Tom Poje

years ago at an ASPPA conference the IRS personal indicated it would be 'reasonable' to treat such ees as not eligible, that is, don't include them at all. but there is nothing in the regs that addresses this issue.

I'd read and reread and read 1.401(k)-2©(1)(i) which says a safe harbor plan is treated as using current year method and then read 1.401(k)-2©(1)(ii)(A) [cant switch to prior year]...unless current year was ..used...for 5 plan years so the first big question would be how many years has the plan been safe harbor?

the permissible mortality tables are listed in 1.401(a)(4)-12 Standard Mortality Tables the last sentence says "applicable mortality tables under 417(e)(3)(A)(ii)(I) are also considered to be standard. if you are not imputing disparity and everyone has the same ret age then it is a moot point because the APR becomes a constant. use whatever permissible table helps you the best

its buried in 1.401(k)-2©(1)(i) - also I think you would find it in the regs under discontinuing the safe harbor, because of of the stipulations is that you test use the current year method. and also, since a safe harbor contribution is a 'QNEC' or "QMAC", I think the ultimate logic would be that you are providing something based on 'current year' comp, so logically use current year testing.

I don't think there is anything to prevent you from aggregating them (since the rules say you can aggregate plans), but you do lose the safe harbor, and I assume top-heavy free ride. plus the other plan had better be using current year testing since a safe harbor plan is deemed to use current year testing.

Since you are suppose to provide this info in a format that any common idiot can figure out, I was going to say "Look at that useless SAR you throw away every year - it tells you the total value of the assets in the plan. Now, take out your calculator, and punch in that value. if you multiply that by the investment % you will arrive at the dollar value in the fund." ha. in this plan, there are close to 50 different 'investment' just for the equities. I have a new participant, received a 1700 contribution - so technically it is not even invested yet. There is 4,000,000 in assets. over 50 investments just in equities. so if you have to list 'each' investment for this lady's .04% of the total assets....good grief.

so, under PPA, the participant statement for non-self directed account is to include "The value of each investment to which assets have been allocated" what meets that requirement? is it sufficient to say equities 82.00% Fixed income 13.00% money market 5.00% or do you have to list the $ amount, or do you have to provide an even more detailed breakdown?

It looks like the concern was as follows using nice rounded numbers Plan provides a 50% match. HCE deferred 10,000 (10%) and received a match of 5,000 (5%) plan failed so 5,000 was the excess contribution' when removed from the test you would have ADP 5% ACP 5%, thus 'appearing' to be a 100% match. if the 5000 excess was a catch up matched, then ignore the way the ADP test 'looks' for BRF- you still have a 50% match. if the 5000 excess was a catch up (and catch ups aren't matched) then you must forfeit.

I suppose what might be missing from the 'discussion' here is "What if catch-ups are not matched" the preamble (paragraph after the one I quoted) ...the plan can specify that matching contributions will be based on elective deferrals that do not exceed 10% of compensation [the preamble was using an example, the 10% is not reg specific] AND (emphasis mine) the matching contributions on elective deferrals in excess of the ADP limit will be forfeited...

lady MacDuff- for what it is worth, I'd hold that only 987.20 is available for catch up since for the calendar year 2007 4012.80 has already been used. (and it wouldn't surprise if the software had no clue once the plan went 'short plan year'

'may' is one of those nasty words in the English language. I don't think in this case, it means, "It is up to the (ab)user - it is his choice, he may chooses do it or he may choose not to do it. I think in this case it is more of an issue the ee is 100% vested in the match. logic (as well as the regs) would say, then there is no way in the world that such $ could ever be forfeited. ah, but in the case of excess contribution, they 'may' actually be forfeited, despite being 100% vested. that being said, I read the preamble as saying "If you don't have some goofy formula related to the match then dont worry about an apparent disproportionate rate of match if a catch up is involved with excess contributions"

yes, but the '5 year clock' starts ticking again (unless you had establshed a ROTH IRA as well) for anyone else out there reading this, this is an interesting recomendation implied by the regulations: at the time someone starts a Roth 401(k) they should also establish a Roth IRA!!!!!! see page 13/14 (assuming this shows the same format on your computer as mine, my print out from months ago is page 17) of the preamble to the regs http://treasury.gov/press/releases/reports/roth402a.pdf

there simply is no guidance at this time that I know of. I suppose if you follow the rules for for mergers/acquisitions/othersimilar events that is found under the 401(k) regs you would be ok. that is found at 1.401(k)-5 and clearly says "Reserved" in other words - there is nothing out there yet. you make a good faith effort. I'd personally lean toward putting the plan in a position that would be the same as it would today - e.g. if the individual had been working at least a year and would be HCE because of comp today then I would treat him as such. Its the people on the bubble of comp that are the difficult ones to handle. does it make that much of a difference in testing?

well, if you fail your nondiscrim test (using total comp) then you can correct by allocating a larger contribution under -11g. but I don't see how you can use it to correct a comp test failure.

or, put another way: you have an allocation based on comp less overtime and bonus. you failed comp test, so comp less overtime less bonus can not be used for testing purposes. therefore, run as you would a cross tested plan, using total comp (instead of comp less bonus less overtime)for tesing purposes, but keep your allocation as such (because of course you follow the terms of the document in regards to the allocation) actually, you might not even need to cross test, plan might pass on alloaction basis if you impute disparity. if you cross test, while doubtful it would kick into play, but the gateway minimum still has to be satisfied.

the regs don't address the issue. at one ASPPA conference the IRS official voiced an 'opinion' you could follow the same guidelines as for the SHMAC but again, that was their opinion only. In other words, it would work pretty much the same as stopping a money purchase mid year, except in this case it is a 401k and you would have to test, etc.

both. it is of 'all eligible' not 'all eligible for QNECs', otherwise the regs would have specified (or else I suppose you could do an end around the bottoms-up by specifying something goofy like "Qnec for those with less than 500 hours") now, the 'both' comes in the fact the regs say you could use either "all eligible" or "all eligible employed on last day of the year" see 1.401(k)-2(a)(6)(iv)(B) I'm not sure - I hadn't thought about it, but I guess it possibly implies the count could be different for the ADP test than for the ACP test since you could have an hours requirement for the match, and therefore you have 'less eligible employees'

I will work on the assumption this is in the wrong folder (since you are a first time user, that is understandable) there is a folder for cross testing. 410(b) is coverage, and must be passed before proceeding to any testing for nondiscrimination. you can pass this test either using ratio % test or avg ben test - it does not have to be both. since you indicated you failed avg ben test, that implies you probably failed avg ben % test, which usually makes it extremely hard to pass rate group testing, though not impossible. but then you need each HCE to pass the ratio % test by himself.

when proposed regs are issued, the good old boys at the IRS request comments for consideration. One of the comments from ASPPA is: The final regulations should clarify that an EACA only needs to be applied to those employees hired on or after the effective date of the EACA. so we will have to wait and see how the final regs come end up.

I suppose if there had been a loss then these same people would be more than glad to return the 'loss' attributable to their share as well, wouldn't they?

what a deal and what a special have we for you today. this report, designed for "don't Re-ly-on-us v 12" will work on your system as well. While it does not work by class (I have none, just ask anyone!), it will sort and total by division. [i have never bothered to update/modify to use by classes, but that 6 year old who can program your VCR can probably modify this report to do by class]. the limits in the upper left of the report are coded by formula - I use to try to pull them but something stopped working years ago, so I just modify a little every year. have to anyway the way the tables keep getting changing. oh wait, it will also print 'term' next to someone's name if that is the case. now how much would you pay? but wait, there is still more! this will print hours next to the name as well! now what is it worth? but wait, it will even print a message 'at/over 415 limit' if such is the case' all those features for one low low price of absolutely free use at your own risk. oh my goodness! there is even a line for the plan sponsor to sign off on how the allocation is to be split as indicated on the report!!! download today and receive a free "good luck on your allocation" all the way from Florida. now how can you go wrong with all that!

t-24 of 1.416-1 the third sentence "However, in the first year of the plan...

only cuz your my hero being an MD and a PA doing pensions.

a couple of points - remember, a safe harbor 401(k) plan is simply a 401(k) plan that meets special requirements. now if the one time elction not to participate wasn't possible, it would be impossible to convert an existing 401k plan into a safe harbor 401k plan if someone had previously waived out. as for people who 'waive' goodbye to free money in a safe harbor plan, well, I think it must be due to austin arch-enemy using some type of brain malfunction beam. as for how to handle people who waive out: to be included in the ADP test, you have to be able to defer. such a person can't, under no condition (which is different than deferring 0) so they would not be included in the ADP test. (It is a moot point in a safe harbor plan) for coverage, they are includable and not benefiting. the same would be true for the ACP test.

though you have 1 plan, the regs say you have 2 - one for union and one for non union. and the ADP for union automatically passes in otherwords, you have mandatory disaggregation, so each plan has to pass on its own things like 410(b), etc