded as an 'excess contribution' because no else deferred. now suppose one defers 16500 into the new plan. If I understand the regs correctly, this means there are excess deferrals of $5000. So now, even though $5000 was refunded as an excess contribution, for tax purposes it is treated as an excess deferral. again, that is my understanding only.

while it's true a plan could be disqualified for accepting deferrals above the limit, deferrals are still an individual limit, and a calendar year limit at that. In other words, when the individual is issued his/her W-2(s) what is the total value of deferrals that will appear for the calendar year. short plan year, non calendar year, etc don't really matter. the IRS does it this way so they know if an individual has exceeded the limit, simply by looking at all the W-2s an individual has for a year. hence, the fact an individual might have received a refund shouldn't matter. refunds don't show on the W-2

but what if you had a profit sharing contribution? what you really need would be 3 tests - one for deferral, one for match, one for ps. I've seen a few odd plans in which you can't defer on bonus but it would count toward profit sharing. fortunately those don't happen very often. as is, you can get by with what you have. my guess is that if push came to shove it would be possible to modify the report to achieve what you need

that sounds correct ( if match had an hours requirement then test 2 would be the one you would use)

lets say in 2010 the discretionary match was 75% and in 2011 it was 100%. it wouldn't make sense (at least to me) to run the ratio test of current year HCE to prior year NHCE comp. the comp ratio test is simply saying, when I gave 75% match to people based on their comp was that discriminatory due to comp. the ADP might be harder to pass because you are now comparing a match for the HCEs at 100% to a 75% rate for NHCEs, but discretionary match will always have issues when using prior year unless its consistent each year (which in effect, makes it somewhat not discretionary.

that would be my understanding. the person quit so there was a distributable event, in fact, there had to be as he received a distribution of other money. therefore, it sounds like a bad 1099R. (I suppose if you were real lucky the person quit in Oct. therefore, if the plan allowed a terminee to continue to make payments, the grace period for correcting thing wouldn't happen until 2011, so then the loan would default, but that scenario is probably unlucky) it sounds like the person needs to correct the tax form for 2010 and include the loan balance.

to max out the owner in a ps requires 49,000 / 245,000 = 20% the gateway would be 5%, though that doesn't guarantee passing any test. if you allow deferrals and the owner defers 16500, then the profit sharing needs only be 32,500 32,500 / 245,000 =13.26%, so te gateway is reduced to 4.43% under the 1/3 rule. so that would reduce the contribution to the rank and file. however, you may fail the ADP test if you get little or no deferral. possible drawback unless the NHCEs defer, the avg ben % test will be harder to pass as the NHCEs are receiving only 4.43% rather than 5%. on the other hand, if you get any deferrals from them, the test will be easier to pass. if the NHCEs have been there awhile, most make the plan safe harbor, thus provided 3% safe harbor. this satisfies top-heavy, which is generally the case in a cross tested plan. this satisfies the ADP test, so it doesn't matter if the NHCEs don't defer. if the majority of the NHCEs have been there awhile, then the fact the safe harbor is 100% vested has little drawback.

it's Friday and it's been a while since I 'ruined' someone's day. I posted these a few years ago - time to do it again. Identify the 100 college football helmets. 50 on one spreadsheet, 50 on another

the July CPI-U figure was released today = 225.922 the plan limits are based on the figures for the 3 month period july-aug-sept. based on the current value the deferral limit would be 17,000 for 2012. comp limit of 250,000 and 415 limit of 50,000. They'd have to change the regs to prevent that from happening. well, we've been stuck for 3 years, maybe its about time things increased. should the average for the 3 month period jump to 226.666 then the regs would have the comp limit at 255,000 at the 415 limit at 51,000. (assuming my calcs are correct) some of those folks in Washington have to love that with the budget and everything else.

its an old Elvis photo from a Relius user group meeting from years ago. (It was the anniversary of his death the other day) posted a few Elvis pension songs under the thread vesting and BRF (or soemthing lie that) under this same board yesterday.

for clarification purposes ADP test is first run treating excluding amounts above the 402(g) limits and plan limits. if the plan fails, then additional amounts may be treated as catch-ups (if available) as for wording, I don't think your example 1 works. it certainly doesn't match the definition of catch up. and there is, as I recall, an example if the regs, in which deferrals throughout the year were 'assumed' to be catch-ups, but when the final totals came in they weren't. I forget the exact context. possibly it was expected the ee would hit the 402g but comp or something else changed and it didn't happen. its debatable if you can put a plan limit of 0%. the original preamble had an example of 0% plan limit. that example was not in the final regs. so, does that mean the IRS changed their minds or were they just saving space. one argument is that if you have a cap of 0%, then technically the person can't defer and so he can't get a catch-up. I lean toward the original preamble which I think said yes he can defer but its the plan that is limiting his opportunity, rather than, no he can't defer at all. so does that mean you could put a limit of 1 cent. now the person can defer, so he should be eligible for a catch up. but a counter argument could be that 1 cent is not a meaningful benefit.

hmmm. if the plan is a 401k is he being included in the ADP test? even if it is not a 401k plan, unless the plan operates under the 1 year break in service rule, you are pretty well stuck being a participant once you have ever met eligibility. common document language would be something like: an individual shall not be an Eligible Employee if such individual is not reported on the payroll records of the Employer as a common law employee. In particular, it is expressly intended that individuals not treated as common law employees by the Employer on its payroll records and out-sourced workers, are not Eligible Employees and are excluded from Plan so, is he on the payroll or not?

my father thanks you, my mother thanks, and I thank you. still singing my old favorite pension songs (for the 401k enrollment meeting) Wise Men say only fools don’t put in and I can’t help deferring into you Shall I save? how much should I put in? For I can’t help deferring into you I will get a match they put it in for me a great big wad of cash some things are meant to be take 5 grand invest each year for me too for I can’t help deferring into you I will get a match they put it in for me a great big wad of cash some things are meant to be take 5 grand invest it for me too for I can’t help deferring into you for I can’t help deferring into you. ………. to the tune of Are You Lonesome Tonight (Hitting retirement age and not having saved) Are you a poor one tonight Do you miss cash tonight? Are you sorry deferrals didn’t start? Does your memory stray, to that four – oh – one – kay When you should have deferred on your part? Does the account in your name, seem empty and bare Do you gaze at your wallet, and see nothing there? Is your heart filled with pain, have you financial strain Tell me friend, are you a poor one tonight?

1.401(a)(4)-11©(2) would say that a 2/20 and a 3 yr cliff vesting schedule areequivalent, but no such indication for the schedules you indicated. if all the NHCEs worked under schedule A and HCEs worked under the other schedules that would obviously be discriminatory. as for your question about changing vesting schedules and old $, etc. you would have tested the old dollars previously so there shouldn't be any need to retest simply because a vesting schedule was changed that does not affect those old dollars.

they did add a BRF report at 16.1, so you can test the match on 3 levels (which doesn't help your 5 levels) I have one with 4 levels, but there are no HCEs in the highest level (unbelievable) so I don't have to test that level at the moment anyway. The numbers on the report equaled what I had been getting on my crystal report version, so the results are as expected. they forgot to put any grouping on the report, so it sorts by soc sec number, but at least thats easy enough to modify. one interesting side note, the plan I was looking at had a short plan year, 11 months. one individual made 109,000, so when creating a new plan year the system says he will be an NHCE - it has no way of knowing how much comp he made in the previous 12 months, since there was short plan year.