Tom Poje

I used to wonder about things like that, then I was called for Jury duty 3 or 4 years in a row.... I seem to be off the cycle for now.

most documents contain language regarding gateway minimums. especially now with restated documents, but you are talking a few years ago, so its hard to say. If the document contains gateway language and if someone did not receive a gateway, that is a failure to follow the terms of the document, and is correctable under EPCRS. if the document does not contain gateway language, you have no 'right' to simply give someone the gateway. thats poor document language. you indicated the plan passed gateway in 2007, so we'll assume the plan actually dies contain the necessary language. you further indicated the plan failed nondiscrim in 2007. under EPCRS this is referred to as a demographic failure (5.01© of rev proc 2008-50 SCP is only available for oprational failures (4.01(1)) VCP is used to correct demographic failures (4.01(2)) unless you can figure another wait ou as Mr. Cline suggests (e.g different interest rate, age nearest or age last, etc) it sounds like you are stuck using VCP if you want the safety of IRS approval. for 2008, the gateway was failed (and assuming the document requires the gateway to be satisfied) this is then an operational failure, which is correctable under SCP. if you get lucky, fixing that will also help pass nondiscrim (thereby avoiding a demographic failure.

how to handle the loan on the 5500 depends on whether the loan is 'self-directed' or not According to the ERISA Outline Book 2008 edition 7.Form 5500 reporting requirements on defaulted loans. With the issuance of the revised Form 5500 series, effective for 1999 and later reporting years, the government provides more explicit instructions on how to report participant loans that have been deemed distributed under IRC §72(p) because of default. 7.a.Earmarked loans from defined contribution plans. The following reporting requirements apply if: 1) the loan is treated as a directed investment solely of the participant's individual account (i.e., earmarked loan), and 2) as of the end of the plan year, the participant is not continuing repayment under the plan. The deemed distribution under IRC §72(p) is reported on line 2g of Schedule H (large plan filers) or Schedule I (small plan filers). The loan is not reported on Schedule G as a loan which is in default or is uncollectible. In the year the deemed distribution is reported, the participant loan is included in the beginning-of-the-year assets (column (a) of line 1 of Schedule H or I) but not in the end-of-the-year assets (column (b) of line 1 of Schedule H or I). For subsequent years, the participant loan is not reported as part of the plan's assets, unless the participant later resumes repayment of the loan. If repayments resume in a later year, the loan must be restored as an asset in column (b) of line 1 of the Schedule H or Schedule I, and the amount reported on line 2g for the earlier year must be subtracted from the amount otherwise to be reported on line 2g for the year the repayment resumes (which might be a negative number, as a result). Note that although an unpaid participant loan might no longer be reflected in the plan's assets for Form 5500 purposes, the loan is still considered to be outstanding for purposes of applying the loan limits under IRC §72(p)(2)(A). In addition, the instructions caution that the loan is also considered outstanding for other purposes, such as the qualification requirements of IRC §401, including the determination of the top heavy status of the plan under IRC §416. For example, to calculate a plan's top heavy ratio, the value of a participant's account must include the value of an outstanding loan which is in default and has been deemed distributed under §72(p), until the loan amount is actually offset, even though the loan no longer appears as part of the assets for Form 5500 reporting purposes after the year in which the deemed distribution is reported. See Part E.2.d.1) of this section for a discussion of other purposes for which the value of the defaulted loan remains relevant until there is a loan offset. 7.b.Reporting rules for other loans. For participant loans that are not earmarked loans under defined contribution plans, as described in 7.a. above, including loans under defined benefit plans, a deemed distribution on account of default is not reported in line 2g of Schedule H or I. Instead, the unpaid loan balance, as increased for accrued interest, continues to be reported as a plan assets, both in the beginning-of-the-year asset column and in the end-of-the-year asset column on Schedule H or I, until the loan balance is actually offset. In addition, the loan is reported on Schedule G as a loan which is in default or is uncollectible. In the year of the offset, the loan is reported as an actual distribution from the trust and is not included in the end-of-the-year asset column on the Schedule H or Schedule I submitted with the Form 5500 filed for that year.

using ft william you don't even get a chance to check question 11, the item is greyed and therefore it is left blank. apparently the software read the plan characteristic codes and therefore knows it is not a DB

geeeeeee whiz Kate. first you were a doctor (MD) apparently doing plans on the side then an attorney (PA) and now VA - veterans administrator?????????? is there any job you don't do?

no, but as noted above the one client registered incorrectly (as submitter rather than signer) the problem was resolved going through the DOL, but that means the 5500 was not re-submitted through the software's web-site. therefore, the software company has no 'record' of the form being accepted, even though it has been accepted. (but the client did print a report from the DOL indicating the 5500 was received)

had the same error, and finally tracked down the problem. when obtaining the ID from the DOL, the person had clicked 'author' instead of 'signer' arrrrrrrrrrrrrrrrrrrrrrrrrrrgggggggggggggggghhhhhhhhhhhhhhhhh

my problem with that argument is that both Treas. Reg. Sections 1.401(k)-2(b)(2)(vi)(A) and 1.401(k)-2(b)(5)(iii) were amend to say 6 months, but the one in the middle 1.401(k)-2(b)(3)(iii)(A) was not amended. while this might be one of the only times the IRS has ever missed something (I think its been years since they have issued any 'corrections' ) it seems more than likely they intentionally did not amend 2(b)(3) to say 6 months.

this is the DOL response Hello, Thank you for your inquiry. Error P-227 is received when the Form 5500 does not contain the Plan Administrators valid User Id and/or PIN signature. I-104 is received when a valid Plan Sponsor's User ID and PIN or Administrator's User ID and PIN was not provided. Common reasons for an "invalid" signer User ID and/or PIN include entering the incorrect PIN, entering a User ID that does not have the role of "Filing Signer" selected on the user's User Profile page in EFAST, using a User ID for a user who has not yet completed all steps of the registration process, or a combination of these. To address these common reasons, the signer should return to www.efast.dol.gov and log in with the appropriate User ID and 10- to 16-character password. In the case of the signer on this filing, the signer may not have completed all registration steps. If the signer does not know their User ID and/or Passwod, the signer should use the "Forbot User ID" and/or "Forgot Password" links on the login page. Once logged in, the signer should go to the User Profile page and verify that the correct 4-digit PIN is being used to sign the filing. Also on the User Profile page, the signer should verify that the role of "Filing Signer" is check-marked. If not, changes can be made using the "Change Profile" option. "Filing Signer" must be selected for the User ID and PIN signature to be considered "valid." If you have further questions regarding how to check your User Profile, sign a filing, or amend a submitted filing, please call 866-463-3278.

if I understand the question correctly, its not a matter of doing it one way or another as how one sees things. its a requirement that the document specify how to handle compensation. for example ee worked 12/23 - 12/27, but this paycheck shows up the following year. here is sample document language Compensation Earned in Limitation Year but Paid in Next Limitation Year. If elected by the Sponsoring Employer in the Election Form, then effective as of the first day of the first Limitation Year beginning on or after July 1, 2007, Code §415©(3) Compensation for any Limitation Year will include any amounts earned during that Limitation Year but not paid during that Limitation Year solely because of the timing of pay periods and pay dates if: (i) these amounts are paid during the first few weeks of the next Limitation Year; (ii) the amounts are included on a uniform and consistent basis with respect to all similarly situated Employees; and (iii) no Code §415©(3) Compensation is included in more than one Limitation Year. so in effect, it sounds like, at least for for compensation purposes in your case, no election was made. if the question is, for purposes of what limitation year to use, the documents I have are pretty specific in their definition Plan Year. The term Plan Year means the Plan's 12 consecutive month accounting year beginning January 1st and ending the following December 31st. If the Plan Year is changed, a short Plan Year will be established beginning the day after the last day of the Plan Year in effect before the change and ending on the last day of the new Plan Year

1.416-1 T-1 (b) says "All plans of the employer in which a key employee participates MUST be aggregated" © says "Once aggregated, all plans that are required to be aggregated are either top-heavy or not top-heavy" because of the aggregation rules, the statement 'the DB plan is top heavy and the 401k plan is not' makes little sense unless you do indeed have a situation in which the lkey employees only participate in the DB plan.

(lets pretend you know nothing about the new plan, it is handled by someone else) so the guy goes ahead and defers another 16,500. now what? neither plan is in violation, so neither plan is required to distribute excess deferrals. the regs give the correction method 1.402(g)-1(e)(2) - but these rules only apply if the correction for excess deferrals occurs after the taxable year. 1.402(g)-1(e)(3) has rules if excess deferrals are corrected during the taxable yaer, but these rules only apply for plans of the same employer. so now you are in la-la land as far as I can tell - there are no regs for the situation you describe.

K2Retire: thats my understanding. that's why you can correct under EPCRS, to prevent disqualification (401(a)(30)). (Otherwise it makes no sense that it is even possible to correct under EPCRS...e.g why would they even tell you how to correct the problem) with two unrelated companies, and assuming neither plan is in violation, I believe you are correct, there is nothing one can do until another distributable event occurs. see 1.402(g)-1(e)(8)(iii) which says distributions after correction period can only be distributed when permitted under 401(k)(2)(B) BG5150 1.402(g)-1(e)(2)(i) puts the burden on the individual to notify each plan he is in violation, so depending which plan corrects the problem before April 15, that would be the plan that provides the 1099 If no correction was made by April 15 (e.g. two unrelated companies), there was no distribution, so no 1099. however, the individual has submitted his W-2s to the IRS, and the IRS is so sophisticated that they will sum up the deferrals indicated and know of the violation. fortunately, they don't have to tell the individual, because the individual was wise enough to also know this and to indicate on the proper line number of his tax form that he did indeed have excess deferrals, and therefore extra income. (This is, by the way, the double taxation. eventually one day he will take a distribution and then pay taxes on that amount a second time)

I thought most documents had language that said the plan could not accept deferrals in excess of the limit, therefore if someone did indeed exceed the limit in that plan you have a failure of not following the terms of the document. this is a disqualifying event, and therefore correctable under EPCRS. If the individual had excess deferrals due to deferring in 2 unrelated companies, neither plan has accepted $ in excess of the limit - therefore neither plan is in violation of any rule, so no neither plan is subject to disqualification. I think those are cases in which you have no 'distributable' event.

as I recall, in one of the Star Trek Next Generation shows, the Borg indicated they were actually descendents of the IRS

now you are being silly. if you had read to the finish you would have discovered that on the average it will take you 19 hours for recordkeeping, 3 hours just to learn about this form and a full 5 hours and 19 min to prepare the form. and then 32 minutes to copy and assmble and send the form. hmmmm. then it says If you have comments concerning the accuracy of these time estimates...... by the way, the form 5500 sf instructions indicate the time needed to complete the form is 2 hrs and 32 minutes shoot. you save about 3 hours by preparing the 5500 SF - must be the way to go! (I guess I should ask - are you bringing the avg down or up?)

so now the new 5500-EZ asks the following: Is this a defined contribution plan subject to the minimum funding requirements of section 412 of the Code? the plan is a money purchase, amended years ago to 0% formula. so is the answer yes, and minimum required is 0 or is the answer no, since the formula is 0% and therefore there is no required contribution.

DPSRich: FT William indicated they hope to release their version of the 2009 Form by 5/21

if you go out the the IRS website you can download f5500ez.pdf you can type in the info for the year, print and mail to the IRS. not sure if any vendor will add that to their system. there are no bar codes or anything, no electronic filing, so you are not saving any time by using a vendors software even if they add this form. now, the form does say if the plan is a db, then complete the SB attachment -the instructions then say while you don't file it, you 'have it on hand'

Marge: I believe its actually just FT Williams, not Fort Williams, at least they never refer to themselves as 'Fort', but only as F T. (I'll admit I thought it was Fort as well) first year we have used them, haven't had any problems at this point in time

Austin - are they gray hairs? (at this point in the game, its about all I understand)

The IRS has promised guidelines in regards to otherwise excludables, but as of yet we are still waiting. there are 3 possible choices: 1. use plan entry dates 2. use 1/1 and 7/1 (assuming calendar year plan) 3. use 1/1 and 18 months after date of hire. as for the ADP test (NOT coverage) you are permitted to use 'carve out' - that is treat all HCEs as having met the 1 year wait

if you are not providing the safe harbor to the otherwise excludables then you have taken it out of top heavy free. otherwise I'm not sure why you are testing coverage separately, unless you are providing additional contributions, which also takes it out of top heavy free. as to using date of entry comp, well, it depends on which IRS official you ask. some (ok at least one very picky individual) would say it takes it out of top heavy free, others say it is still top heavy free

that would be my understanding, which of course could always be wrong. did the person work 1000 hours 'within 12 months of date of hire'? yes. was he wroking on the next entry date? no did he have a break in svc? yes if you have the one year hold out rule, then he doesn't enter until he completes another year, but then it becomes a retroactive entry to date of rehire, which is next to impossible to handle in a 401k plan. at ASPPA Conferences the IRS personal strongly hinted you couldn't apply a 1 yr holdout to a 401k

the accudraft documents define different situations reemployment before break in svc, before eligibiility reemployment before break in svc, after eligibiility satisfied but prior to entry date reemploment before break in svc reemployment after a break and before entry date, which sounds like your situation (g) Reemployment of an Employee After a Break In Service and Before the Entry Date. For any Plan Year in which the eligibility requirements in Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer either prior to or after satisfying the eligibility requirements in Section 2.1 (but before the Employee's Entry Date in Section 2.1) and the Employee is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Years of Service that were completed prior to the Break in Service will be recognized, subject to the following provisions: [the provision listed being whether the plan is using the one year holdout rule or rule of parity - most likely rule of parity if its a 401k because you can't retroactively let someone defer]. (1) Determination of Years of Service for Eligibility Using the Rule of Parity. The following provisions apply to determining Years of Service for eligibility purposes: (A) One Year Holdout Rule. Any Years of Service completed prior to an Employee's Break(s) in Service will not be counted in determining an Employee's eligibility to participate in the Plan until the Employee satisfies the One Year Holdout Rule. If the Employee has not satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and then satisfies the One Year Holdout Rule, then the Employee will become a Participant in the Plan as of the Entry Date in Section 2.1 after the Employee has satisfied the eligibility requirements in Section 2.1 (including, if applicable, an Entry Date that may occur during the One Year Holdout Rule period after the Employee's Reemployment Commencement Date). If the Employee has satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and then satisfies the One Year Holdout Rule, the reemployed Employee will enter the Plan as of the first day of the Eligibility Computation Period in which the Employee completes one Year of Service. Furthermore, the recognition of any Years of Service completed prior to an Employee's Break(s) in Service will be subject to both the One Year Holdout Rule and the Rule of Parity. (B) Rule of Parity. Any Years of Service completed prior to an Employee's Break(s) in Service will not be counted in determining an Employee's eligibility to participate in the Plan if those Year(s) of Service are disregarded pursuant to the Rule of Parity. If such former Employee's Year(s) of Service are disregarded under the Rule of Parity, then (A) the reemployed Employee will be treated as a new Employee for purposes of Section 2.1 and (B) the Employee's Eligibility Computation Period will commence on the Employee's Reemployment Commencement Date and subsequent Eligibility Computation Periods will be based upon the provisions of the definition of Eligibility Computation Period (with the Reemployment Commencement Date substituted for the Employment Commencement Date, if applicable). If the Employee has not satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and such former Employee's Year(s) of Service are not disregarded under the Rule of Parity, then the Eligibility Computation Periods will remain unchanged. If the Employee has satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and such former Employee's Year(s) of Service are not disregarded under the Rule of Parity, the reemployed Employee will enter the Plan as of the Employee's Reemployment Commencement Date.