Tom Poje

no. the notice provided indicated a particular contribution was going to be provided for the entire year. you can not switch mid stream.

guess it will be interesting to see how the DOL will handle it. lets see, the few plans we apparently 'incorrectly filed' based on incorrect comments made by DOL officials have ceased operations, have no employees, barely managing to get a signature before the door closes and the lights go out. after that point who do you bill before a late or incorrectly filed form? oh - maybe they will consider those extenuating circumstances.

I'm not quite sure what the exact question is, or are you talking about filing forms on paper not using EFAST? http://www.dol.gov/ebsa/faqs/faq-efast2.html Q3: Short plan year 2009 annual returns/reports (Form 5500 or Form 5500-SF) may be due before EFAST2 can receive them in January 2010. How do I file these? Short 2009 plan year filers whose due date to submit their 2009 filing is before January 1, 2010 will be given an automatic extension to electronically file their complete Form 5500 annual return/report within 90 days after the 2009 filing system is available on the DOL web site. This special extension is being granted to encourage such filers to submit their 2009 returns/reports electronically under EFAST2. Filers who choose not to take advantage of the special extension must use plan year 2008 forms and instructions and submit their annual return/report on or before the due date for their filing under the current EFAST system (before EFAST2 and the 2009 Forms and instructions are available for filing in January 2010). Q2: How can I file my timely plan year 2008 annual return/report if it is due after January 1, 2010? You have several options: You can electronically file a plan year 2008 annual return/report using EFAST2-approved third party software or IFILE beginning January 2010. EFAST2 is the new filing system. You can electronically file a plan year 2008 annual return/report using EFAST-approved third party software until June 30, 2010. EFAST is the current filing system. You can file a plan year 2008 annual return/report on paper through the current EFAST filing system, using EFAST-approved software or government-issued hand print forms, until October 15, 2010.

and the same to you Lady MacDuff hmmmm. breads to make Potica (or Povotica) - you roll out the dough thin and smother it with a walnut filling and roll it back up. Christopomos (or Christopsomo) which is a Greek Christmas bread. lots of butter in the recipe I have- oh and anise seed, of course. then I do...oh never mind.

there is a false assumption that the widget will also cost more in the future. that same widget Big Screen TV which cost $2000 a few years ago now costs $500 and does even more than what it did before. take a look at a computer and what you get for the price. there are lots of other examples, so not everything goes up in price, nor does the quality stay the same.

30 days is deemed to be 'reasonable' there is nothing to prevent you from using a shorter period, other factors to consider: # of people involved if its a 3% SHNEC, its less likely to be viewed as something effecting a participants decision to defer etc

as long as the report name is the same, the system should read the customized version over the Relius version. ah, memories. years ago...they indicated since it was a Crystal report you could modify, but you had to save it on your Relius drive. then you load the update and your customized report gets overridden. I was a bit peeved the first time that happened, probably one of many that complained so we ended up with things as they are now. I've combined the employee list with the results on one report, plus added age if someone is age 50 or older, plus the amount of catch up for excess deferrals, etc. even tried adding 'shifting' if needed. gotta love the ability to customize things. dang, Grinch can't be worried about that stuff right now. I should be home making the breads and other goodies I have to give away.

I am aware of those examples, but I didn't think they pertained to your question. using the example I messed up on, but will now correct, it sounds like what you are asking would work something like as follows : HCE 6% 6% NHCE 6% 1% can I shift so I have HCE 6% 6% NHCE 3% 4% I now pass ACP can I treat 1% of ADP as catch up? or put another way: can I overshift so that I fail the ADP test and then treat more as catch up. the IRS hasn't said so one way or another that I know of, I'd have leanings against it guess it depends on how you interpret "The plan must pass ADP before and after the shift"... can that be read as "The plan must pass ADP before the shift and after the shift with any additional catch ups.

well, search your custom folder and see if you have more than one version of the ADP report. maybe the latest update is pulling that report instead of the one which has no page numbers

are you saying you don't want any page numbers, or just the sequential ones that Relius is printing? It shouldn't matter if you update your computer - the ADP report will pull from your custom directory - sort of like an override - your custom report prints instead of the Relius report.

4 scorched and many years ago, while doing support for the old Pentabs system someone asked if it was possible to calculate an ideal salary for an age weighted plan on the system. of course my answer was 'no' but give me half a chance and I will see if I can figure something out. I figured it would be the typical small plan, but no, turns out it was around 100 lives, 20 people needed ideal salary calcs. I did 'create' a way using the target benefit module, the results on the 100 lives being within a few pennies of expected results. I think the maximum difference on any one individual was 4 cents. In other words, took the $ amount generated by the target plan and ran it as an age weighted plan (along with the comps calculated for the ideal salary) the conclusion being, that a first year target (non integrated) produces the same results as a first year age weighted. assuming the formula for the target generates the same amount of contribution as the age weighted) I'm sure the individual who condems the age weighted plan as being unfair has no problem with a target plan. hmmm, despite the fact they produce similar results.

I think what is being asked is the following: HCE 6% 6% NHCE 6% 1% can I shift as follows HCE 6% 6% NHCE 3% 3% oh, I fail ADP, so now I treat it as catch up. I don't think so because you are redoing the ADP test after the shift. It is my understanding the ADP test is completed and done before any shifting is tried.

I have leanings against such a strategy. the first step of catch-ups is to treat any excess deferrals or deferrals exceeding a plan imposed limit as catch-up. then you run your test. if you fail your test, then you have more catch ups due to excess deferrals. but I think once you get to the point of passing the test, then shifting comes, not shift and then run the test and determine if you have more catch ups due to failed test. but who knows how the IRS would view things.

hopefully the document will tell you. though it shouldn't happen, if its a 401(k) plan and operated under the rules of a 1 year rule, here is what would happen. ee rehired 10-03-09. 1 year later is 10-03-10. person completes the required service, so is restored prior service, therefore retroactively enters back to 10-3-09. oh wait, that means they should have been included on the 09 ADP test. oh wait, you can't defer on money you earned previously. ugh. ugh and ugly. therefore, as a general rule, you can not have a 401(k) plan that operates under the 1 year hold out rule. but you indidn't indicate if this was a 4019k) plan, so it is hard to say. again, the document should say. most likely the person enters immediately, if under the rule of parity, since they are vested, but again, the document should say - either under the eligibility section, or definition section (break in seervice, rule of parity, year of service, or something) hopefully you even have a restated document - my experience has been the descriptions in these are a lot better than they were in the past.

aside from possibly some special language in one document or the other, 402(g)(2)(A) says "the individual may allocate the amount of excess deferrals among the plans...and notify each such plan of the portion allocated to it" so if Plan A fails adp testing, then I would allocate it there! .......................... in a really strange concept, suppose somehow the individual was an HCE for both companies, and both plans failed testing. based on what I have seen in the regs, the catch up limit is a plan imposed limit. thus, it appears an individual could have more than $5000 in catch up between two plans of unrelated employers! In fact, the IRS added language to say if one employer has 2 plans you have to aggregate those plans and cap the catch up at the limit to prevent this, but there is not similar language for unrelated employers.

lets suppose the rollover to the IRA was $10,000, but unfortunately because the plan failed the ADP test, there was $1000 in excess contributions. this means only 9000 was eligible rollover. so, in effect the person has made a $1000 contribution to the IRA for 2009, which is perfectly all right, assuming the IRA contribution limity wasn't exceeded. I think the way it works is that the plan issues 2 1099s, one showing the 9000 in rollover and another for 1000 excess contribution, which is taxable. (all amounts subject to whatever gains/losses involved , of course)

lets see, this article says the NHCE only gets 3%. huh? for most corss tested plans, the minimum is 5% under the gateway minimum rules. while true in an age weighted plan the younger employees might end up at the 3% top heavy minimum, the older nhces end up with more than 3% the comments do mention that the owners compensation is capped at whatever - $245,000. but then use that figure when it talks about everyone getting an equal % of pay, that is not quite true. try dividing by the doctors actual comp. the comments say the individual will receive 0% interest after the owner/doctor whomever retires. not true. its true the individual may recevive no more contributions, but that is not built into the nondiscrimination formula gee, by that logic lets tell everyone not to put into an IRA either (or roll your funds into an IRA after the doctor quits), because we know they will earn 0% until you retire also. ...................... ah yes, the good old days, when everyone receive the same percentage of pay or adjusted for integration. and then the plans had 10 year cliff vesting and strangely enough, people were terminated after 8 or 9 years.

I'm sure I'm not the only one who is curious as to how the results turn out. Of course, any such results are somewhat like a private letter ruling, so....(not surprised the auditor says the safe harbor must be made) I vaguely recall when safe harbors first came out, the idea (false or otherwise) was that if a plan didn't issue the notice (or provided it late) the plan had to do testing. I think it was even in the ERISA Outline Book in one of the early editions. But that was many years ago, and I thought the IRS had been pretty clear on the issue the last few years. ........................................................... hope this picture will suffice for the month. (as I bake breads and cookies to give away, so its the 'reformed' Grinch)

EACA rule is as follows. I don't believe any specific number of days is mentioned for an ACA, simply 'reasonable time' [see ERISA 514(e)(3)], though I'd wager since the regs are pretty specific as to the definition of reasonable, that ACAs would follow similar guidelines. § 1.414(w)-1(b)(3) (iii) Timing —(A) General rule. The timing requirement of this paragraph (b)(3)(iii) is satisfied if the notice is provided within a reasonable period before the beginning of each plan year or, in the plan year the employee is first eligible to make a cash or deferred election (or first becomes covered under the automatic contribution arrangement as a result of a change in employment status), within a reasonable period before the employee becomes a covered employee. In addition, a notice satisfies the timing requirements of paragraph (b)(3) of this section only if it is provided sufficiently early so that the employee has a reasonable period of time after receipt of the notice in order to make the election described under paragraph (e)(2)(i) or (e)(2)(ii) of this section. (B) Deemed satisfaction of timing requirement. The timing requirement of this paragraph (b)(3)(iii) is satisfied if at least 30 days (and no more than 90 days) before the beginning of each plan year, the notice is given to each employee covered under the automatic contribution arrangement for the plan year. In the case of an employee who does not receive the notice within the period described in the previous sentence because the employee becomes eligible to make a cash or deferred election (or becomes covered under the automatic contribution arrangement as a result of a change in employment status) after the 90th day before the beginning of the plan year, the timing requirement is deemed to be satisfied if the notice is provided no more than 90 days before the employee becomes eligible to make a cash or deferred election (or becomes covered under the automatic contribution arrangement as a result of a change in employment status), and no later than the date that affords the employee a reasonable period of time after receipt of the notice to make the election described under paragraph (e)(2)(i) or (e)(2)(ii) of this section. If it is not practicable for the notice to be provided on or before the date specified in the plan that an employee becomes eligible to make a cash or deferred election, the notice will nonetheless be treated as provided timely if it is provided as soon as practicable after that date and the employee is permitted to elect to defer from all types of compensation that may be deferred under the plan earned beginning on that date.

the IRS solution when no notice is provided. This was one of their better comments because the gave an example of 2 employees, one who had been a participant and another who was a new participant. http://www.irs.gov/retirement/article/0,,id=200386,00.html

in this case, I believe the IRS would disagree. the preamble to the final regs (p23) at http://www.ustreas.gov/press/releases/repo...22804td9169.pdf Additionally, a plan that uses the safe harbor method must specify whether the safe harbor contribution will be the nonelective safe harbor contribution or the matching safe harbor contribution and is not permitted to provide that ADP testing will be used if the requirements for the safe harbor are not satisfied. The safe harbors are intended to provide employees with a minimum threshold in benefits in exchange for easier compliance for the plan sponsor. It would be inconsistent with this approach to providing benefits to allow an employer to deliver smaller benefits to NHCEs and revert to testing. Accordingly, if, at the beginning of the plan year, a plan contains an allocation formula that includes safe harbor matching or nonelective contributions, these regulations clarify that, except to the extent permitted under §1.401(k)-3 and §1.401(m)-3, the plan may not be amended to revert to testing for the plan year. other comments from IRS officials can be found. here is one 2002 ASPPA conference # 2. A Safe Harbor 401(k) plan fails to make 3% nonelective contribution by the end of the subsequent plan year. It would appear that plan is no longer a safe harbor and must perform ADP (and possibly ACP) testing. Additionally safe harbor contribution still must be made. Contribution is made (with earnings) 18 months after year-end. In performing testing can the safe harbor contribution be considered a “corrective” QNEC per Rev. Proc. 2002-47? IRS response: The premise posed above is incorrect. If you don’t make a required Safe Harbor contribution, you have a potentially disqualified plan! The above correction is reasonable.

someone asked a similar type question in regards to matching contributions computed on an annual basis, if they could fund during the year to avoid a large contribution at the end of the year. one of the IRS comments is as follows: Q and A #33 ...On that basis, we are concerned that the allocation violates the terms of the plan, which provides for an annual allocation. this was in the context of allocating to individuals throughout the year, so the situation might not be the same. I certainly wouldn't want to allocate the amount to indiviudals, especially if there are hours requirement or last day rule.

if yoy have a document, and the document says the plan is a safe harbor, then the plan is a safe harbor. end discussion. failure to provide the notice is simply a failure to follows the terms of the document, that is, since the plan is a safe harbor you must issue a notice. so you issue the notice as soon as possible. I sure hope the document indicates just what type of safe harbor is provided - despite what the notice didn't say. as indicated, 30 days is 'safe', that is, it is 'reasonable'. you could do less, and depending on facts and circumstances, a shorter time frame could be deemed reasonable. before it gets too late into December, I would amend the plan, pass out a SMM indicating whatever - plan is no longer safe harbor and get on with life. the only possible concern is to eliminate a safe harbor you have to give 30 days notice. so does that mean it is too late now? I don't think the IRS has addressed that issue. the regs do say "because the plan is amended during a plan year..." 1.401(m)-3(h)(1). well, the plan isn't being amended "during" the year. it is being amended before the plan year begins. though the notice must be given 30 days before the plan year begins to be reasonable 1.401(k)-3(e)(i) indicates the actual amendment to the plan only needs be adobted before the plan year begins.

ASPPA is concerned as well. just a few comments from one of its members "Obviously, we are taking this proposal extremely seriously.... Although we are confident we will ultimately defeat this proposal, we do recognize the concern the proposal will engender among the members given how many of them work with plans that utilize cross-testing. Further, we are likely to employ some targeted grass roots efforts so that the bills co-sponsors clearly appreciate what they are doing and to help prevent others from co-sponsoring. Simply put, this bill is a plan killer and would result in millions of Americans losing their valuable retirement benefits. We cannot let that happen." I do not often get into plugging membership in any organization, but it is a good reminder about some of the work ASPPA does. You might not even be aware of this.

yes, your 30 day notice should indicate such, I believe plan can be amended as late as Dec 31.