Tom Poje

don't ask me why people do what they do. someone asked and I forwarded the question. I suppose its possible the descretionary might have allocation conditions, and it could be cheaper to get give a little bit extra safe harbor contribution to all rather than a discretionary to a few.

I posed this question at the ASPPA conference Q and A. Actually, as I am part of the process I sat in with the IRS agents a month beforehand to review the questions. Their initial reaction was that you had to specify the amount of SHNEC in the document but upon further review the regs merely say that the SHNEC must be "...at least 3 %" they indicated that you could probably even word things that way (e.g. as long as you gave at least 3% you were ok, but you could give more (assuming you didn't say the amount was only 3%) of course, such comments don'y necessarily reflect actual Treasury stance, but ....

Interesting. the new Corbel document, for Normal Retirement Age includes the following "However, solely for purposes of nondiscrimination testing... the employer may deem the social security retirement age as the Normal Retirement Age" so, that implies (at least with those documents) you can now use SSRA as testing age. It is my understanding that you would still have to do a BRF on the different SSRA ages.

as an added note, I see the new Corbel document defines limitation year in the definition section, and further says for purposes of the initial plan year that the limitation year is the 12 month period ending on the last day (hence no pro-ratio)

can you find the definition of "limitation year" in the document? I am looking at a Corbel document and found it buried in section 4.7 maximum annual additions. Its defined (at least in the document I am looking at) as "the Plan Year". My understanding then would be it runs from the effective date, and if it was the same as yours you would have to pro-rate the limits. There is always the possibility the definition could have said "the calendar year" or "the 12 month period endong on the last day of the plan year" in which case, at least as I understand things, you would not prorate. (since you indicated that compensation is going to be the full 12 month, maybe that is what you have for limiation year as well.) even though deferrals didn't start until 10/1, they could have made the effective date 1/1., which of course would have made all your questions/answers easier. I'm certainly no expert of short plan years, but hopefully that is enough to get you started.

not for testing, but for cross-testing plans I do try to send the contribution breakdown (by class or participant) with a space for a signature at the bottom. years ago the IRS 'implied' this was required, though I think they backed off a little on the issue. but once you get in a habit of doing something, its hard to stop, and it can't hurt.

good point about catch-ups, Laura. another issue that comes to mind is if one plan uses top-paid group election and another plan doesn't for HCEs.

of course there are no clear guidelines at this time how to handle your scenario. A safe-harbor plan is suppose to be 12 months long. and you can't aggregate a safe harbor with a non safe harbor (or at least aggregate and get the safe harbor free ride) My guess (and I do mean guess) at the cleanest way to handle things is simply continue with plans is until the end of the year and then merge one way or the other. you did not indicate if it was a stock acquisition or asset purchase, and that probably makes a big difference. If my feeble brain remembers, coverage is not (or shouldn't be) an issue because of the acquistion free -ride rules. nondiscrim might be an issue (but not in the safe harbor). I suppose what becomes an issue is if the employees involved in the takeover become immediately eligible for the other plan (hopefully not)

If I understand your statement correctly, I disagree. If you aggregate for coverage, you must aggregate for ADP (or any nondiscrim testing) as well. If you can pass coverage w/o aggregating then you DONT aggregate the ADP test either. now, just beacuse you aggregate for 401(k) does not mean that you have to aggregate for the nonelective, but still, whatever rules you use for coverage for the particular 'plan' you are looking at (401(k), 401(m) or nonelective, you must treat the nondiscerim test in a similar fashion. this also applies if you are using the otherwise excludable option as well.

I'll go out on a limb and assume the following. last year's NHCE avg was 4.56. I'll also assume the following, there is nothing limiting the HCE deferrals except for your knowledge of what the maximum is. but that is not a plan imposed limit, only knowledge of what will pass/fail the test. If that is the case, then there are no 'catch-ups' until he has deferred 15,500. anything above that is catch-up. for purposes of testing you would use 15,500 / 230,000 = 6.52, which of course fails. refund is $412 if he hasn't used up the full 5000 in catch up then he can reduce his refund by whatever amount he has left. (by the way, at the moment for the indexed limit I have $5505 for next year's catch up (this of course would be rounded to $5500) so it looks like we will bump up a little next year.

there would be nothing to prevent this, but the eligibility must also contain a provision that requires the person to enter the plan if they worked 1000 hours in the 12 month period (as required by law) in other words, in your example, a person might work 800 the first 6 months and 400 hours the next 6 months. they have failed your conditions for eligibility. however, they have worked 1200 in a 12 month period. by law they have met the minimum eligibility standards and must enter (unless excluded for another reason)

many moons ago, you were limited in the amount of contribution - possibly the simplest explanation would be that if you were at 62% of the 415 limit (accrued benefit) in the DB plan you were limited to 38% of the 415 limit in the DC plan. but you had all types of adjustments that could be made and terms like 1.0 calc and 1.25 multiplier, I think there was a 1.4 multiplier and it made a difference if a plan was super-top heavy, and you could do a buy-back in certain cases. I think Mike Preston would refer to those years as the "glory years". now, a few years ago, they said each type of plan (DB and DC) has its own limit. its only amongst those types that you worry about limits. e.g. you can't get more $46,000 in a combo money purchase and profit sharing plan. The main limits being not on an individual basis but on a deductibility issue for the employer. I am assuming you are talking about one employer, not someone working for two different unrelated employers. the deferral limit is usually set no matter how many different employers, but even that can make a difference if you are talking about different types of plans - 401(k), 403(b) and 457 andall the different catch up possibilities involved.

what is the plan's definition of 'break in svc'? did the ee meet the eligibility requirements previously? for example: plan imposes no break in service ee worked 1000 hours but failed to meet entry date requirement ee quits and later returns to work a year later this ee enters upon date of rehire because they satisfied the eligibility requirements and they have now passed (or if you will) reached the next possible entry date.

I thought the doctor only gave you an MR when there were possible serious problems....

ah lady mcDuff- I think part of the problem is the instructions speak of "When you must first report a termianted vested participant" but aside from the opening coment, there is no special instruction pertaining to ees no longer required to be reported. Of course, the software we use is a real pain because it doesn't include the D people on the count. In another place it will list the people properly as D, but then it also includes (for some reason) type of Annuity, etc, so if you do the download into govt forms you have to do a bunch of editing - a real pain with a large plan. I think the first two letters of their name comes from the last two letters of 'torture'.

I guess I need to get new instructions. the ones that come with my 5500 (and are similar going back to 2005) the opening line for the ssa says General Instructions (of whom to report) for the SSA (at this point there are 3 bullet points, the third one being): previously were reported under this plan but are no longer entitled to those vested benefits. to me, that implies they are required to be reported. were those people separated from services? certainly, thus the line on the 5500 that says participants who seperated from service with a defrred benefit...blah blah blah required to be reported - it only makes sense to include these people. I know, logic and IRS don't go hand in hand, but...

I think the follwoing is a lot closer to my sentiments, and this one overcomes whatever problems may exist with the keyboard or forewall ohowihateohiostate so, how did you do on your identification ability?

the more I have re-read the proposed reg on these animals has me leaning towrd the conclusion that there really isn't a separate animal called an ACA, rather you have an ACA and it can take the form of an EACA or a QACA (or I suppose a combination of both) the preamble to the proposed regs says the following (see page 10, last paragraph): "The definition of an automatic contribution arrangement under section 514 of ERISA is generally the same as the definition of an EACA under section 414(w)(3), (including the requirement that automatic contributions under the arrangement must be invested in accordance with regulations prescribed by the Secretary of Labor under section 404©(5) of ERISA), but the definition does not include a notice requirement." it then goes on to say However, section 514(e)(3) of ERISA requires a notice to be provided to each participant to whom the arrangement applies. so, the difference would be the notice...but that is taken care of in the next sentence which says As in the case for the notice under section 404©(5)(B) of ERISA, the specific timing and content requirements under section 514(e)(3) of ERISA are generally the same as the notice requirements under section 414(w)(4), but the interpretative jurisdiction for that notice is also with the DOL. The title of the proposed regulation is Automatic Contribution Arrangement and the preamble is divided up into: 1. QACA (page11) 2. EACA (page 16) 3. Notices (page 20) there is no section referring to a seperate ACA. I've looked at side by side comparisons of ACA, EACA and QACA, and, except for the issue of how to handle prior participants, there is no difference between an ACA and an EACA. The comparisons I have seen say that in EACAs you can exclude, ACAs say it is unclear. (remember, the distribution ability under an EACA is an option, not a requirement) If you have already lost your copy of the proposed regs, I have attached it. In fact, the opening paragraph to the proposed regs states the proposed regs are done to reflect the provisions of PPA to facilitate automatic enrollment.

ok, I believe they spelled #10 wrong. still, it was a fun game

aaaaaacccck. someone sent me a 2nd set I guess that makes 100 of the 120. oh well, the weekend is here. (The one I lose on is the one I will get soon to pick the 10 teams I think will finish with the best win-loss record.) since it is against my scruples to pick a certain team south of the Michigan border I am already at a disadvantage. (I cant even type that name on the keyboard - even if I wanted to. must be a firewall protection of some type)

WDIK - guess I will never be cured, but I did need a break from the work load. I managed 31 without 'cheating' if it makes a difference - but I do know all the answers now.

db plan has been frozen for a number of years. the company put 15% of current comp into the DC plan. what % can be put into the DB plan since no one is accruing any more - one is simply funding the DB

this will always be an issue until the IRS invents some type of guidelines. I'd lean toward the burden of proof being on the IRS. lets suppose in your example partner B was excluded from the plan, but had his own plan with no other participants. now would you have an argument against him receiving 0 some years? the end results are the same. in fact, take it one step further. how come a one person plan (strictly profit sharing - no 401(k)) - how come that is not deemed to be a CODA since the person decides each year how much to put in?

simply identify all the football helments. off the top of your head of course, since you could easily do a search and find the answers. (please, no posting of answers, don't spoil it for other people) though if you want to 'brag' about how many you got correct - or how poorly you did! there is a running count in the upper right corner. even someone who doesn't follow the sport that much like me managed more than half. Ok, before opening the file you might want to take a quick look at a list all the division I college team names - maybe that will help. I guess maybe that wouldn't really be cheating. of course I expect Mike Preston to get a perfect score - even if it is an actuary adjusted score.

this is a reminder to all folks out there: if the QNEC was used in ADP testing, then the plan would have to pass nondiscrim woth and without the QNEC. in addition, that means, when testing without the QNEC you would not meet the gateway. I believe in this case with no ADP test you are in the clear.