Tom Poje

Interesting, never even dawned on me someone would want to do this (much less that only certain items are to be filled in) Tried it on FT William, and if one-participant plan is checked the only items you are allowed to fill in are the required items. learn something new every day.

for plan 1 for coverage, it does not matter if you have 2 ps formulas (3% and 4.5% ) both of those are nonelctive contributions, so someone is benefitting either one or the other (or both), so not quite sure what you are asking in your question.

there are 2 major tests that are run: coverage and nondiscrimination coverage rules are found in 1.410b and the average benefits percentage test rules are found in 1.410(b)-5 (no mention of gateway under the coverage rules). the avg ben % test if the same for coverage and for nondiscrim. nondiscrim rules are found in 1.401(a)(4) and the gateway rules are found there (1.401a)(4)-8. therefore the gateway only applies when performing nondiscrimination testing. (Thus if a plan is not cross tested for nondiscrim testing you are permitted to use accrual testing in determing the avg ben % test. The IRS officials basically summed it up the same way... This question was asked at the 2009 ASPPA Annual Conference. Based on the facts below, does the profit sharing allocation have to meet the gateway requirements of the final comparability regulations? A profit sharing contribution is allocated to a select group of employees using an integrated points allocation formula that requires a general nondiscrimination test under IRC §401(a)(4). The rates used in the rate group test were calculated using contribution rates, and the ratio percentages of all rate groups met the nondiscriminatory classification percentage. The average benefit percentage test did not pass using contribution rates, but did pass when tested using equivalent benefit accrual rates. Do the gateway requirements apply to this allocation because the average benefit percentage test was done based on equivalent benefit accrual rates? No. There is no gateway requirement for a general tested plan under Treas. Reg. §1.410(b)-5(d)(5), unless cross-testing is used to determine the rate group testing. The gateway rules are in §1.401(a)(4)-8(b)(1)(I).

deferrals don't cont toward the deductable limit, so not sure how or why that would come into play. no, deferrals should not be removed if they are not excess deferrals

Andy: yeh, but as they say, I was born ignorant and have been losing ground ever since.

one can only wonder. at the 2007 ASPPA Conference the following was asked: Q19) Safe Harbor 401(k): A notice is issued indicating a safe harbor contribution will be made for the upcoming year, but the plan was never amended to contain safe harbor language. Now that it is after plan year end, it is too late to amend to correct the problem. Is the plan on the hook for the contribution, and must also run all appropriate tests? A: Notwithstanding the notice provided, the plan terms do not provide for the safe harbor plan. Therefore, you should follow the plan terms and run the ADP test as needed. (Whether there is a Title I issue due to the notice is in the purview of the DOL.) note in this case there was no mention of issue a 'new' notice. I guess you simply tell the people it was decided not to amend the plan and the safe harbor is still in effect.

assuming you folks have a minimum of ability in Crystal, added another data check field, this one for normal retirement age. I'm not going to attach the revised report just for this one item, hopefully it's easy enough to add at your end. it's a formula if {PLANDYN.MINAGENRYRS} >{PLANEE.NRAGE} then "Check retirement date" in other words, if an employee's normal retirement age is less than the plans retirement age, it implies the date of birth was changed at some moment in time and the normal retirement age needs to be reset. this happens when a fake date of birth is entered and eligibility has been run. in a later year, a correct date of birth is entered. unless you delete the normal retirement date (or set eligibiility to recalc normal retirement date), the system will never make someon's retirement date worse than what it was. (Of course, if the plan was amended to a later retirement age this will generate an error message that is bogus.)

on point 2 I was only considering a 'contribution' credit not an interest credit. I wouldn't consider someone who received interest credit as 'benefiting' either.

1. the gateway is whatever is required under the DB/DC combo rules, but not necessarily 7.5% 2.if someone receives a cash balance credit, that person has received a nonelective contribution, and is therefore eligible for the gateway. 3. most documents now contain gateway language, and aggregate gateway language, so you probably dobn't need to amend the plan, but you would have to see what they say. since most DB/DC plans are top heavy, my experience is that the cash balance credit for NHCEs is so small, that it fails to provide enough to satisfy top heavy, and you have to provide the people something in the DC plan anyway. again, watch out for top heavy language. a person who has received, for example a 5% cash balance credit is not treated as having received a 5% contribution towards the gateway. you must convert the cash balance credit into an 'allocation' % (in simple terms since you might not be familiar with it, you cross tested, but backwards because you go from a DB into a DC) however, for purposes of the gateway, you are allowed to take the average 'cross tested rate' of anyone who received the cash balance credit towards the gateway. for example 2 NHCEs might receive 5% cash balance credit, but when you convert to an allocation rate one might be at 4% and another might be at 3%. you are allowed to treat those 2 people as each having received 3.5% toward the gateway (and gateway only, not nondiscrim testing.) you also have to make sure you pass minimum particpation. you have to convert the contribution credit into an accrual to determine that. hopefully in a brief recapsule of these I have stated thing correctly. i imagine I might have left something out.

bingo. you hit the nail on the head. a(4) testing has to be done with and without the QNEC. at the 2006 ASPPA Conference, Q # 6 was as follows Can a QNEC, used to satisfy ADP and/or ACP testing, also be used to satisfy Gateway testing? A. No. The QNEC can not be used for double duty (Unless the plan was a safe harbor 401(k) in which case this is permitted)

as I recall from a webinar given by the DOL, gone are the days you could send in the 5500 without the auditor's report, receive a note back from the DOL months later saying there was no auditors report, and then you would send it in saying you forgot to attach it. a sneaky way of getting around the timing rules. now it will simply be late, end discussion, beg for mercy.

as Sieve indicated, the regs are clear that if one group has a 2/20 schedule and the other group has 3 year cliff, that those schedules are 'deemed' to be equivalent. once you have more than 2 schedules (or 2 schedules that are not deemed equal), then you would test the same as you would for any BRF. ...................... I imagine the following factors are worth considering: how is vesting credited - does one plan exclude years before the plan started and another include them? how is vesting credited - is one plan 1000 hours and another 500 hours? I suppose there are other possibilities as well.

going forward, you could amend the document to exclude the owners from the safe harbor since they are HCEs. If I recall, depending on when the contributions are deposited, you may be able to deduct some of the contribution in the following year.

1.401(k)-1(d)(3) indicates you can take hardship for employee, spouse [or primary beneficiary- as added by PPA]

think of the names of the contributions. profit Sharing is considered a Non-elective contribution. A safe harbor is a non-elective contribution so when you test coverage for non-electives, you count either one a person benefits under. now, if a person receives safe harbor and no profit sharing you have the following: NHCE 1 3% safe harbor NHCE 2 3% safe harbor, 2% profit sharing both are includable and benefiting for coverage for the nonelective protion of coverage testing. Nondiscrimination is a different issue. one person received 3%, and another received 5%. This might cause nondiscrimination to fail, but not coverage.

1.401(k)-1(b)(4)(iii)(B) last sentence says you may NOT aggregate a plan using the ADP safe harbor provisions of section 401(k)(12) and another plan using the ADP test of section 401(k)(3). you briefly reference 410(b) the section dealing with mergers and acquistions. but this wasn't either, this was a group switching from union to nonunion. the good news (I suppose) is the IRS envisions other possibilities such as the one you indicate. 1.401(k)-5 is entitled Special Rules for mergers, acquistions and similar events. note, they have added 'similar events'. unfortunately this section of the regs simply says "Reserved" - so they haven't decided how to handle. irregardless, you've only been able to use the similar provision under 410(b) for coverage and not nondiscrim, so I don't see how that can help in regards to the ADP test.

but the issue is that no such exam exists at this point. They talk of 2 different exams dealing with 1040s, but they will have to come up with an exam for those who only do 5500. they still don't have the form available for the SSA, just how are they going to come up with some type of exam for '5500 filers'. plus, how do you handle the following: the office has an actuary, so they are 'otherwise excludable' from the test, but still need the PTIN. now, someone else in the office fills in the 5500. everything is done through e-fast 2. have you violated the rules? does everyone in the office need to pass testing, and just how are you going to prove all this. or the office only does small plans. so only the form 5500-SF (or 5500 EZ) will ever be filed. do I have to pass compentency since there are no attachments? just what items on this form could be filled in 'wrong' that change the orbit of the world?

no. the whole idea is you get a free ride on ADP testing, and the max you can have for deferrals is 1 year. And if someone is eligible to defer they have to get a safe harbor

accoring to the IRS web site: How are enrolled retirement plan agents and enrolled actuaries affected by the recommendations? (posted 7/22/10) Enrolled retirement plan agents and enrolled actuaries must obtain a PTIN if they are compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax return or claim for refund. But they will be exempt from the competency test requirement if they only prepare returns within the limited practice areas of these groups. Because a Preparer Tax Identification Number (PTIN) is going to be mandatory in the future, can I go ahead and get one now? (revised 8/19/10) No. In preparation for the launch of the new online registration system, effective 8/22/10, the IRS has ceased processing PTIN applications on Forms W-7P, Application for Preparer Tax Identification Number, and through e-services, Online Tools for Tax Professionals. Individuals who do not have a PTIN and are preparing a return prior to the launch of the new registration system will have to use their social security number to satisfy the identification number requirements in the paid preparer section of the return.

dang, I should have traded the report for some cooler weather! days above 90 degrees: JACKSONVILLE 46 DAYS (RANK 1ST) JULY 8TH TO AUGUST 22ND PREVIOUS RECORD OF 44 DAYS FROM JUNE 30TH TO AUGUST 12TH 1992 and more of the same all this week but I'll settle for the compliment assuming you really find it that useful. Jim - hope to see you at the ASPPA Conference in October.

The IRS has indicated the following (http://www.irs.gov/taxpros/article/0,,id=210909,00.html): Tax return preparers who have PTINs before testing becomes available will have until Dec. 31, 2013, to pass the competency test. After testing becomes available, new tax return preparers will be required to pass the competency test before they can obtain a PTIN. the tests the IRS requires have absolutely nothing to do with the 5500 (at least at this time) and to require passing those for 5500 filers seems kind of a stretch, though they do hint they will provide additional guidance (as indicated in bold) The two competency tests are described as covering: 1) Wage & non business 1040 and 2) Wage and Small Business 1040. What does small business include? And how would this impact those who prepare other business returns? (revised 7/20/10) For competency testing purposes, small business will include Form 1040 Schedules C, E and F and various other 1040 related forms. Appendix I of the Return Preparer Review report contains a detailed list. Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented.The IRS plans to add a third test with regard to business tax rules after the three-year implementation phase is completed. if this guidance takes as long as the new SSA schedule it may be awhile before anything gets implemented.

unlike your office, where everything is entered correctly all the time, I had to come up with a way of checking data, which over the years, well, is just not correct. this census report will print messages under the following conditions: (its getting out of control, but it does catch things!) (after eligiblity has been run- some message make no sense if you run the report before eligibility is processed) 1.ee term prior year but has comp this year hint:must be rehire or maybe its just the last paycheck that showed up in the new year. 2. ee is Age 70 1/2 (actually age 69 1/2 but what the heck, I like to know a year ahead of time) 3. Bad date of birth (this came about because the import didn't include the century, so the year imported as 2048 rather than 1948) 4. 0 comp but active (ee must have quit but no one told you) 5. ee is inactive or ineligble and no reason provided (probably as a result of takeover and ee wasn't coded properly. I think this could play mind games with the 5500 participant count) 6. ee is inactive but has no term date (don't ask me how I ended up with this, different users with different abilities and multiple over-rides over the years, anything is possible.) 7. number of break in svc if > 3 (just in case he should forfeit at 5 and Ididn't run a forfeiture transaction) Since I don't use home e-mail address, I put secret messages in there such as "ee paid out in 2009" just cuz.

I'd hold it shouldn't matter whether the contribution is fixed or discretionary. (e.g. suppose you had a simple profit sharing plan that failed testing because terminees don't receive a contribution. If you couldn't correct because the contribution was dicretionary, then a lot of plans would end up being disqualified) with the problem is that these regs were written before crosstesting became such a big deal (though the rules pertaining to 401(k) corrective amendments were revised begining 1/1/06) As things currently stand, it is my 'undersatnding' that you can use a corrective amendment under the conditions specified in this question, but I ceratinly could be wrong about that - I'm basing things on what I have learned fro others. (I've never added anyone in a cross tested plan myself) I've tossed the question into the hopper for the Q and A session with the IRS for the ASPPA Conference in OCT, so perhaps they will provide a different answer then.

and thats for deductabilty. there are other issues involved and maybe thats what you are hearing confusing reports on. there is the timing for annual additions, which I think is 30 days after the deadline for deductibility. also to be used in the ADP/ACP test, you have 12 months after the end of the year to make the deposit. safe harbor contributions also have until 12 months after the end of the plan year, unless its a payroll match.

Q and A info on IRS New Requirements for Tax Preparers can be found at http://www.irs.gov/taxpros/article/0,,id=218611,00.html One section discusses testing in fact it mentions 2 tests - both deal with 1040s which of course have nothing to do with 5500s. found under the heading of Will paid tax return preparers be limited to preparing only the types of tax returns that they have successfully tested on? so unless they come up with a 5500 test I don't see how those tests would be required of 5500 preparers (if it comes to that point of all this being reqired of 5500 preparers). oh wait, its the IRS. ....... there is also a section that talks about PTIN. it doesn't sound like you are 'saving' anything by applying 'now', but then, who am I to say.