Tom Poje

apparently not. I'm no loan guru. maybe. you have at least 1 prohibited transaction 1 for the excess on the amount above 50,000. then you might have a second one on the employer for failure to transmit payments (if indeed payments were deducted but not sent in) - that is the same as failure to send in deferrals on a timely basis. If there were no loan payments deducted, then I don't see where you have a prohibited transaction, you simply have a loan that has gone into default. that is something else. both correctable under VCP but not SCP.

when the $100 was made to the plan the first time, it was considered a contribution and therefore deductible. but once it becomes a forfeiture, its not deductible a second time, so maybe that's the distinction. (In addition, in the case of a leveraged ESOP, providing you meet certain conditions, it doesn't count as an annual addition, so there are differences between forfeiture and a contribution)

you mean, like, if you start out in pensions you can never switch.... sounds like most of the horror movies on the sci-fi channel

not quite sure what is being asked by standard method of ADP test. for instance, the documents we use have the following definition for QMAC 1.129 Qualified Matching Contribution. The term Qualified Matching Contribution means an Employer contribution made to this or any other defined contribution plan on behalf of a Participant on account of Elective Deferrals, Voluntary Employee Contributions, and/or Mandatory Employee Contributions made by such Participant under a plan maintained by the Sponsoring Employer, that is subject to the distribution (but financial hardship distributions are not permitted) and nonforfeitability requirements of Code §401(k) when made to the Plan. Qualified Matching Contributions are available for either the ADP Test or the ACP Test so, if made, such QMACs could be used in either test (but of course you cant double up and use the same QMAC in both tests at the same time.) if your document has a required match contribution that is subject to vesting, then no, you can't wave a magic wand and make it a QMAC. even if it was 100% vested you can't wave the magic wand because there are also distribution restrictions that must be attached.

they were using efast 2 software and it got hung up and simply hasn't been released yet? instead of releasing the limits, they are working on the PTIN test for 5500 filers only? (one speaker at the ASPPA conference indicated that the PTIN was an item used in the outhouse)

Lady MacDuff: the issue as best put is as follows: ee 1 safe harbor account $500 ee 1 profit sharing account $1000 ee 1 is 0% vested and is paid out $500 and forfeits $1000. so now, can the $1000 in forfeitures be used to fund next year's safe harbor? one argument is no, because safe harbors must be 100% vested when contributed to the plan. well, it does say they have to be 100% vested - you can't argue that point. (QACAs are an exception). so, in my opinion, it hinges on 'forfeitures can be used to reduce contributions, does that mean any contribution and therefore overrides the 100% vested rule when made to the plan provision. .................... as to the argument 'my document says I can, the IRS already approved it, so.... I recall the first safe harbor documents we had, all said that the plan would be safe harbor if it provided the safe harbor notice. They also had IRS approval, but this was changed shortly because it's the document that drives the safe harbor not the notice. we shall see what comes of all this.

oops. I see I misspelled 'participant' on the min distribution 2010 report. it says particpany

not necessarily true, because one of the recomendations to avoid possibly tripping top-heavy free was that you could use forfeitures to pay plan expenses. but how dare you use the term 'non-sensical' and work with the regs we have. shame on you.

PiggyBank I think your comments have been very good, certainly helpful. a lot of the stuff in the regs doesn't make sense, but we live with it. I know Mr Cline as well, consider him a good friend (or at least 'comrade' in the pension industry), I may perhaps disagree with the IRS position on this one but not to the extent he does. again, I think it boils down to making a statement "Forfeitures can be used to reduce any contribution and therefore that overrides the QNEC requirement that they be 100% vested when made to the plan" as opposed to "QNECs must be 100% vested when made, therefore the statement that forfeitures can be used to reduce any contribution must be modified to say 'except QNECs' or something similar. one sesion I sat in on mentioned that a new EPCRS is coming out shortly, that it is in the final stages. I see that BNA says the following Employers will no longer be permitted to use forfeitures, or nonvested amounts left in employee accounts, for correcting certain kinds of retirement plan qualification errors, an IRS official says. Forfeitures can be a source of qualified nonelective contributions for some corrections but not others, IRS's employee plans voluntary compliance program coordinator says. IRS will clarify the differences in its next revenue procedure on voluntary corrections, Avaneesh Bhagat says. it will be interesting to see which QNECs (at least in the context of 'corrections') forfeitures can be used.

Thank you for the explanation, it does not appear to be overly heavily biased in any way . (might not get you a job with CNN or FOX, but that's another story) The IRS response is the response I would have expected, based on a strict interpretation of the regs that say QNECs and QMACs must be 100% vested when made to the plan. now as to whether things should be interpreted that way is another matter, or if that reg could be overridden by looking at forfeitures and saying 'forfeitures can be used to reduce ANY contribution' does not appear to have been discussed. I think to say "responses given by the individuals are NOT official guidance" oversimplifies things. Having been on the Q and A committee at one time, it is also a fact that (unless you have a question submitted from the audience on the same day) 1. All questions are submitted to the IRS folks early Sept (giving them a chance to review them) 2. Meeting with the IRS agents mid Sept to discuss the question. this gives a full month afterwards for the IRS agents to also sound off amongst others regarding this issue and possibly change it. In this particular case, no answer was provided on the sheet before hand, so I think that shows it was something felt worthy of further discussion rather than a simple answer. and certainly not an off the cuff answer "we think its this way..." in addition, this 'answer' is no different than the answer provided in an IRS webinar (or whatever) months before by a different agent, so it's not simply one or two individuals who feel this way. my own opinion is you can't disagree with the statement that QNECs have to be 100% vested when made to the plan. I don't think you say the IRS is wrong in that interpretation. as to whether the use of forfeitures can override this - I'd lean towards saying yes - thats my opinion - but since it doesn't sound like this point was discussed one way or the other I'm not sure you can make a blanket statement the IRS is wrong.

I find the news regarding this fascinating: A large rally was scheduled for central Paris in the afternoon as demonstrators stepped up protests against a government proposal to raise the national retirement age from 60 to 62. ....... and in this country they talk about raising the SSRA from age 67. ............... ...About 1.1 million people have demonstrated across the country, French media quoted police as saying. Unions put the figure at 3.5 million nationwide as the rolling strike goes on for more than a week now. Students from high schools have been skipping classes to join the strikes. Some students told CNN in Paris that they are worried they won't be able to get jobs if the current generation hangs onto jobs for an extra two years. .......... I must have been out of it in when I was in high school. I never would have thought about skipping school to strike because I might not be able to find a job. looked it up, unemployment there around 10%

I could not attend (unless I took a later a floght and wouldn't get back until much later than this tired old body cared to), but one individual indicated to me the response was ...... Rhonda Migdail said it could be argued for forfeitures to be used for Safe Harbor contributions, but not for QMACs and QNECs. QACAs are not subject to immediate vesting, so forfeitures can be used. ......

the plan practically cant have other contrinutions. suppose you have an officer who is not a key employee. they would be eligble for top heavy contributions if something other than safe harbor contributions were made. so Id assume the design is to save money. on the other hand, if the officer is not an HCE then you you have problems.

the only contributions that count toward gateway would be nonelective, so I dont believe you can use the safe harbor match. That is a SHMAC rather than a SHNEC. In the same vein, for rate group testing you only use nonelectives. since a SHNEC is a type of nonelective it is included, but not the match. for the avg benefits % test everything is included.

that was the IRS response to the question.

this is from this years Q and A (They must have known you would ask this question) Does the rule of parity for vesting permit the disregarding of years of service for a rehired participant who was nonvested at termination in employer contributions but had salary deferrals? What about someone who made no deferrals but could have? 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 permitprior service to be disregarded.

I see this issue is to be discussed during the Q and As at the ASPPA Conference. I have an earlier flight so will miss it, so hopefully someone else will report back what has been said.

this is somewhat similar to a Q and A for the ASPPA conference this year[just pulled off the notes for this year]. instead of top-heavy, it is in regards to the 3% safe harbor IRS response Contributions made after the Section 415 timing date of 30 days after the tax return due date are considered to be annual additions for the following year. However, if consider the contribution a self-correction under EPCRS, it is permissible to relate this back to the earlier year. If the contribution is made after 12/31, you are clearly under EPCRS. [One of the exceptions to the 415 timing rule is an erroneous failure to allocate. See Treas. Reg. 1.415©-1(b)(6)(ii)(A). EPCRS clearly treats post-415-period deposits that relate back to a prior plan year as an annual addition for the year to which it is meant to be paid, but EPCRS applies only after the 12/31/09 deadline. Therefore, there is a lack of guidance for the period between 30 days after the tax return due date and the end of the 12-month regulatory correction period.]

good question. in your case for non owner 1.401(a)(9)-2 Q-2 (a) Required Beginning date means April 1 of the calendar year following the later of the calendar year in which the ee attains age 70 1/2 ot the calendar year in which the employee retires from the plan. so it doesn't matter if you worked at all during the year, its based on the year you quit. (Of course, that means in most cases you don't receive the census info from the client until the following year, which means its well after the fact.) if you use Relius, I did try to create a report (and posted under the Relius board on Benefits Link) that would pull anyone this would pertain to (the report will say "by 4/1/2011 if you terminate before 12/31/2010" for such people it finds) it can be run across all plans at once, hopefully it catches everyone, but since I wrote it I offer no guarantees.

hurray. we finished last night. now I guess its time to start getting the safe harbor notices ready and checking the minimum distribution notices that need to go out. (after a few days at the ASPPA Conference) hope to see some of you there. .... as a side bar, as I noted before well pleased with FT William many of the forms were strictly the SB for DB plans, and from those that handled them in the office (certainly not me), easily exportable as an XML file to be imported into Datair, but no such luck with Relius.

lets suppose Fred was due a top heavy contribution for 2009 of $1000. He quit 1/2/2010, so the comp in 2010 is minimal. if you go strictly by rule that you switch to a 2010 for annual addition, then you can't give the guy the top heavy because you violate 415. that makes no sense. I'd lean toward Lippy the Lion's approach. (har-de-har-har)

1.401(a)(4)-9©(4) is clear that a component plan is deemed to satisfy the avg ben pct test if the plan of which it is a part satisfies avg ben pct test. that doesn't necessarily mean your cooked, for if all rate groups pass ratio% test you still pass

but a better question is how many of those plans not filed are due to E Fast2? yes, we are working on completing some even as I type, but none due to E-Fast2. so, being honest, none of what we have should have an extension simply because "E-Fast 2 is new and people aren't used to it",etc.

I personally didn't have to call them, however I know another tpa I work with that says response time was half an hour, and they were well pleased. via e-mail I had noted an spelling error on one of the screens, they sent an e-mail back and it was fixed the next day. whether or not it had anything to do with it, I had sent another note about the IRS' comments that the 8955-SSA would be delayed (indicating that maybe they hadn't seen it since it was only a week since the IRS released the comment), and within a day or two, they changed their screens to indicate that, including the link to the IRS. now maybe they were going to do that anyway, its hard to say. My experience has been they are very responsive. the selling point for me was the fact all you have to do is type in a plan EIN and the system retrieves the prior year info. If I had to start with fresh input (name of plan, address, etc) on every plan I doubt I would have switched at the start of this year. it was one of those decisions made mid-Feb because Relius wasn't ready yet.

if these people never ever ever ever work 1000 hours, then they would never meet the 1 year eligibility a plan could require. therefore they would never be included in coverage testing.