Tom Poje

you described the definition of comp for allocation purposes. does the document have a separarte definition of 414(s) comp?

I suppose one solution might be to temporarily trick the system. e.g. set up a dummy QNEC account, run the additional match there, print the ADP/ACP test and then reverse all the tricks.

top heavy is a non-elective contribution, so anyone who receives top-heavy is considered as benefiting. what you end up with, for all practical purposes, is a 'class' plan - those at 3% and those at x%. you could test a(4) on an allocation basis, or even cross test (but watch out for gateway minimum) as you pointed out, see 1.401(a)(4)-2(b)(4)(vi)(D)(3) and the example #2 following involving top heavy that follows. for all practicallity, it achieves the same results as above. remember, the ees in question are still benefiting, you only treat them as 'not benefiting' temporarily to prove 'nondiscrimination. I suppose you could think of this type of situation as being a plan that could end up passing the 'broadly available allocation gateway" by the way, I realize you said "IRS Regulation 401(a)(4)..." if it helps the '1.' in front of the number indicates it is from the regs. without the '1.' implies it is from the Code.

well, 1.410(b)-5(d) only employee contributions are disregarded from the avg ben test. there is no exception that says "and also refunded deferrals/match". how come they would list one exception and not another? on the other hand, recall that 'catch-up' contributions are also not included. 1.414(v)-1(d)(3)(ii) in addition, recall that refunded deferral/match are still considered annual additions - it would be odd to consider them in one spot and not in another. yet catch-up contributions are not considered annual additions. we seem to have a pattern here. in addition, recall refunded deferrals are still considered in determining if a top heavy is due for the year - again, it would be odd to consider them in one spot and not in another. again, catch up contributions not used in determining if plan is top heavy. I suppose another argument might be that no major software I know of excludes refunded deferrals/match from the test, but I guess they could all be wrong as well. the only exception might be excess deferrals, which if refunded on time are not annual additions, and therefore there is some argument they should not be included.

Rcline: I don't think that is quite true. while you could have an effective date as of 1/1, you could certainly have someone enter the plan 7/1 and receive an allocation based on full year comp. for that matter, in a DB plan you give someone credit for up to 5 years of past svc, the document is the typical style giving only general language on eligibility/entry. e.g. 3 months eligibility. so, aside from specific language that says "entry date is retroactive to the begining of the year", or '1st day of plan year if hired in the first half of the year, 1st day of following year if hired in the 2nd half of the year" just when does someone enter in a new plan - does it back track to the effective date, or can it only be from the signature date if later.

plan is effective 1/1/07 but document not signed until 4/1/07, deferrals are ok because they didn't start until 6/07. now, does that mean no one was eligible the first day of the plan year (and therefore avoid a large plan audit) , since the plan itself wasn't in existence until after the effective date. certainly you weren't eligibile to defer until after the signing date. (Stupid plan in which only 7 people deferred out of many, many, many)

in this case no, it doesn't help, because comp can also be based on calendar year ending with the plan year. I had never thought about some of the things that happens if you use calendar year comp, but the plan year is something else. ee could 'have comp' from 1/1 - 5/23 and quit, but for the plan year which runs 7/1 - 6/30 he has no hours. by the way, I did try and submit your safeharbor question for the Q and A at the Western Benefits Conference, but that doesn't come up for awhile.(July) Granted its late for submitting stuff, but I do have a little influence at getting some questions submitted, so maybe I'll get an IRS response someday.

since my mind mentally can't handle how to calculate the following: Plan year runs 7/1/07 - 6/30/08 but comp for allocation purposes is calendar year comp. thus the comp for the calendar year ending within the plan year is zero. immediately eligibility. ee hired in 2008 and so enters in 2008. and is there on the last day of the plan year. plan is top heavy. so his top heavy minimum is zero? and if plan was tested for nondiscrim he shows as zero? and for coversge he got nothing though he is eligible?

according to Adam Pozec's notes from a few months ago, 'the answer is unclear'

if that like In "the big inning" A-Rod hit a homer. Fortunately the other team scored enough to beat the Yanks. Everything is always the beginning of the year except for the 415 limit, which is end of year.

if B had a non safe harbor plan, you could not aggregate for ADP testing, since one is safe harbor and one isn't. but if you can't aggregate for ADP testing, then you can't aggregate for coverage, since you have to test under the same conditions. now, since B doesn't have a plan at all, does that change the rules? I'd express the same concerns you have, since no notice was given, etc, I'd lean toward saying you cant. but if you cant then I dont think an -11g will help since you cant include the B folks. so it raises a couple of questions. 1. will plan A pass ADP testing if not treated as a safe harbor (I thnik you could actually give up the free ride and do that, and it might not matter if the plan can pass anyway) 2. can plan A pass the avg ben test (treating B as zeroes (non aggregated)) or if 1 is true, then aggregate the plans and then the QNEC is okay (I think, but since it is after my 4:15 limit my brain is melting down.) long live blinky!

if plan is top heavy, you lose your 'get out of top heavy for free' card if you use the otherwise excludable option. the advantage of the QACA is that you can use a 2 year cliff vesting for the safe harbor. therefore, it would seem to me to make more sense to provide the safe harbor to all, since there is no top heavy. you save on the fact the 3% is only provided on comp from date of entry. (or if you go with the match non deferring ees get the big fat zero.

there was some stuff here: http://benefitslink.com/modperl/qa.cgi?db=qa_davisbacon A short section in the Coverage / Nondiscrimination Answer Book some stuff beginning on page 91 probably a lot of crossover with the different references

same as ADP test. provide QNEC or QMAC to pass testing refund $ (plus earnings) to HCEs (or forfeit if not 100% vested) er pays penalty tax if distribution not timely made.

"I've never written a song in my life. It's all a big hoax." - Elvis, but I plan on being at the ASPPA Conference.

ok, since I have really been confused between ACA and EACA and QACA I see the preamable notes (last paragraph on page 10 of the attachment) says the following: The definition of an automatic contribution arrangement under section 514 of ERISA is generally THE SAME definition of an EACA under section 414(w)(3),(including the requirement must be invested in accordance with regulations prescribed by the Secretary of Labor under section 405©of ERISA, but the definition does not include a notice requirement. HOWEVER, section 415(e)(3) of ERISA requires a notice to be provided to each participant to whom the arrangement applies. As in the case for the notice under section 404©(5)(B) of ERISA, the specific timing and content requirements under section 514(w)(3) of ERISA are generally the SAME as the notice requirements under section 414(w)(4), but the interpretative jurisdiction for the notice is also with the DOL. so that sounds like there is no seperate animal known as an ACA as oppossed to an EACA. the preamble says they are generally the same! even looking at Corbel's cheat notes of the differences between the two it really looks like there is no difference between the two. the exception being if the ACA is a non statutory ACA - most often this would occur if the plan chooses not to comply with QDIA regulations.

Pittsburgh was a 'side trip' - the ABC group there wanted a talk on cross testing, so they grabbed me. but since I am originally from Michigan, the hockey results were perfectly fine with me. Andy way overrates any abilities I may have in regards to pension songs. at the moment I seem to be struggling with some ideas for Jimmy Buffet, "Jamaica Farewell" Along the way I will squander my pay For that fun that comes daily on the mountain top I'll take expensive trips on sailing ships I'll keep spendin' and spendin' and never stop Now its sad to say I'm in a four-oh-one K I'm not deferring or puttin' away My heart will be down When 65 comes around I'l have so little cash left to spend in town (maybe someday I can actually finish such nonsense. at the moment I understand that 'Elvis' may come out of hiding and make the fall conference)

In regards to that issue, I believe that is correct. hopefully I can get a chance to re-read some of that stuff again and clear my mind up on some other things.

the proposed regs 1.414(w)-1(b)(2) say that to pass uniformitty an EACA is permitted to follow the rules of 1.401(k)-3(j)(2)(iii) without regard to whether the plan will be a QACA. this sectiion (iii) is the section that pertains to current employees (e.g. those that have made an affirmative election, ot those that have chosen not to have elective contributions made.) I'd give a strong recomendation to reading the 2nd paragraph for "EACA under section 414(w)" of the preamble to the proposed regs (beginning page 17?)

just for the fun of it I tried typing minimum distribution factors in google and tried the very first choice, which was http://www.72t.net/MinDistribution/MdFactors.aspx those factors seem to match what's in any book I have, but I only did a quick eyeball on a few values.

Below Ground- sometimes I get sloppy in my hurry posting calculations. the '.7' is really .7% which of course is equal to .007. (sorry, at the moment I've got enough other projects on my desk, before I look at the pdf file example)

I'd agree the question has me baffled as well, so you are not alone Belgarath. I seem to recall back in 2002 a concern about 'nonconforming' states - those that didn't update the state tax law to conform with the higher deferral rates permitted under EGTRRA, but eventually all the states conformed (as far as I know). gad, that issue brings back nightmares long since forgotten.

I believe the IRS goes beyond being a big brother in this case. more like a father (or the Godfather) in other words, too bad so sad your dad. see 1.410(b)-7(d)(5) 2 or more plans may NOT be aggregated and treated as a single plan under this paragraph [permissively aggreagted] unless they have the same plan year. thus for coverage you get 2 tests and people includable and not benefiting. since you can only nondiscrim test the same way you coverage tested (no permissive aggregation), you will have to run separate ADP tests. but of course for the ADP test you don't include the 'other' memeber of the controlled in the adp test, since they are not 'eligible' for that plan. if you have to rely on the avg ben % test to pass coverage, you include all contributions - see 1.410(b)-5(d)(3) how to handle.

doesn't change my opinion at all. for otherwise excludables, I still hold that since the plan could have had a 1 year wait. so I pretend it was and anyone who is now in that would have been been excluded if the plan was written that way is excluded. as pointed out some IRS officials agree, some don't.

I think the answer to your question depends on which IRS agent you are talking to. ignoring the fact the plan is elapsed time, consider a 410k plan with immediate eligibility and monthly entry dates. some IRS agents say the entry dates come into play, thus otherwise excludable are those who have been there less than a year. other agents lean toward the maximum statutory exclusion thus, 1 year plus a max of 6 months (ignore the plan's entry dates) I lean toward that, and every year they promise to tell us exactly how to interpret the regs on this issue. 1.410(b)-7©(3) refers to those employees 'who have satisfied the lowest minimum age and service conditions [of the plan] but not the greatest age and service conditions permitted under 410(a). note, there is no mention of entry dates, thus, as far as I can tell, the difference of opinion among different agents. 410(a)(1) speaks of age and service 410(a)(4) speaks of time of participation (1st day of plan or 6 months after meeting requirements) so, I would hold that even though the plan in your case is elapsed time, it could have been 1 year wait and 2 entry dates, thus anyone who never ever ever ever ever ever works 1000 hours would be otherwise excludable but my opinion only. again, it could very well depend on which IRS person you talk to.