Tom Poje

Q and A 8 simply says: How do I submit the Form 8955-SSA to the IRS? Form 8955-SSA can be submitted to the IRS in paper by sending the filing to the address below, or electronically by using third-party software and the IRS’ Filing Information Returns Electronically (FIRE) system. See FAQ #10 for more information on electronically filing Form 8955-SSA. Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0024 so I would just fill in the form from the site and submit (unless your software also has the form available and you can use that). My sample test of the form (print form with data) prints with no bar codes. oddly enough if you print just "blank form 8955-ssa" bar codes appear, so who knows!!! based on what you have to do for electronically filing I think I'd avoid that. in the past you should have indicated who was paid out so I would continue to report those people the same as before.

also, for satisfying the gateway, you can't say I gave a 2% cash balance plus a 5% profit sharing and that satisfies a 7% gateway. you have to convert the cash balance into an equivalent DC rate

you can correct under -11(g) if you are within 9 1/2 months. once you go past that deadline, then its VCP

should have added: if running on Relius, you would want top heavy method to be top heavy skim. when you run a $ amount the system will 'skim' off from the total contribution and keep providing top heavy as needed. ........ the very first plan I ever ran in my life on the old Pentabs system got stuck in a loop. it was the first year of the plan, so the allocation was run. system finished and said, oh wait, the allocation makes it top heavy, give the non keys 3%. so it gave them 3% first, got finsihed and said, oh, my mistake, its not top heavy, and it kept running and running and running going back and forth. talk about a bug in the programming!

maybe yes or no. I think mathenatically it would work if the key ee is the oldest particpant. In an age weighted formula, the oldest person should receive the largest % and everyone receives less. so if I allocate the oldest key ee 3%, since the plan is top heavy, all non keys have to receive 3% as well. if there are other key ees, they would receive a smaller amount through the formula. if I give the oldest key slightly more than 3%, then depending on how things work out the other keys would receive more, unless a non key was close in age to the oldest key the non keys would still only receive 3%. if non keys are older then they would receive more than 3%. In fact, the question can the non keys receive 3% and the keys 0% makes no sense unless this is a 401k, because at that point the top-heavy minimum is 0% since the keys received 0%.

my search through what files I have saved yields the following comments fron the ASPPA Conferences 2002 q 5. If a 401(k) Profit Sharing Plan uses an individual funding vehicle with a $2,000 threshold and the business owners are able to immediately move into this funding vehicle that had multiple investment options, but non-owners with smaller 401(k) contributions are in a pooled money market until they reach the $2000 threshold, is this discriminatory? What if the threshold is $10,000? $25,000? $100,000? This is a benefits, rights and features issue and, depending on the facts, could either pass or fail. q 6. Is it okay to restrict Individual Brokerage Accounts to participants that are 100% vested in all accounts? Is this a BRF problem / issue? See question 5 above. This would be acceptable if you pass the BRF test. 2006 24. A 401(k) plan allows participant to direct investments from the funds selected by the Trustees. An HCE wants to invest in a fund that the Trustees have not included in the list of funds available. The HCE wants to add this fund but limit the availability to only that HCE as an investment option. Is it permissible for the plan to exclude all other participants from investing in this "new" investment? Answer: No. What if the fund will be available to everyone in the plan but has an initial investment requirement of $100,000? (No answer provided) .......... my own feelings is that it smells bad. 'effectively', (which is a facts and circumstances test) how many people have balances above $300,000 and therefore could take advantage of having a managed account? If you had other managed accounts with a lower threshold that others could take advantage of I think you might have a different issue.

but they sort of have waived things. it's just you use the 2009 form instead of the 2010 (go and figure) Q and A 3 from the website 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.

the latest we have on the 8955-SSA is rev proc 2011-31 (released May 31) which can be found at http://www.irs.gov/retirement/article/0,,id=238959,00.html though this procedure only deals with the electronic filing of the form. however, the website does also contain 18 Q and As on the 8955-ssa, so we must be getting close. summer job security, I guess, for those of uis who will have to eventually file these forms.

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suppose for example plan A 12/31/2010 PYE 1 HCE 5 NHCE plan B 6/30/2010 PYE 2 HCE 10 NHCE then when testing Plan A you would have 5/15 = 33.33% NHCE 1/2 = 50% HCE ratio = 33.33/50 = 66.66% testing plan B 10/15 = 66.66% NHC avg and 1/2 = 50% HCE avg ratio = 66.66/50 = 133.33% so plan B passes ratio % plan A fails ratio % since 66.66 < 70. but 66.66 is greater than any safe harbor %, so if you can pass avg ben pct on a combined bases you pass coverage. per regs, combine all plans falling within same calendar year

coverage could be a problem since you will have to treat the folks as includable and not benefitting. e.g. when test plan A, the folks in plan B show as a zero. in addition, you can't even exclude terminees with less than 500 hours from plan B (if you have to be active to receive a match) because that provision only applies to 'participants' and they are not participants in plan A. if the HCEs are split between the plans then passing might not be a problem

can you say "you can't aggregate for the rate group test?" 1.410(b)-7(d)(5) Same Plan year requirement. Two or more plan may not be aggregated and treated as a single plan under this paragraph (d) unless they have the same plan year. paragraph d is for Permissive aggregation for the ratio percentage and nondiscriminatory classification tests. however for the avg ben % test see 1.410(b)-5(d)(3)(ii) ...plan years ending within the same calendar year..

I'd have my leanings the election is forever. the whole purpose of the rule, at least as seems to be described in the regs 1.401(k)-1(a)(3)(v) is that a "one-time election" is not treated as a deferral election if it is permament, irrevocable., and it applies to plans not even in existence. Thus it seems to me if you let the person now enter, you would back track on the previous election - it wasn't permament, thus that prior election becomes a deferral election. I think the following is IRS audit guidelines. stumbled across it awhile ago http://www.irs.gov/irm/part4/irm_04-072-002.html under 4.72.2.5.2 point #2 it says a change in status will not give rise to a new election. I'd say your example the person's status changed from active to terminated and then back to active again.

well, the regs (1.401(a)(9)-5 Q-3) says Q–3. What is the amount of the account of an employee used for determining the employee’s required minimum distribution in the case of an individual account? A–3. (a) In the case of an individual account, the benefit used in determining the required minimum distribution for a distribution calendar year is the account balance as of the last valuation date in the calendar year immediately preceding that distribution calendar year (valuation calendar year) adjusted in accordance with paragraphs (b) and © of this A–3. (b) The account balance is increasedby the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. For this purpose, contributions that are allocated to the account balance as of dates in the valuation calendar year after the valuation date, but that are not actually made during the valuation calendar year, are permitted to be excluded. © The account balance is decreased by distributions made in the valuation calendar year after the valuation date.

well now ain't that a fine kettle of fish. The ERSIA Outline Book (at least the 2006 edition) says increase by contributions (e.g. they use deferrals as an example) and decrease by distributions made after the val date. but that is the IRS rules. as Sieve indicated there are the prohibited transactions rules (the DOL) for an interesting discussion see http://www.eerisa.com/articles_0109.html

ah but just like no two documents from different vendors are alike, this idiot figures no 2 safe harbor notices are alike, and so, while both may be in compliance one could be more restrictive than another. that was why the caution was issued. obviously an idiot's caution, because considering the individual who asked is the famous do-gooder Austin Power and arch enemy of evil, how could I have ever thought otherwise.

actually, the idiot at this keyboard indicated he was only expressing his own opinion. I'd be careful taking either side. for instance if the document says HCEs excluded from all safe harbors, then I'm not sure how you could allocate a discretionary match to them and treat it as a safe harbor. That would seem to be TAGs reasoning. and with the way a lot of 'checkbox' documents are written that might be the case. on the other hand if the document has a checkbox for excluding HCE from ADP safe harbor (rather than simply 'safe harbor') then I'd say you are probably ok. all this begs the question with the AustinSpace question because we have no idea what his safe harbor notice said, what his document says, etc.

Haven't seen or heard such a thing being done before, but it sounds possible going through the different steps 1. does plan pass ADP safe harbor? yes, so now its ok to see if ACP safe harbor applies 2. Does combined match pass ACP safe harbor? appears to, based on the facts you stated. (even though HCE excluded from basic match, that is not an allocation condition on the discretionary) I'd have a couple of concerns 1. if notice made no mention of discretionary match, I'd probably go thumbs down 2. if document doesn't cap match at 4% of comp, or any particular amount of deferral, but rather simply says discretionary, I'd go thumbs down as well. I don't think you can simply say "Of course the match will be capped at 4%". I vaguely recall most of the restated documents I've seen specifically mention the 4%. but then, those are only opinions.

You just haven't looked hard enough. like finding a needle in a haystack. shhhhhhhhh. its secretly hidden as a side note in the preamble to the 415 regs “As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415©(3). However, in applying these two rules, a plan is not required to determine a participant’s compensation on the basis of the earliest payments of compensation during a year.” if not for that, then once a person deferring 3% hits 245,000 during the year they would be out of luck and couldn't defer more. (thus stuck at 7,350 in deferral!) but that is not the case, beacuse you are permitted to look at things over the whole year. Still, the max comp at any one point in time is still 245,000, so, as was noted in the post above, if it's a basic match, then the match should have been capped once it hit 9800.

At the 2009 ASPPA Annual Conference, (question 33) was along somewhat similar lines -just substitute profit sharing for match: (While its true such responses don't necessarily represent an official IRS position, it is food for thought) A plan provides for a discretionary match which is computed on an annual basis. All participants share in the match. To avoid a large contribution at the end of the year, the employer contributes (for example) a 100% match on deferrals not exceeding 4% of compensation on a payroll basis throughout the year. Under the final 401(m) regulations, you cannot prefund matches before they are earned. Therefore, we will assume for purposes of this question that no requirements apply in regard matching contributions. On that basis, we are concerned that the allocation violates the terms of the plan, which provides for an annual allocation. I suppose, arguably, one could say you only find this in the 401m regs and not in the a(4) regs. of course, just as arguably one could say that the 401(m) regs were revised recently and the a(4) regs haven't been revised, at least in regards to this issue. I have a real problem if gains aren't included in any adjustment. Any correction under EPCRS alsways includes an adjustment for gains. and if, say, the match depsoited was $1000 and the person terminated so the $1000 was removed. further assume the investment lost money that year. this means the person is penalized for receiving a match he wasn't even entitled to.

none that I know of, and I've never heard anyone else say that stopped deferrals because of an in-service withdrawal.

even though a loan is defaulted and therefore deemed to be 'off the books', the loan is tracked on paper and continues to accrue interest. if the individual tries to take another loan, the outstanding 'loan' is counted against what the individual can borrow. That would be the reason for paying off the loan. such deemed distributions should have been reported on the 5500 (e.g. line 2g [or 8e on the SF]), another reason for thinking of them being 'off the books', but again, as noted, you track them in case the person wants another loan.

so at 2% deferral, everyone receives 4% match, that is as good as the basic match, so far so good the rate of match doesn't increase as one defers more, so that is good the enhanced match is not on deferrals > 6%, so that is good. the 4% rule only applies to a discretionary match so based on the facts stated, I believe the formula is ok and no ACP testing is required. but then, I have left my brain at home on occasions, so I might be missing more than just that item.

that is my understanding, and , for example, if the participant requested $1000, and it was split $900 actual deferral and $100 gains the person is still deemed to have taken $1000 in 'deferal', just in case they want another hardship in the future. see also Treas. Reg. §1.402A-1, Q&A 8 (though it ties into Q and 7) one place to find the Treas Reg is at: http://edocket.access.gpo.gov/cfr_2010/apr...cfr1.402A-1.pdf

as far as I know there are no exceptions to the installment rule - even if the plan was to terminate the individual has to continue to receive periodic payments (he couldn't take everything as a lump sum at plan termination). So I don't think being rehired makes a difference, but I could be wrong.