Tom Poje

the easiest way to remember - the IRS looks at W-2s, (and supposedly are able to sum up the totals for any given calendar year when you file - thats the only way they would know if someone went over the limit) so if the person worked for another company, they may hit the limit for a given calendar year without you even knowing it. the plan itself has no problem in such situation because the plan didn't accept anything over the limit.

well, maybe next year Relius will make it impossible to check that box if it is a DC plan. like your spirit though

I don't think you have to do anything (but I of course could be wrong) in the past you filled out form 5329 and sent in the $ and requested a waiver. if they were in a good mood they would return the money. now you simply send in the form 5329 and request the waiver. if they refuse, they will write and tell you to send in the money

I'm thinking that in the past, perhaps N/A was also a choice so just leave it blank and make the software happy

I like the thought, though I guess it would be 0 or 1 for 5% owners - you wouldn't want to pull all HCEs, only 5% owners. I had to teach myself how to create reports like this just to make my life easier and catch things I or others in the office could miss. The census report with all its little checks was a biggie. I had never thought about doing min distrib before, but now that we are locked in on one table for the most part, it dawned on me the other day it should be fairly easy to create using that table. hadn't thought about using the HCE coding instead of the ownership %. I'll have to look at that I don't like the Relius report because its a text file, if you select all it pulls people with 0, you mught have to update trade balances, of the goofy 10 year projection it shows, etc. as a side note, when first released, Relius plan specs had a field you could enter for an interest rate assumption. the 70 1/2 program actually was written to use that field, but looks like they never hooked it up, and then they later deleted the field off of plan specs. BG5150 - looked at using the HCE code, it won't work on the one plan i looked at, spouse has 0% on her own but makes over 110,000 so shows as HCE reason because of comp, not attribution ownership

I think you are suppose to leave it blank. on FT William the keyboard gives you an electronic shock if you try and answer that question for a DC plan. oh wait, you are simply unable to answer it if its a dc plan, it's impossible to even fill it in. dang, them guys was clever enough to have it look at your plan codes, see that the plan is a DC and therefore grey it out. I think you are reading too much into the question. It does not ask "Is this a db plan?" - based on the plan codes it knows that already. pretend the plan is a DB. now maybe the question makes more sense, if the DB plan was fully funded.

I forgot how nice it was not having to process these. this is a first attempt to generate the minimum distributions out of report writer. this is a summary of accounts report, the sources have been supressed, leaving only the totals per participant. then its coded to only pull those people who are 70.5 as of 12/31/2010.[its hard coded, so such fields would have to be updated each year, but as a reminder, it should give a warning message if plan year end is after that date] if run for a plan year 1/1/2009 - 12/31/2009 it will take the ending balance and divide it by the proper factor to produce the min distribution. if person is active, it will indicate that min distrin is due 4/1/2011 if the person quites before 12/31/2010. I tried it and it did produce the same results as the 70 1/2 found under processing for 2 different large plans (each with around 30 possible min distributions) so it seems to be working, but of course use at your risk. since it uses the 12/31/2009 balance it includes any receivables that have been run, which is optional for min distrib) the report labeled 'all' lists all the possible min distributions the other report produces a scaled down version of the text report that prints out of Relius (one person per page). no projection for future years, but since the system doesn't calculate any interest assumption, its probably not much of a loss anyway. ok, maybe I don't show people who have no balance or min distribution due, but thats just me. and I don't have it built into the report if spouse age is greater than 10 years. but I am lazy. I think I have it pulling 5% owners correctly, but I haven't figured out how to pull owners due to attribution .......................................................... a reminder, if using Relius 70 1/2, if you don't manually enter the balance, you might have to processing/ balance update / set trade date field / overwrite existing values so it pulls the correct ending balance.

well, its not perfect, I haven't found the transacation to run for ADP / ACP failure distributions, so you always have to separate those on your own (and I'm sure there are other scenarios that might crop up), but at least the first attempt did come back and tell me I was out of balance and I could figure out I wasn't pulling 'loan distribution' amounts correctly. (And I probably handle my suspense account differently, but if the report helps, then great)

since most of the data we use involves imports, we haven't been using the loan system. thus when I show loans I usually use distribution from one account source and show as positive distribution into the loan source. ({RPTEEACCT.DISTRAMT}) modified this report to use the following as well ({RPTEEACCT.LNDISTRAMT})

the one exception is a 403(b) (if my memory serves me correctly) is that you can ignore those terms who quit before 1/1/09 because they might have old contracts, and they don't want to put a burden on you hunting down the info on these folks.

unless I am misunderstanding what is being asked, if the person had a balance at the beginning of the year then the general rule of thumb is you count them in line 6. they are a participant, maybe not active, but still a participant. they disappear in line 7 (terminated and entitled to future benefits) because they have been paid out

dang. I thought it was simply garbled speech from act-your-age

no disagreement here. lets see, for a large plan you need an auditors opinion, I have yet to have a plan they haven't reviewed the 5500 thoroughly, but I guess their opinion counts for nothing in regards to being able to file if the preparer isn't certified. on the reverse side of thing, a small plan - in almost all cases you can now file a 5500-SF - no attachments, and a limited amount of info at that. I'm waiting to see what will become of all of this. I still can't see having 5500 preparers being certified is the intent of the legislation in regards to 1040 preparers.

Austin - in regards to vesting, fortunately my brain was actually functioning one day, and I included a comment about it in the book I helped contribute on, so it was easy to find the reg. see 1.401(m)-2(b)(5) example 7.

you have a couple of things going on and they can get confusing. there is an animal that exists called a non-elective contribution. you indicated this is 100% vested after 2 years. The plan could have a schedule that starts at 20% after 2 years gradually reaching 100% after 6 years. a qualified nonelective contribution is commonly referred to as a QNEC. amongst other things, what makes them Qualified is that they are 100% vested when deposited. in a safe harbor plan (e.g. your plan provides a 3% SHNEC (my term, just so it doesn't get confused with QNEC)) the plan also gets a free ride on the ADP test, which a regular QNEC doesn't provide. so every SHNEC is a QNEC, but not every QNEC is a SHNEC.

I wouldn't say its that unusual. remember the matching contributions are still included in the ACP test, so it could cause the plan to fail. if you are matching during the year, I certainly wouldn't recomend it because its a pain in the rear - you have to forfeit the match even if you don't fail the test. However, you are required to match if the plan is safe harbor 401k, but it would be unusual to have to match a catch up in those plans - because they dont fail ACP (as a general rule), the basic match is only up to 5% deferred, etc. Austin - my understanding is the vesting is optional (so you are not blowing anything) how you want to handle. I'd have to dig back through my notes and see if I can find a site for you (besides something like "Blinky said so".

Austin: lets suppose my balance is $1000. I am 40% vested and as it turns out my ACP refund is $400. so I could refund the 400 now my balance would show as $600 40% vested vested balance = $0 (because the vested balance has already been paid)

I'd say the following when cross testing, you are allowed to split the testing into 2 groups, those with more than one year of service and those with less than 1 year of service. since you rarely have an HCE in the group with less than 1 year of service, there is no need to cross that group, so no gateway is need, only the top heavy.

lets make sure this is really done correctly based on your comments, plan failed both ADP and ACP if you correct the ADP test first, then you may have 'related' match, and if so, any related match would be forfeited. that makes sense. Since catch up contributions could be matched (depending on the document) it would be my understanding these would not be forfeited. The reason matches are forfeited to prevent an HCE from receiving at a higher rate than other people, but if the plan matches catch-ups then the higher rate rule doesn't come into play. plan could run ACP test first, and fix that first. in that case, the match would be distributed, vesting may come into play, but there are even special rules that could be followed to avoid forfeiting match money if the individual is partially vested. this should be possible based on your document language which you indicated "corresponding Matching Contributions that are not returned because of a simultaneous failure of the ACP Test (Excess Aggregate Contributions) shall be forfeited"

J Simmons - it should have said 'regard', but somewhere over the last few months I have lost my ability to type. I am constantly reversing letter like that. (hmm, maybe thats the problem - never learned how to type - I only type with 2 fingers, and the right side seems to be maybe half a step ahead of the left side at the present time, if that makes any sense.) It's kind of aggrevating. I think in the great scheme of things I am a praying mantis. I was referring to jpod as the grasshopper, because he was asking about splitting the otherwise excludables into 2 years or more and 2 years or less, and I was merely pointing out in the Code where this is found, which someone taught me many moons ago. it was in bold because, despite the fact the code and regs say you can test otherwise excludables separately, it does not apply to the 2 year eligibility rule

before you can request a waiver from the excise tax, you must provide some type of proof that a correction has been made (or perhaps at a minimum in the process of being made, though (without looking it up) I thought it actually had to have been made) In the old days, you actually had to send in the penalty tax and request it be waived.

as for not 'processing' any payrolls made late in the year, the DOL has this idea that once deferrals are withheld from a person's paycheck, they must be deposited in a timely manner. Unless you are withholding the $ and depositing them somewhere outside the company, you would be crossing over into a very dark world. if the auditors wish to cover the fees involved all power to them. It's optional whether to file a 5500 on an accrual or on a cash basis, based on what you indicated it sounds like the TPA is doing everything on a cash basis. (I will go out on a limb and guess they receive a download to import from the investment house, and obviously that doesn't include late December deferral depsoited in January. Investments houses themselves handle things differently. I know John Hancock (goes back to the days of Manulife to show how old I am) waits until January whatever before issuing final reports for the year. So, despite the fact the contribution isn't deposited until January, it is still treated as being 'made' in the prior year. I'm sure there must be other investment houses that do the same.

this one seems to be working fairly well, I haven't had any major problems with it over the years and found it useful. this is another of my 'screwball' reports, that I have finally been able to update to look like something basically, its a Summary of Accounts Totals only, but in a format designed to look like the 5500 SF. Needed something so others here could fill in the account data portion on the 5500 without my help. There are a few user defined fields I use to track the suspense account, but I think this should work even if you run a 'dummy employee' instead (unless you are using the user defined fields for another purpose) ok, maybe you have to adjust distributions if you have corrective distributions, but at least it looks something like the actual 5500, and no one has a gun to your head forcing you to use it.

ah grasshopper, as I recall, you were absent the day the teacher went over Code section 410(a)(4)(B) which talks about Requirements may be met separartely with respect to excluded group. If employees not meeting the minimum age or service requirements of subsection (a)(1) without regrad to subparagraph B.... subparagraph B is the one that allows a 2 year wait for certain contributions. (I fell asleep, but was awakened by the crack of a ruler over the head - thats how I knew you were absent, you didn't warn me it was about to happen)

so is it a matter of which comes first, the chicken or the egg? Suppose the match is made Jan 31. on that date date, has the individual satified the the top heavy minimum? at a given moment in time I'd say yes. now 3 months later I fail ADP test, and he forfeits the match. I'm still not convinced you now have to pony up nonelective money so he re-gets a top heavy. As noted above, in unusual circumstances this could actually force a plan to fail coverage. Suppose the plan also failed the ADP test, and you distribute the deferrals. You now have to forfeit the related match. But the IRS has clearly indicated you could run the ACP test first and distributed $ for a failed test, then run the ADP test. so why can't you run the top heavy first, then run the ADP/ACP first. I'm not saying thats the answer, but just a possibility. my guess is that it is probably too late to submit a question (except at the Conference directly). usually they meet with the IRS in early - mid Sept, so they can get answers and assemble everything ahead of time.