Tom Poje

as I understand it, they want to fund the safe harbor plan anyway. the folks in the safe harbor plan are only losing 1 week of 3% comp, just so you can get around the rules and aggregate the plans for testing.

you indicated the other plan fails ratio % miserably, but did not indicate if it passed nondiscrimination classification test (e.g. ratio > safe harbor %) and avg ben pct test. maybe there is still hope. since the IRS has said "A plan is safe harbor even if you fail to issue the required annual notice" and "A plan is safe harbor even if you don't make the contribution within 12 months. you can't revert to testing. you have to come up with the contribution" "If you provide a notice but fail to amend the plan to be a safe harbor by 12/31, the plan is not a safe harbor, even if you provide a 3% QNEC. The plan would still have to do testing" etc, etc. I would agree that you can't simply say "we aren't going to rely on the safe harbor and do testing", regardless, the plan is still safe harbor (the notice itself is an indication of such), and as you pointed out, the regs say you can't aggregate a safe harbor and a non safe harbor. [this might be an unintended consequence of the rules, but, unless the other TPA can provide some comment from the IRS indicating otherwise, I would be leary of such a move.. I do like the idea of 'suspending' the safe harbor for what amounts to be one week, and therefore being forced into testing. clever.

when you have a controlled group, you have all employees under 1 employer. You have the option of permissively aggregating the plan (assuming they have the same plan year) if you choose NOT to aggregate plan then you have Plan A (for coverage Plan B employees are includable and not benefiting) (for ADP test, plan B employees do not show) Plan B (for coverage Plan A employees are includable and not benefiting) (for ADP test, plan A employees do not show) [you have to be consistent, if you test coverage seperately, you have to ADP test seperately) if you aggreagte plans you are correct, everyone is includable and benefiting, you have 1 ADP test including all employees.

having a bad hair day, so I needed a chuckle. thanks. probably should be pronounced PO- G (as in Gee whiz) in grade school, when OJ Simpson was popular they used to say O-J - Poe - Jay the original Croation pronunciation is Poi - Yah (the name actually means "song") so take your pick. maybe someday I will post one of the many others. I think its somewhere between 12 and 15. Happy Thanksgiving from a Tom!

ugh. make me look this stuff up. it sounds like SOL 1.401(k)-1(d)(4) Rules applicable to distributions upon plan termination (i) No alternative defined contribution plan. --A distribution may not be made under paragraph (d)(1)(iii) of this section if the employer establishes or maintains an alternative defined contribution plan. For purposes of the preceding sentence, the definition of the term "employer" contained in §1.401(k)-6 is applied as of the date of plan termination, and a plan is an alternative defined contribution plan only if it is a defined contribution plan that exists at any time during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. However, if at all times during the 24-month period beginning 12 months before the date of plan termination, fewer than 2% of the employees who were eligible under the defined contribution plan that includes the cash or deferred arrangement as of the date of plan termination are eligible under the other defined contribution plan, the other plan is not an alternative defined contribution plan. In addition, a defined contribution plan is not treated as an alternative defined contribution plan if it is an employee stock ownership plan as defined in section 4975(e)(7) or 409(a), a simplified employee pension as defined in section 408(k), a SIMPLE IRA plan as defined in section 408(p), a plan or contract that satisfies the requirements of section 403(b), or a plan that is described in section 457(b) or (f).

from the IRS website http://www.irs.gov/retirement/sponsor/arti...=151926,00.html we read: Generally, distributions of elective deferrals cannot be made until one of the following occurs: The participant dies, becomes disabled, or otherwise has a severance from employment. The plan terminates and no successor defined contribution plan is established or maintained by the employer. The participant reaches age 59½ or incurs a financial hardship. .................. so the question becomes, what is the definition of successor plan, which is found in Notice 98-1 (unless there is another definition I don't know about) - see bold type in the enclosed. making you work for your thanksgiving supper.

the fact Relius has an option for inclusive logic has nothing , as far as I know, to do with an opinion by Corbel. the logic is a carry over from the old Pentabs system which was there before Pentabs was purchased by Corbel. That being said, if I were to ask you hopw many numbers are between 1 and 3 what would your answer be? Or would you ask for further information, such as "Including or excluding 1 and 3" So when does someone hired Jan 2 complete 12 months? is it at the end of the day on Jan 1, so they would enter the following entry day or on that day itself - in other words -retroactive to the start of the day? I still think it boils to an administrators view, and being consistent, etc. I don't believe I've ever seen an IRS opinion on the matter

to show you how ignorant of the issue I am, I thought the question would have been not ASG, but rather is this a controlled group, which my limited knowledge says yes.

and now you know.

correct, though if someone has already made an investment choice they don't have to receive the notice. I think ours simply has a big note across the top that says If you have made an investment choice ignore this notice. and you do not have to issue a notice saying the plan does not have a QDIA if that is the case.

see comments under "How to use message boards" basically, benefits link was spammed

apparently Benefits Link has been spammed. if you look at the users logged into the board, the number of guests has been over 300 for any given 15 minute period all day - and you know that doesn't happen. appropriately, I see that today is (November 19) Today we're celebrating . . . " Have a Bad Day" Day “Have a Bad Day” Day If it burns you up to constantly be told to “Have a nice day!”, today is your respite from these cheery-minded folks. Today, you can proudly and grouchily declare, “No thanks! But you have a bad day!”

this depends on what type of logic you are using. Relius has a check box "Waiting period exclusive" to handle either case. I'm not sure if there is any hard and fast rule. (you realize of course your post is 10,004 for the 401(k) board. you just missed the grand prize for being 10,000, whatever it was - benefits link has come a long way - a big thanks to Dave Baker)

maybe Q-9 of the following will be helpful. http://www.relius.net/News/TechnicalUpdates.aspx?ID=430

The IRS has provided both some Q and A's on the issue as well as sample amendments.

hmmmm. what does the document say. The notice language you indicated would seem to fail the safe harbor requirement - as you indicated, if they defer 6%, then they should receive a larger match. perhaps the notice language is simply bad, and the document indicated otherwise. I know of nothing in the regs that would permit the limiting of a safe harbor match to the minimum automatic enrollment % for an individual. In fact, a new participant who defers 6% will receive a different rate of match than a similar individual who defers 6% and has been there for a longer period of time. clearly a violation of the safe harbor rules. (but then again, maybe I am reading the QACA rules incorrectly - but I thought that a QACA was simply a safe harbor that also inlcuded an automatic enrollment feature which pertains to those employees who have not made an elections)

agreed its too late for 2009. plans need to be amended by Dec 31, but any related notices have to be issued 30 days before plan year begin. you might amend plan to use the 'maybe' option for next year, e.g. issue a notice saying such by Dec 1, amend plan by Dec 31. the client has 12 months from the end of the 2009 year to make the contribution (1.401(k)-3(h)(1))) (in other words, it works just like a QNEC) hopefully that will be sufficient time for your client.

At the 2009 ASPPA Conference, this was the Q and A #8 Question It is very common to want to restate a safe harbor takeover plan to our document mid-year. We are currently telling clients we cannot make any changes to a SH plan other than adding Roth and expanding hardships, until the beginning of the next plan year. If the change does not affect the CODA portion of the plan (i.e.. the 401(k) deferrals and the safe harbor contribution) or if it is more generous, is it permissible to make the change mid year?. Examples: • add a profit sharing feature • change allocation conditions for the profit sharing formula to eliminate last day requirement • eliminate permitted disparity from a plan with a last day requirement • eliminate all distribution forms except for lump sum? • liberalize eligibility requirements or entry dates? IRS Response IRS Announcement 2007-59 provides guidance only for mid-year changes to add a Roth deferral feature or hardship withdrawals. Comment was requested on whether additional guidance was needed with respect to other mid-year changes. To date, no further guidance has been issued. ............... so, at the moment, there are no other guidelines to follow, even if it would 'improve' things as you indicate. Q and A's do not necessarily reflect the actual position of the treasury, but they are good guidelines.

that's my own reading, I am sure others may disagree. I just don't see any other reason why that particular reg cite would be there. of course, it gets back to the idea of 'reasonable'. if the plan is a SHNEC, then what difference does it make if someone changes the deferral election. if the plan is a safe harbor match, I could see (the IRS) wanting to give someone the ability to increase or start deferrals at least as often as monthly.

Jim- missed you at the conference your situation reminds me of a song... Old Macdonald had a plan He needs an E-I-N And in this plan he has match E-I E-I-N There’s a deferral here a deferral there Here a match, there a match Everywhere a match match Old Macdonald had a plan E-I E-I-N Old Macdonald ran a scam I-O I-O-U And in this scam he stole the dough I-O I-O-U Steal a few bucks here steal a few bucks there Here a buck, there a buck Everywhere a buck buck Old Macdonald ran a scam I-O I-O-U Old MacDonald is in jail D-O D-O-L He hasn’t got a chance of bail D-O D-O-L Steal a few bucks here serve a little time there Here a year there a year The judge gave him about 20 years Old MacDonald is in jail D-O D-O-L

while entry dates are not fixed in stone, 1.401(k)-3©(6)(ii) says a plan may limit the frequency and duration of periods in which a participant may make or change an election for the plan year, and 30 days is deemed reasonable. I have read that to say you must allow at the minimum monthly changes to any deferral elections.

assuming this is a non pension plan, see 1.401-1(b)(i)(ii) ....distributions...after a fixed number of years, the attainment of a stated age, OR a prior occurance of some stated event...layoff, illness, disability.... the fixed number of years was set at a minimum of 2 in some type of bulletin as I recall, most document checklist give you the option of select an age or svc(min 2) or participation(min 5) usually 59 1/2 is selected because no early withdrawal penalty

well, as part of my otherwise drab presentation, this was one the songs from the ASPPA Conference. This group wrote a song about a defined benefit plan (there have always been rumors they used drugs) and they were foolish enough to name themselves after those types of plans. D Beatles (Tune is Let it Be) My 401(k) it is in trouble And I just turned age 50 How can I save up quickly? A D-B. And in my hour of darkness The solution’s right in front of me Yes there’s an easy answer A D-B. A D-B, a D-B, a D-B, a D-B A great big tax deduction A D-B. And when the broken hearted people Living in the world agree Yes there will be an answer A D-B. For though the company defaulted Still there is P-B-G-C Yes there will be an answer A D-B A D-B, a D-B, a D-B, a D-B A great big tax deduction A D-B. And when the night is cloudy There is still a benefit for me Yes there will be an answer A D-B. I’ll wake up to the sound of money Monthly checks are mailed to me Yes there’s an easy answer Annuity A D-B, a D-B, a D-B, a D-B A great big tax deduction A D-B.

I did ask one of the document/legal gurus at the ASPPA conference about eliminating a required match when the plan was already satisfying the ADP with test with teh 3% SHNEC. the response was that as of this time the IRS has only approved modifying a safe harbor document in only a few ways (e.g. adding a Roth, etc). in addition, of course we have eliminating a safe harbor feature. there are no provisions for amending eligibility (e.g. allowing more people into the plan) or other such things. I think the conclusion being you can't eliminate a required non-safe harbor match without possibily creating a time warp or something otherwise nasty until we get futher guidance.