Tom Poje

yep. report has been written, had the extreme benefit of having Austin check some stuff. I thin kwe are both well pleased with the results. The report seems to be working real well. I even ran it across the entire database which took about an hour and generated X number of reports. I believe only those plans actually needing an SSA. This is not written for DB plans, but I suppose it would be easy enough to modify that area. quite interesting, if report is run over a 2 year period, my D people from 2009 appear. His do not appear. he has a request into Relius about this, we were sort of holding off on posting the report until then. (though he wrote a separate report to pull the D people for that year anyway.) according to FT William if you run 2 years, then you would put the 2009 people in 6a and the 2010 people in 6b. so I've recently added a counter as best I could. you still create the excel file, and then sum up the counters. I've kept the D and A separate. have no idea if people are going to put A people only in the count or combine the A and D people. as indicated above, one person on the support line at the IRS said count A only, but if you file electronically you have to combine. I think I will combine the numbers for my filings. At least I can always say "But if I filed electronically you require it done that way!" of course, you could always run the report for 2009, fill out your forms. and then run the report for 2010 and fill out the forms. some of the people you put down as an A in 2009 you would then put down as a D in 2010. of course then you have twice as much paperwork, but what the heck.

my understanding is the plan is still a safe harbor, you have an operational failure, a failure to follow the terms of the document which require the issuance of a safe harbor notice. This is based on IRS comments at the 2004 ASPPA Conference q and A 16: Assume a calendar year safe harbor 401(k) plan with a 3% nonelective contribution. The 3% safe harbor contribution is “hard wired” into the plan document. For the year beginning 1/1/2004, no safe harbor notice is given to the plan participants by the required date. Is the result of no notice being given that (a) the plan must perform 401(k) testing for 2004 and (b) the plan sponsor must still contribute 3% for everyone? A: No; You have an operational defect which should be corrected under EPCRS. This will be additionally discussed from the podium. the IRS seems to have further supported this postion in its The Fix is In: Common Plan Mistakes (This is much more recent than the 2004 ASPPA Conference) see http://www.irs.gov/retirement/article/0,,id=200386,00.html in particular. I seem to recall an Old ERISA Outline Book (years ago), when safe harbors first came out indicated the plan was not a safe harbor and tested needed to be done, but I'm pretty sure they changed that portion of the book.

the FT William system expects the value on 6 to match the count of bodies on page 2 for the following reason (I asked): You can overlook our edit checks if you plan to paper file. However, if you use the FIRE system or our fulfillment system the participant count on line 7 must match the total number of participants on your page two's even if the code entered is 'D'. This is due to the fact that the FIRE system does the same check to make sure Line 7 has the correct value. Our edit checks are designed to ensure successful FIRE submissions ......... so you can't win. must have been an actuary who wrote the question and the answer "just what do you want it to be!"

well, you have more patience than I do, I waited awhile and gave up. I was going to ask that and also if the plan is terminated, all assets paid out, the company is going, there is no longer any sponsor, just who the heck signs the form? on the brighter side of things I've tried writing a Relius report to pull the participant data and create a file to upload into FT William. appears to be working, ran it across the whole database (which took about an hour), but I think I'm set on all the DC plans. have someone else looking at it so see if he has as much success.

I tried the form that is currently availabe on FT William. the edit check will have a hissy-fit (or whatever) if the count on page 1 doesn't equal the number of bodies on page 2. (not that the edit check should influence how you code things.......) (again, my reading of the instructions of who counts as a participant with a deferred vetsed benefit includes those who were previously reported and are no longer entitled to a vested benefit (3rd bullet point, first set of bullet points on the instructions)

and for purposes of the 5500 you do not show it because it was distributed years ago. the reason you keep track of it, is that on 'paper' it continues to accrue interest. if the person requested another loan it counts against the maximum allowable loan. thus the govt's way to prevent someone from taking a 50,000 loan every year and never paying it back.

my understanding of how the rules work: if things were done timely, there would have been 2 1099Rs one coded P (taxable 1 year ago) - person was suppose to put the excess deferral on their tax form even though they won't actually receive the 1099R until a year after the fact a second 1099 coded 8 for the gains taxable in 2013. once you are after the fact, its only 1 1099R for the full amount, taxable in the year of distribution. this doesn't mean the person shouldn't have paid taxes as well in the actual year of excess distibution, thus resulting in double taxation. I imagine the same software the IRS uses for the form 5500s is used, so eventually the system will look at the W-2 for 2012 and determine the person had excess deferrals and generate a form letter in 3 or 4 years indicating the problem. if the excess deferrals occurred because of two unrelated plans then you probably don't even have a distributable event, for most likely neither plan accepted deferrals in excess of the limit. you wouldn't even have a distribution until the person terminates and at that point in time the person is taxed the second time.

my understanding was a code D simply told the SSA to take these folks off a previously reported list. I have no idea If they had never been reported, so I put them down 'assuming' the prior administrator did their job and reported them. If they hadn't and the IRS took the trouble to investigate I'm not quite sure what would happen.

under Purpose of the Form (which is the very first part of the instruction) , bullet point 3 it says "previously were reported under the plan but have been paid out or are no longer entitled to those deferred vested benefits" I read that to say, if they were reported previously you need to put them on as a D. In fact, I think its quite plain it says that. (I guess I wonder, if it was purely optional, why have a code D anyway) if they were never reported, then they 'weren't previously reported' and I see nothing in the instruction that says anything about reporting 'unreported terminees'. if the person wasn't reported in a prior year and should have been, well, technically that is suppose to be $1 / day penalty unless one shows reasonable cause for the failure. not sure how that would be enforced, or even discovered. but I suppose if someone quits and tells the DOL they think they might have a benefit somewhere, that might lead to an ugly discovery.

maybe, maybe not. I vaguely recall that a formula like that might be considered a 'disguised' eligibility that the IRS takes a dim view of. which then of course gets into the issue of the fact I could put everyone in their group and achieve the same results, but that's another story.

we switched FT William last year. If you type in the plans EIN's number, all the 5500 data from the prior year is pulled from the DOL so there is not a lot of extra work required. it doesn't matter what software you were using previously. didn't think the learning curve was bad, so what I had thought would be a 'major' switch at the time turned out to be minor.

you are correct, the IRS comment might have been in regards to 10% rather than 6%. my point was merely that something may be currently available, but might not be effectively available. if using Relius, I have a custom report that test BRF based on svc, but if you are any good with tinkering, it should be possible to modify the formulas to look at % deferred the few match formulas we have based on service have never failed, so I guess we are luckier then Mr. RCline

if the highest HCE receives a rate of 26%, then yes, the gateway is 6%. one issue not discussed is top heavy, my experience is most combo plans are top heavy, you did not mention if that is a an issue. (and there is no 'avg' rule, its on an individual basis). if you have an avg of 5.66% you have a pretty good cash balance formula for the NHCEs! 1. you are correct, if you use an average it doesn't matter if someone has an equivalent allocation rate that is higher, you still use the average. 2.has the dc plan even been updated to include gateway language? most documents I've seen simply say you provide each NHCE with enough to satisfy the gateway, so its like an addition allocation formula. 3. generally a QNEC is used to satisfy the ADP test. in that case it can't do double duty - be used to satisft the gateway as well, and in addition such QNECs force you to run 2 nondiscrim tests one with the QNEC and one without. you are always permitted to put in a corrective amendment providing additional contributions to people to pass testing. it does not have to be a QNEC. corrective amendments have to be done before 9 1/2 months after plan year end.

you will always have an ACP test. technically everyone could defer the max, so the formula is currently available to all employees. so then it becomes an effective availabilty test, which there really isn't a mathametical test but then how do you prove it? (And you know in your heart not all the NHCEs can take advantage of higher deferral rates) I've leaned toward 1.410(b)-4 for non discrimination classification test and follow guidelines are given for facts and circumstances. e.g. ratio % is greater than unsafe harbor percentage, extent avg ben 5 test passes, etc... (just so I would have a mathematical test I could run) 4 brf tests (in as simplistic term as I can put it) 1. who deferred at least 3% - which has to be 100% unless you have people who are excluded) 2. who deferred at least 4% 3. who deferred at least 5% 4. who deferred at least 6% with no match on the first 3% this sounds similar to a question raised at the ASPPA conference a few years ago about whether you could start a QACA at 6% and the response was "Yes, but..." meaning if the initial rate was sert so high not everyone could take advantage of it you could have problems, and it becomes an issue of effective availability, agains, there is no mathematical, so how do you prove it? I'd hold if you can pass ratio percentage tests for the groups then you are certainly ok. if you fail ratio %, then its a little harder - but what other facts and circumstances effect things.

the Instructions, under WHEN NOT TO REPORT A PARTICIPANT are quite clear (at least they seem to me to be clear) , a participant is not required to be reported if before the date the form is required to be filed the particpant is 1. paid all deferred vested benefit 2. returns to service 3. forfeits all deferred vested benefit (emphasis mine) since the form is not required to be filed as of today, anyone paid out before today would not have to be reported Furthermore, you are permitted to combine 2009 and 2010. so would you report the person as an A for 2009 and repeat the name on the form as a D? that wouldn't make sense either.

1.401(a)(4)-9(b)(v)(D) provides the min aggregation gateway requirements. the regs require the minimum to be at least 5% increased by 1% for each 5% increment (or portion thereof) by which the HCEs exceed 25%. e.g. 6% for an HCE that exceeds 25% but not 30% as for using annual method vs accrued to date - you are never 'stuck' using one method or another, all you can do is run the numbers and see what happens. there are too many factors involved to say one is better than the other (besides the most import one, namely can your software do it correctly)

yes you have to perform testing, because most likely the people who can take advantage of the 6% deferral rate are HCEs. technically you have 4 tests, though for test how 1 How many people deferred at least 3% would be 100% so that would always pass.

suppose you were a new HCE, deferred 1000 received 1000 match. were credited with 50 in gains on the match. for the sake of the argument further suppose all the match was related. are you implying that you only forfeit 1000 in match and keep the gains? lets suppose the match actually lost $50. since the related match was 1000, I guess you need to come up with an additional 50 to cover the loss.

and it wouldn't even be 4% cash balance plus 0%cash balance) = avg 2% much less the fact you don't count the NHCE, but its the equivalent alloaction rate s that you average. so the 4% cash balance might only be worth 1.2% alloaction rate or whatever.

while the code or regs do not specifically address the issue of earnings (even the ERISA Outline book makes a note of this), under EPCRS Appendix B 2.01(1)(b)(iii)(B) specifically states "any matching contributions (adjusted for earnings) are forfeited in accordance with code section 411(a)(3)(G)" emphasis mine.

oh silly me. the instruction indicate 'previously reported but information is being corrected' so if someone marries and changes their name, then I guess we are suppose to correct the form to match what is on the soc sec card, because in 30 years when the person turns 65 you wouldn't want the IRS to send out a letter to the wrong 'name' saying you might have $ from a plan.

my e-mail from FT Williams says there's was ready 6/14 (but I haven't tried accessing it myself)

the Q and A #3 says May I prepare one Form 8955-SSA covering both 2009 and 2010 reportable employees? Yes, you may prepare one Form 8955-SSA encompassing 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. so if you are combining plan years I guess you go with 2009. 6a is suppose to be for 2008 separated and 6b is for 2009 separated, and since 6b says 'voluntary' I would 'guess' you would include those people in 6b. as I noted under 'humor', I wonder how many people are going to report the name 'exactly' as it appears on the soc sec card as the instruction require.

I would include them on one of those items. while the verbage for 6a only says "Participants who separated with a deferred vested benefit required to be reported..." the instructions on the first page under Purpose of Form says to report info about 'separated partcipants with deferred vested benefits' [same verbage as the line 6a] but there are 4 bullet points who that includes (or perhaps, what the Govt means by that term 'separated participants with deferred vested benefits') this includes those who were reported previously and have been paid out (bullet point 3) at least that is how I would read it.

I find these particularly amusing Line 9, column ©. Enter each participant’s name exactly as it appears on the participant’s social security card. how many are going to comply with it 'exactly'? also The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is 49 minutes. If you have comments concerning the accuracy of the time estimate or suggestions for making this form simpler, we would be happy to hear from you. hey, drop 'em a line