Tom Poje

I missed that stall. yeh, I think that takes it out of safe harbor, because of the rate of match rule. dang it, hate it when I miss the easy stuff. though I think you could get around it by have a 4% match up to 100% (enhanced match) and then have a discretionary match which would be ACP tested. though since the original post said they were tired of having refunds, I'm not sure what that might accomplish. It sounds like the ACP test will fail, though I guess if you match at the end of the year and the document permits it, you wouldn't have to deposit any match that causes a failure.

assuming there is no vesting attached to the match, no eligibility either, then yes, that would be considered an enhanced match. for ACP you could test all match or exclude the first 4%.

in addition, if it is cross tested it is probably top heavy. the person terminated in the DB with more than 1000 hours so has to get the top heavy. since not there on the last day, technically not eligible for top heavy in the DC plan. not sure how your document might address the issue.

under 1.401(a)(4)-11(g)(3)(vii)(B) correction for rate of match - additional contributions can be treated for rate of match but not for other amounts testing (I guess that means ACP test) ....... The example I used was for number purposes only. at 33% for the ratio test, its still not certain whether plan passes or fails. if there was only 1 HCE then it would probably pass the nondiscrim classification test, but I'm too dang lazy to look up the numbers for a question like this. In addiiton, BRF testing there is no avg ben pct test. The general test only applies to nonelective contributions, not to match or deferral

lets suppose Plan A 1 HCE 5 NHCE 100% match Plan B 10 NHCE only 50% match when looking at plan A, how many NHCE receive at least 100% match? 33%. number of HCEs = 100% at 33% do you pass BRF?

sometimes the posts come through with links to elsewhere 'Leo' usually has links to weddings gowns . though sometimes the links aren't there, (posts from others have included links to "depression", "Shelves" ,etc. I'm not about to click on them to see where they end up. its like spam e-mail, junk mail, and inserts in magazines) sometimes the links are 'invisible' , I guess they are hoping you inadvertently click somewhere on the post and get linked as well. based on my conversations with Dave, it's all computer generated. when I find one I know for sure is bogus I delete the posts and send a note to Dave or his help to delete the abuser, but it seems to be getting worse. (interestingly enough, I also tried a search on this particular one (first time I took the trouble to do that) and discovered the same results as you.)

doesn't make a difference if its combined db/dc or not. if you have a document that says the plan is safe harbor, then you provide the safe harbor.(you must fiollow the terms of the document) there is no exemption that says "unless the HCE doesn't defer" or "unless the safe harbor is not needed to pass testing". They would be better to have done a "contingent safe harbor" and then issue a notice a month before the plan year end saying no safeharbor this year.

ft william would seem to agree, just received the following from them: ................ The Small Business Jobs Act of 2010 (SBJA) provides (for 2010 only) that health insurance for self-employed persons can be deducted from self-employment net earning for purposes of income tax. There has been debate about what this means for purposes of retirement plan earned income. Some commentators have suggested the health insurance deduction would raise earned income for purposes of retirement plans. The technical explanation of SBJA, Publication 560, and informal conversations with the IRS confirms that the temporary health insurance deduction has no effect on earned income for retirement plans.

according to the Sungaurd Relius Bulletin: A plan administrator may use Form 5558 to obtain an extension to file Form 8955-SSA. The IRS Announcement indicates that the rules for obtaining an extension are the same as those applicable to the Form 5500. However, the draft of the revised Form 5558 requires the plan administrator to sign the extension request for a Form 8955-SSA but does not require a signature for an extension request for a Form 5500. (aside from the automatic extension that will be granted for 2009) ................ I guess the IRS want's your signature, but the DOL doesn't care.

if catch ups are not matched, then any such match made during the year should be forfeited, not distributed. this is no different than an ADP failure, in which match is forfeited due to the return of excess contributions. otherwise the HCE has received a match at a higher rate than the NHCEs. see last sentence of 1.414(v)-1(d)(2)(iii) in regards to catch up contributions. (This is why, if match is made during the year it is btter to match catch-ups, so you don't have to go through this process)

while true such a formula is available to all employees, is it effectively available to all employees? in others words, is it reasonable to expect all employees to take advantage of such a formula? Or put another way, if the IRS audited the plan, looked and saw that all HCEs deferred 10% but the highest NHCE was 6%, the conclusion would probably be that, in effect, this match formula favored the HCEs, much less the fact you would probably fail ACP testing anyway. a few years ago the IRS was asked if an automtic deferral plan could start at 6%, instead of 3% and stepping up 1% each year. They expressed a concern and had reservations about such an arrangement.

the announcement indicates "Section 6057(b) requires the plan administrator of a plan that is subject to the vesting standards of section 203 of the Employee Retirement Income Security Act of 1974 (ERISA) to notify the Secretary of the Treasury of certain changes relating to the plan and plan administrator. These changes are reported on the plan’s Form 5500 annual return/report. Neither the removal of the Schedule SSA from the Form 5500 annual return/report nor the creation of the Form 8955-SSA affect this requirement. Therefore, a plan administrator should continue to report changes in plan status on the Form 5500 annual return/report for the plan year in which the change occurs in accordance with the applicable instructions." so as dumb as it may seem, it would appear you still report the person as an A in 2009 and then as a D in 2010, because of the requirements of 6057(b)

Hmmm. I leave the dance steps up to you. make it along the lines of a Rap song Birdie Birdie in the Sky Do that Doo-Doo in my Eye Me no care, me no Cry Me don't do no 412-i

Those are my thoughts (I am of course referring to the nonelective feature. since you cant defer on past $, I'd hold the effective date for the 401k portion starts when the document is in place, but his is not a 401k plan I was referring to)

Employee C has worked for 5 years. The company puts in a new plan with an effective date of 1/1/2010 and signs the the document 12/20/2010 Employee C quits 11/30 after working 1000 hours. Is the employee eligible for the plan because you can't exclude service for eligibility, or is he ineligible because he quit before the date the plan was signed?

I think buried somewhere is the idea you don't even have to do top heavy testing if its obvious one way or the other. I'd guess if you have copies of a test that easily passed, and the required adjustment is minimal, it would fall under the same type of rules, though you would want to have some documentation. Is there a requirement to submit nondiscrimination testing to anyone? No, not unless the IRS asks, so as long as you have some proof somewhere. I certainly would be more cautious if it truly might make a difference.

well, if the plan is not top heavy, someone who works less than 20 hours a week probably wont work 1000 hours, so if the plan has a 1000 hours alloaction requirement they won't receive anything anyway, though they could possibly hurt testing because they are includable and not benefiting. If the hours are less than 500 hours a year, then conceivably they would have a break in service, and therefore could become ineligible if the plan is not using rule of parity. of course that doesn't really work with a 401k - even the IRS indicated you can't really operate a 401(k) under conditions like that. if someone never works a 1000 hours then not sure how they would ever enter the plan with a 1 year wait, so I guess it depends on how many hours the contracted workers will have

again, if there are no other contributions, the plan has landed on CHANCE and picked up a card that says "Get out of top-heavy for free". there simply is no top heavy and the point is an elephant or irrelevant or something like that. If there are other contributions, then the card is no good and you must provide enough to satisfy top heavy based on full year comp. If you only provide the SHNEC to statutory includable and exclude otherwise excludables, that also blows the get out of top-heavy free.

the ERISA Outline Book in its discussion on Key Employees has an example of an ee who becomes an officer during the current plan year (Basically the opposite of your question) Is he entitled to a top heavy minimum ?- YES in the current year, but not in the following year. IRS requires this for Prototypes/Master plans. then the Outline Book goes on to discuss 'others' hold the opposite view. He is a key employee because he is an officer, therefore he is not entitled to a top heavy minimum. I vaguely recall (or maybe I imagined it) that one of the document providers actually had a checkbox as to how to handle this situation as to whether the person would receive top-heavy.

back on Jan 12 or thereabouts these were the IRS comments I found Topic 805 - Electronic Filing of Information Returns The Filing Information Returns Electronically (FIRE) System is designed exclusively for the electronic filing of the following information returns: Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA and W-2G. FIRE is accessible at https://fire.irs.gov/. Benefits of electronically filing information returns include: cost-effectiveness, secure (supports AES 256-bit, AES 128-bit and TDES 168-bit encryption); and a later due date for filing most information returns. The electronic filing of information returns is not associated with the Form 1040 electronic filing program. If you are sending files larger than 10,000 records electronically, data compression is encouraged. WinZip or PKZIP are the only acceptable compression packages. The FIRE System is operational 24 hours a day, 7 days a week. Please note that the FIRE System will be down from 2 p.m. EST December 21, 2010, through January 3, 2010, to allow Internal Revenue Service/Information Returns Branch (IRS/IRB) to update its system to reflect current year changes. In addition, the FIRE system may be down every Wednesday from 3:00 a.m. to 5:00 a.m. Eastern Time, for maintenance. After you file your returns via the FIRE System, the result of the electronic transmission will be e-mailed to you if you provide an accurate e-mail address on the "Verify Your Filing Information" screen. The file status e-mail will include the IRS assigned filename, date received, count of payees, and file status for Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8935, and W-2G. If the e-mail indicates that your file is bad, you must log into the FIRE System and go to the "Check File Status" option to review the results of your file and timely resubmit the file as a replacement file. If the file is good, it is automatically released for mainline processing 10 calendar days from receipt Topic 802 - Applications, Forms, and Information All filers must obtain approval from the Internal Revenue Service , Information Returns Branch (IRS/IRB), and be assigned a Transmitter Control Code (TCC) prior to electronically filing Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA, and W-2G. Once you have received approval to file electronically, you need not reapply each year. There are two exceptions where you would need to apply for a new TCC: (1) you have not used your TCC for two consecutive years; or (2) your files were previously transmitted by a service bureau using the service bureau's TCC and you now have the computer equipment that is compatible with ECC-MTB and wish to prepare your own files. Form 4419 (PDF), Application for Filing Information Returns Electronically, must be mailed to the Internal Revenue Service , Information Reporting Program, 230 Murall Drive, Kearneysville, West Virginia 25430, or faxed to 877-477-0572, at least 30 days before the due date of the returns; do not do both (mail and fax). Upon approval of your Form 4419, you will be sent an approval letter and assigned a 5-character TCC used to identify payers/transmitters and to track their files electronically. If you file Forms 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G for multiple payers, only one TCC is required for each transmitter. However, if you file Forms 1042-S, 8027, or 8955-SSA you will need a separate TCC for each return. You may not electronically file information returns until your application has been approved and you have been assigned a TCC. If any information on the Form 4419 changes, please notify the IRS/IRB in writing so the database can be updated. Be sure to include your TCC in all correspondence.

if you are lucky the person is catch up eligible and therefore can keep the 8 cents.

looks like its below freezing, at least at night. does that count? 5-Day Forecast for Hell, Michigan 40 | 29° F Partly Cloudy Wednesday, 9 41 | 32° F Rain Thursday, 10 38 | 25° F Snow Showers Friday, 11 40 | 29° F Partly Cloudy Saturday, 12 41 | 25° F Chance of Snow

Once she has had a 5 year break and forfeited 20% of her balance she is 100% vested in the remaining balance, so I dont see how that makes a difference if a partial distribution is taken. Or at least that would be my understanding of how it works.

ooooh. Austin shoots and scores against the Sieve. now what does that make the score?

since the DOL doesn't seem to care about EZs, that leaves things in the hands if the IRS. with the amazing speed they have produced such things as the new SSA form, along with SB attachment for the SF, and the test for PTINs...oh never mind, I think the paper EZ will be around awhile yet.