Tom Poje

without looking it up, I had thought that '3 year testing' only applied to coverage, and specifically only if there weren't major changes (e.g. in a small plan I would consider going from 1 HCE to 2 HCEs a pretty major change.

oddly enough, I see your question was asked almost word for word in the Q and As. Question 28 and 32. now I'm worried. The IRS answered same as I did. both times! good meeting you too, guess the Pilgrim picture only has another week before its replaced. even managed to bake a batch of pumkin cookies last night. yummmmmm. I should note, object in the picture do not necessarily represent actual facts (I think the hair is a lot grayer!)

that would be my understanding. it would not surprise me if any software system had problems with that scenario. I'd override.

as Eric pointed out, (or at least if you referenced the reg he pointed) a plan that alloactes the same amount of cont / participant is 'deemed' to be a safe harbor formula, so no further testing should be needed. don't know of many owners in this day and age that opt for something like that, but it is possible.

1.401(k)-2(a)(6)(ii) requires a plan pass nondiscrim testing both with and without a QNEC, so not sure if that's a great strategy anyway, because you have to run testing twice. 1.401(k)-3(h)(2) clearly indicates SHNECS are an exception to this rule and can be taken into account to satisfy 401(a)(4), and don't have to follow the rules pertaining to QNECs. The IRS conclusion is that QNECs can not satisfy the gateway (#6 Q and A 2006 ASPPA Annual conference) while such Q and As might not represent an actual position of the Treasury, this would seem to make sense given the above. and you can't get around it by saying you'll restructure, because 1.401(a)(4)-9©(3)(ii) says that's a no-no.

unrounded limits according to Hewitt, which match the numbers I get off of my spreadsheet, which I assume would match the values if you calculated through the formula.

haven't seen the instructions for form 8955-ssa.(even trying a google search) since it used to be that you had to report people within 1 year following termination it would seem 'logical' that you would somehow report 'year' by 'year' rather than combining years to meet this requirement. this in reality makes little sense, but since the IRS is asking for comments, it would be better to put in your comments now. Written comments should be received on or before January 3, 2011 to be assured of consideration. Addresses: Direct all written comments to Gerald Shields, Internal Revenue Service, Room 6129, 1111 Constitution Avenue, NW., Washington, DC 20224. http://govpulse.us/entries/2010/11/01/2010...r-form-8955-ssa I suppose one comment would be "what if someone was paid out after 2 years. Does that mean you would need to report them for 2009 on one form as having a benefit, and then report them on a 2010 form as having received a distribution?"

strongly agree with the sentiments expressed. in prayers!

of course the most important factor is what the document says Life expectancy rule If beneficiary specified, and document does not contain a provision, must use this method Treas Reg § 1.401 (a)(9)-3, Q&A-4(a)(1) which for a spouse would have normally been (the year following the death) Spouse only – Use spouse’s age in the distribution calendar year, use single-life table. Recalculated every year based on spouse’s current age. Use table in year of spouse’s death, then subtract 1 from the factor for the following years

we subscribe to the old Life cereal ad I'm not gonna try it. Let's get Mikey to try it.... we'll also wait, though I think the boss wants it for the DB updates it may have.

Sadie Hawkins Day When: Always on November 13 Here is a holiday that originated from a cartoon. It all began in Al Capp's "Lil Abner Cartoon in the 1930's. In the cartoon series, the mayor of Dogpatch was desperate to marry off his ugly daughter. So he created Sadie Hawkin's Day. On this day, a race is held and all the single men were given a short head start. If a woman catches her man, he had to marry her. Sadie Hawkins Day races and events grew in popularity during the course of All Capp's long running cartoon. This holiday (largely popular because of the cartoon) died out after 40 years when the cartoon was discontinued. It can occasionally be seen celebrated on college campuses. ...................... for those married men: how much of a head start were you given? I guess for the ladies: how much of a head start did you give him?

perhaps in a similar vein, Q and A #3 from this years ASPPA conference DC plan is top heavy and has a plan year ending 12/31. The plan terminates on September 15, 2010. Normally, TH minimums are provided only if the employee is employed on the last day of the plan year. (Assume that there are salary deferrals during the year so that, if a top heavy minimum is required, it needs to be made.) Questions: (1) For the 2010 plan year, is 9/15/2010 treated as if it were the last day of the plan year, so that only non-key employees who are employed on that date are entitled to a TH minimum? (2) If (1) is Yes, is the 3% minimum calculated for compensation from 1/1/2010-9/15/2010? (3) If (1) is No, is there NO top heavy minimum for the 2010 plan year because the plan terminates before the end of the year (similar to the concept that there is no money purchase plan funding if the plan terminates before the end of the year and there is a last day employment requirement), or does the plan have to wait to see who is employed on 12/31/2010 to determine who is entitled to the TH minimum, even though the plan has terminated before that date? (4) Is the answer to any of the above affected by whether the employer continues in existence through the end of 2010? ANswer provided (emphasis mine) 1) Of course, if there is no employer contribution, there would not be an obligation to provide top heavy minimum contribution. But, if there were contributions to keys during the year, including elective deferrals, there is a top heavy minimum based on compensation and employment through 9/15/10. Plan must liquidate within a reasonable time under Rev. Rul. 89-87 or else 9/15 date may not be reasonable. There is effectively a short plan year for top heavy purposes. (2) yes (3) n/a (4) no change

I'll send you a rough excel sheet that does the calc -see if that helps explain things

haven't heard from any of our clients yet with 'late' letters from the IRS, all our 5558s were filed (I believe) by mid July (didn't wait until the last day) and we had switched govt form software at the start of the year so we missed out on all the fun and excitement others reported. good luck, at least it sounds like the IRS is aware of what is going on.

You can always use comp from date of participation (well, unless you have a very poorly written document) as of 9/30 no one is able to defer, so arguably everyone's date of participation has ceased and I'd hold you have a valid argument for only considering comp up until that date. Or another way of putting it, what if everyone switched from non-union status to union status as of that date? You would not use comp through the end of the year, only through 9/30 or the date they were eligible. I believe Sal's book gives examples of that type of scenario. I suppose another possibility (?) would be to run a comp test using comp thru 9/30 divided by total comp. if you pass the comp test, then arguablly you could use comp through 9/30 in testing, beacuse that would satisfy a definition of 414(s) - though I would have to look up in the regs if that would be a valid exclusion (using comp throug a point in time)

if the reason for the return being considered 'late' is because the 5558 was considered late and therefore invalid, then you can't blame the new system. Its unclear from your comments if that is the reason the 5500 was considered late . remember, the 5558s are not e-filed, so there is no 'electronic' recording process for them. based on the IRS News letter that just came out, the IRS admits there have been some problems. (just posted this earlier, but I'll repost it here) The IRS Retirement News for Employers dated 11/5/2010 contained the following: Form 5558 Requests for Extension That May Have Been Inadvertently Denied As everyone is well aware, plan year 2009 is the first filing season using ERISA Filing Acceptance System (EFAST2) for the filing of Form 5500, Annual Return/Report of Employee Benefit Plan. A number of plan administrators are still in the process of updating their systems for EFAST2 and have had some issues and concerns about filing timely without an extension. Because of these issues and concerns, a number of plan administrators have filed the Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. The IRS Ogden Campus received numerous Forms 5558 from the practitioner community. Some Forms 5558 were inadvertently denied and plan sponsors received extension denial letters (CP 216H, Application for Extension of Time to File an Employee Plan Return Denied - Not Timely). We recognized this error and have taken the necessary steps to correct this issue. If you believe you received a CP 216H Notice in error, please respond by enclosing the denial letter and proof that the original Form 5558 was postmarked timely (for example, express mail or certified mail receipt). Please send your responses to: Ogden Accounts Management Center EP Accounts Unit, Mail Stop 6270 Ogden, UT 84201 If you received a CP 213N, Form 5500 Late Return, proposed penalty notice indicating Form 5500 was not timely filed, in error, please respond by following the instructions in the notice. For additional information, see our FAQs on Notices from IRS (CP 213 Notices). We apologize for any inconvenience this may have caused. We appreciate the feedback. ........... Form 5500-EZ Filing Address Beginning with the 2009 plan year, Forms 5500-EZ must be mailed to the IRS Offices in Ogden, UT to be processed. Many filers have contacted the IRS that they incorrectly mailed their Form 5500-EZ to Lawrence, Kansas instead of to the Ogden address. The Lawrence, Kansas address is not an IRS office; it is the offices of the independent contractor hired by the Department of Labor (DOL) to process Form 5500 returns. Up until October 31, 2010, all Forms 5500-EZ mailed to Lawrence, Kansas were forwarded to the DOL and the DOL forwarded these returns to the IRS Offices in Ogden. However, after October 31, 2010, the mail forward expired and the incorrectly filed returns will be returned to the filer. In order to ensure the Form 5500 EZ is received by the IRS, filers should send another copy of the Form 5500-EZ with an original signature to Ogden at the following address: Department of the Treasury Internal Revenue Service Ogden UT 84201-0020

Possibly related to the problem indicated above, The IRS Retirement News for Employers dated 11/5/2010 contained the following: Form 5558 Requests for Extension That May Have Been Inadvertently Denied As everyone is well aware, plan year 2009 is the first filing season using ERISA Filing Acceptance System (EFAST2) for the filing of Form 5500, Annual Return/Report of Employee Benefit Plan. A number of plan administrators are still in the process of updating their systems for EFAST2 and have had some issues and concerns about filing timely without an extension. Because of these issues and concerns, a number of plan administrators have filed the Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. The IRS Ogden Campus received numerous Forms 5558 from the practitioner community. Some Forms 5558 were inadvertently denied and plan sponsors received extension denial letters (CP 216H, Application for Extension of Time to File an Employee Plan Return Denied - Not Timely). We recognized this error and have taken the necessary steps to correct this issue. If you believe you received a CP 216H Notice in error, please respond by enclosing the denial letter and proof that the original Form 5558 was postmarked timely (for example, express mail or certified mail receipt). Please send your responses to: Ogden Accounts Management Center EP Accounts Unit, Mail Stop 6270 Ogden, UT 84201 If you received a CP 213N, Form 5500 Late Return, proposed penalty notice indicating Form 5500 was not timely filed, in error, please respond by following the instructions in the notice. For additional information, see our FAQs on Notices from IRS (CP 213 Notices). We apologize for any inconvenience this may have caused. We appreciate the feedback. ........... Form 5500-EZ Filing Address Beginning with the 2009 plan year, Forms 5500-EZ must be mailed to the IRS Offices in Ogden, UT to be processed. Many filers have contacted the IRS that they incorrectly mailed their Form 5500-EZ to Lawrence, Kansas instead of to the Ogden address. The Lawrence, Kansas address is not an IRS office; it is the offices of the independent contractor hired by the Department of Labor (DOL) to process Form 5500 returns. Up until October 31, 2010, all Forms 5500-EZ mailed to Lawrence, Kansas were forwarded to the DOL and the DOL forwarded these returns to the IRS Offices in Ogden. However, after October 31, 2010, the mail forward expired and the incorrectly filed returns will be returned to the filer. In order to ensure the Form 5500 EZ is received by the IRS, filers should send another copy of the Form 5500-EZ with an original signature to Ogden at the following address: Department of the Treasury Internal Revenue Service Ogden UT 84201-0020

actually the gateway rules only kick in for a dc plan that is crosstested by itself or in combo with a DB plan. silly me. if you cross test a DB plan (on an allocation basis) you would never get to a point of 'primarily DB' as no such provision exists under 1.401(a)(4)-8© I've never seen a DB plan 'cross tested' , anyone have an example in which the test is better on an allocation basis than on an accrual basis?

unless you do something silly and convert the contribution credits to an equivalent allocation amount and cross test on an allocation basis?

My favorite all time quote of his, was after Jack Morris pitched a no-hitter, and Sparky's comment was "I never managed a no-hitter before" (Thank heavens no one else was managing who might have blown it!) But I bet the Sieve has better stories and memories.

if there are no other contributions besides deferrals and safe harbor then the plan is not top heavy. if the employee terminated before the end of the year, he is not eligible for top heavy anyway (unless you have a strange document) if its a 'discretionary' match and was limited to 6% deferred and 4% comp maximum (e.g. 66% match up to 6% deferred), that match would be considered safe harbor and no testing required nor would that kick the plan out of being top-heavy free. since you indicated the match was a 'maybe' I see no way this would be a safe harbor if its up to 6% of comp (rather than 6% deferred) If there is an additional profit sharing with a last day rule and the indiviudal quit he would not receive the profit sharing, but would have to be bumped up to any gateway minimum since he received the 3% safe harbor.

hmmmm. and I initially thought that was a picture of safe harbor, QDIA, SAR, fee disclosure and the like we now have to provide each participant.

the document language 'on or before' is no different than the reg language found in 1.401(a)(9)-5© As far as I know its very common practice (especially if the min distrib is large) to make the first distribution before 12/31 to avoid the very thing you noted: receiving 2 distributions in one year and thereby probably paying more in taxes. I can't imagine a document with language that would be so restrictive as to define a minimum distribution to be taken on one and only one day. So if April 1 falls on a Sunday, (or December 31) how are things handled since you can't pay before hand?

yes, min distribution still due, calculated the same as any previous calc, as if there was no death. in 2011 you start using the single life on the spouse (of course following whatever terms the document may say. thats the distribution calendar year AFTER the distribution calendar year containing the employee's death. 1.401(a)(9)-5 Q-5

but once you switch to current year you are stuck on current year unless you amend to prior year, even if you stop the safe harbor, so unless you have a document that says you are on prior year testing you continue to do current year testing. by the way, the implications (if prior year was to be used, is to rerun all the tests. my understanding is that even if the safe harbor was in existence for 5 years you couldn't switch back to prior year the first year. reason: the prior year was a safe harbor, and therefore a QNEC or QMAC was used to pass testing. You can't use those numbers a second time because that would be double counting.