Tom Poje

My knowledge is better on "Don't Rely-on-Us" anyway, the system should be using whatever you have coded for NRA in Plan Specs. if you are getting everyone to show at age 65 it sounds like a coding problem. (I even tried changing the retirement date on a dummy plan I have and age 60 shows up as testing age (or it could be 59 depepnding on if you code age nearest or age last) The only other ting I can think of is that you have the definition for retirement date as something other than 'date of event' or '1st of the month following' (this would apply to any definition - not just 59 and a half) I could see this creating nonuniform ages, and therefore the system using age 65. e.g. if it is coded plan val date nearest, some people would be age 59 and others 60. this is nonuniform and so I will go out on a limb and guess the system would use age 65.

I'm not so sure that NHCE #2 has to receive the same rate as NHCE #1. LRM simply says if you only have 2 NHCEs, then the max number of groups you can have is 1. thus the plan meets that qualification. LRM also specifies that the grouping must be reasonable (I'm pretty sure have only 1 group would be reasonable.)(I only point this part out simply because I imagine that some people will miss this point and simply assign people to groups in whatever order and then depend on Mr. Preston to back them up and say prove to me the grouping isn't reasonable) now, while true each person in the group must receive the same amount/percentage, you have one person in the group who has failed the hours/last day provision - therefore, the person isn't eligibile for the group alloaction.( I can only assume this person must have had less than 500 hours.) the only reason this person received anything in the first place is not because of the grouping, but because of the safe harbor, and that is simply increased to the gateway minimum under a different portion of the document, not the allocation grouping. if I recall, years ago at an ASPPA conference (on a different issue) someone asked about a prototype that had immediate eligibility if hired by such and such a date, and a 1 year wait for all new employees. I don't remember the exact details, but the plan appeared to fail 'coverage' (I'm not sure why the otherwise excludable wasn't use) However,the conclusion of the IRS went along the lines something like "well, its a prototype, and they always pass coverage and nondiscrim, so you must be ok"

then my mis-read. I thought it was indicated there were 4 nhces

I'd agree with Blinky on this one. since SHNECs can perform triple duty, it wouldn't appear to be a problem if the HCEs 3% was a nonelective and the NHCEs was a 3% SHNEC. As far as I know, there is no rule like QNECs in which you have to run a nondiscrim test with and without QNECs. Such a contribution would of course take the plan out of the top heavy free scenario, but since most if not all employees would receive the 3% SHNEC anyway it probably doesn't matter

it is not a matter of "sources could be disaggregated" 1.410(b)-7© requires mandatory disaggregation, and quite clearly states the sources are treated as 'separate' plans. while 1.410(b)-6(b)(1) certainly says that you use the minimum age and service, however the paragraph before that 1.410(b)-6(a)(2) clearly states that this rule is applied 'soley' in reference to that 'plan' However, the concluding statement adds 'In determining if a plan satisfies the average benefit percentage test ...then all plans in the tesing group are treated as a single plan'. so, if, when referring to coverage, you are talking about the avg benefits % test, then it is true you would look at the min age and svc conditions. if you are talking about the ratio % test, then you look at the 'plan' or 'source' conditions.

its in the LRM pertaining to the prototypes. I'll post it again

as a general rule you take the ending balance as of the prior year and divide by the appropriate factor from the uniform table: age factor 70 27.4 71 26.5 72 25.6 73 24.7 74 23.8 75 22.9 76 22.0 77 21.2 78 20.3 79 19.5 80 18.7 81 17.9 of course, nothing is ever that simple. sometimes there are possible adjustments that would have to be made to the account balance - though I dont think that often. if the 70 year old had a young (more than 10 years difference) wife then its possible that using the joint table might be desired....oh, oops, not politically correct, I suppose the 70 year old lady could have a 50 year old muscle bound macho husband....

If it was a prototype then you could only have 2 groups for the NHCEs, but otherwise the formula does work (ignoring the possible reprucussions when the youngest NHCE tells the other NHCEs he received 49% of pay!!) suppose the plan had simply given all NHCEs 5%. it would have failed testing and could have put in a corrective amendment producing the same results.

no elapsed time required. you could, for instance (depending on the document) put an hours qualifier on it such as "600 hours in a 6 month period or 1000 hours in a 12 month period"

but you do not have only 11% nonelective. the 4% QNEC is still a 'non elective', but as the wise fish said, you still have 2 tests to run - one with and one without, though of course the test including all nonelectives would pass

I asked King Sal about your comments (- or maybe its Emperor Tripodi - I get the titles confused) - and he responded in the following manner (I happen to have a running gag with him about some of the typos I have come across over the last few years, so I have a foot (or at least a toe) in the door) ........... Not sure where the confusion is. Here is how I would distill it. (1) First identify the "plan" that is subject to coverage/nondiscrimination testing. In this case, the plan is the total of nonelective contributions, whether by PS allocation, gateway, TH, or SH 401k. (2) Then determine how the "plan" in (1) is tested. If the plan is not subject to disaggregation, or permissive aggregation with another plan, then you test it accordingly. If the plan is subject to disaggregation (e.g., otherwise excludable employees - see last sentence of 4.a.6)a) on p. 9.41), then you test each disaggregated group separeately. If the plan, or a disaggregated portion of the plan, is permissively aggregated with anothe rplan that consists of employer nonelective contributions, then those aggregated plans are tested together.

I'd say I would need a lot more convincing based on my 'limited' knowledge

yeh, but you don't have a boss like I do that insists you can do such things.

this could be corrected under the self correction program (VCP only) see page 29 of rev proc 2006-27 (its a loan in excess of 72(p)(2)(A))

despite the fact it changes how the nondiscrim testing? e.g. the IRS has said you can't change ADP testing (e.g. from prior to current year after the fact, etc)

Cash Balance has NRA = 60 401k plan has NRA =65 so, can the 401k NRA be amended after plan year end to NRA age 60?

my copy of the regs (1.401(k)-1(b)(5) and 1.401(k)-2(a)(6)(ii)) says to pass 401(a)(4) nondscrim a plan must be able to pass i) including the QNEC (rarely a problem since they usually only go to NHCEs) ii) excluding the QNECs I think that is one reason why the IRS personal says they can't satisfy the gateway - you have to run the test excluding QNECs so I am not sure I would agree QNEC are in the same 'general nonelective contribution pot' always. sometimes yes, sometimes no, depending on whether you are (i) or (ii). it is interesting that no such rule applies to the SHNEC. see 1.401(k)-3(h)(ii)...'these contributions are not subject to the limitations of 1.401(k)-2(a)(6)(ii)... (thank heavens you don't have 2 tests for coverage!)

ah, young grasshopper under 1.401(a)(4)-(8)(b)(1)(B) it is clear these are the hoops you pass through to be able to nondiscrim test a DC plan on an accrual basis. there is no gateway if you were to test on an allocation basis. note also, the rules apply to nondiscrim testing. thus they do not apply to coverage testing, thus you could run the avg ben % test on a 'cross tested' basis for coverage without having to provide the gateway.

I don't think, that's been my problem all along. however, at the Q and A a year ago, the IRS personal said the QNEC (unless it is the safe harbor 401(k) version) can not be used to satisfy the gateway. it simply can not be used to perform 'extra duty'. only a SHNEC can do that.

correct, because instead of the allocation gateway you have provided the smoothly increasing gateway.

yes, well put. Kim can give the talks and I can 'retire', though I did hear a rumor that Elvis ASPPA-resley may try his hand at some type of presentation this fall.

if you are not aware of it, one of the best features of this website is the free daily newsletters, http://benefitslink.com/newsletter/ when, for instance, the final regs for some section are released you receive the notification and a link so you can print out the stuff. I print the stuff off, because, while I can always look in the regs, I've found it hard at times to find the preamble. And I've found the preambles to be so valuable - in this particular case I think they addressed your question more so than the regs (in fact I only copied the one paragraph, if you read further they address when the deferral election must be made, etc )

about as close to any comments you might find can be found in the preamble to the final 401(k) regulations. (always print them preambles when available, you can never find them when you need them later! "One commentator asked for clarification of the interaction between these timing rules and the rule under the regulations that treats a self-employed individual’s earned income as being currently available on the last day of the individual’s taxable year and whether this last day rule precludes a partner from making elective contributions during the year through a reduction in the partner’s draw. The restriction on the timing of contributions is not intended to prevent a partner from deferring amounts that are paid to the partner throughout the year on account of services performed by the partner during the year, and the final regulations have been modified to clarify this point. However, self-employed individuals who take advantage of this opportunity to defer amounts during the year must make sure that the amount contributed during the year will not exceed the limits (such as the limits of section 415) that will apply to the individual, based on the individual’s actual earned income for the relevant period."

very wise and well said indeed, you have answered your own question!

You cant have a SIMPLE if you accrue a benefit under another qualified plan. so since both require contributions it would be impossible to have both at the same time.