Tom Poje

the SNHEC can be a 'maybe', so it should be possible to ive a notice at the beginning of the year that HCE might get and NHCEs will get, but there is no such option for the SHMAC. it is in the document at the beginning of the year. now you could stop it at some point during the year for the HCEs (following the rules as defined in the regs) but I see no way of accomplishing what you want. you are trying to turn it into a discretionary match, which would only be possible if you have provided a SHNEC to all.

1.401(m)-1(a)(2)(ii) adds that it becomes a 'facts and circumstances' as to whether it is a match. there is no argument that the person received the contribution because he deferred. The question (at least as I see it) does the contribution in this case actually constitute a 'match'. you aren't really 'matching' anything. as I pointed out, I think I could easily argue this is a 4% nonelective contribution based on an allocation condition 'that someone defers'. again, in this plan, what 'level' of match exists? there is no level, it is simply a 4% of comp. I am not saying my argument is necessarily correct, but I would want further guidance from a higher authority

BRF- exactly what it says - 'BARF' - more testing (Benefits, Rights and Features)

again, that is exactly why i raised such question - I don't think what you suggest is possible. what it sounds to me is that this is a cleverly disguised 4% nonelective based on whether someone defers. If it was simply a 4% nonelective to all then it would be a safe harbor nonelective, which can have some requirements, such as entry dates, last dates or hours requirement. (1.401(a)(4)-2(b)(4)) since you now have an additional condition that is not safe harbor (whether the person has deferred or not) you have taken the non-elective out of safe harbor - I suppose if the plan could meet testing under the nonelective rules you might be considered to pass testing - I hadn't considered that possibility. I would certainly get a determination letter on this one and ask the IRS how they would view such a plan. In other words, it sounds a lot closer to having a cross tested plan with 2 classes - those that defer and those that don't. I'd still hold you don't have a match - you are not matching deferrals at all, but rather providing a contribution if someone defers.

so, for example the HCE makes 200,000 and defers $1. his match is 8000 so his rate of match is 8000% doubtful there would be enough NHCEs in the group to pass BRF testing. ok lets suppose he defers 8000. the match rate is now 100%. any NHCE that defers more than 4% will receive less than 100% rate so this too could cause plan failure. and how do you propose to handle someone who doesn't defer? what is their 'rate of match'. Do you have to treat them as includable and not benefiting for coverage and for BRF testing? is this really just a plot by Dr Evil?

the way you described it, it sounds like a 4% discretionary nonelective contribution, but based solely on whether you defer. in other words, you are not matching the deferral at all. without digging into the issue, I know you have a last day rule or hours requirement to receive a nonelective, but I don't believe you can have a requirement 'as long as you defer'.

I am a bit confused as to what actually happened so I will make an attempt an giving an answer. a notice is only a notice and not worth the paper it is printed on without a document to back it up. in fact, the IRS answered as such at the Q and As at this years ASPPA conference in Washington DC. (This was in context of a 3% nonelective) now, you may have some disgruntled employees (especially if there was no contribution) (In this case, at least you indicated there was a contribution.) now you say 'no employee would receive any less', but since the basic match can get one up to 4% of comp while the nonelective is typically only 3%, I'm not sure if that is true no employee would receive less. then you indicated 'later in the year' a safe harbor nonelective was implemented. at that point I am really confused. a safe harbor notice was issued timely e.g Dec 1. but apparently no document allowing for a match was signed before the start of the year, therefore 'nullifying' the notice. however if deferrals were permitted at that time but a safe harbor was implemented 'later' then that sounds like a violation of the 12 month rule for a safe harbor. In addition, you could have an individual that could say "I wouldn't have deferred if I knew there was no match". ugh. this one sounds bad in a lot of ways (at least based on the limited info provided.) Plus all this doesn't address the issue of what the SPD or SMM said. [if there is an actual document saying a match would be made, then you have to follow the terms of the document and provide the match and all the above becomes a moot point.]

if you get real lucky you would fail the 414(s) comp test. then you would be required to use 414(s) comp in your ADP test. wouldn't that throw the auditor for a loop.

Haven't really found a great resource. Amy Cavanaugh answerd a few questions here: http://benefitslink.com/modperl/qa.cgi?db=qa_davisbacon and she put some questions in the Coverage and Nondiscrimination Answer Book (27 questions) In Appendix L some information on compliance is reprinted (pages 19 -25 of DBRA Compliance Principles) from a particular section towards the end of: http://www.abc.org/user-assets/Documents/G...esourceBook.pdf this is a 255 page document. I think if you have insomnia or live in a padded cell, or maybe if you are stranded on a desert island somewhere it might prove valuable reading.

1.401(k)-2(b)(v) says 'in the complete termination of the plan...correction must be made as soon as feasible...but no later than 12 months after the date of termination.' so I'd say you use comp through date of termination not end of the year.

the regs say anyone who received any nonelective contribution must get the gateway. if someone did not receive a nonelective (including forfeiture) then that person would not receive the gateway. so for example, if someone received a 3% safe harbor nonelective, they would get bumped up to the gateway. however, if someone receives no profit sharing, no forfeitures, even if they had deferrals and a match there is no gateway.

well, if employees in B received no nonelective contribution to start with, then they would not receive a gateway. now, if i understand the rules correctly, the transition rule for acquisition applies only to coverage not to nondiscrimination. however, if each plan maintains a safe harbor formula for profit sharing then I think you get a free pass. (The sum of 2 safe harbor plans is deemed safe as long as you pass coverage, or something like that.) however if one of the plans is new comparability then I believe you have to test for nondiscrim using all people.

participant died ay age 65, it is now 2 years after the fact - so RMD is not an issue - yet. document clearly states that payments are made as elected by the 'beneficiary (since the participant made no election) either lump sum or installments. so if the spouse (beneficary) has not made an election then what? how can you simply cut a check since the amount is above the threshhold of 5000) [who knows why spouse doesn't respond. I am 'indirectly involved' this is a question i got asked for someone I do some work for. do you 'have to wait' until 12/31 of calendar year participant would have turned age 70 1/2 when distributions must be begin?

the example I use in my talks is as follows: Assume 44,000 contribution is invested at 8.5% interest. if employee is age 60 and NRA is 65 then Age 61 = 44,000 * 1.085 = 47,740 Age 62 = 47,740 * 1.085 = 51,798 Age 63 = 51,798 * 1.085 = 56,201 Age 64 = 56,201 * 1.085 = 60,978 Age 65 = 60,978 * 1.085 = 66,161 [or simply contribution * 1.085 ^ (yrs to retirement) [assuming 8.5% interest rate] the APR for 1983 IAF at 8.5% interest is 115.39 66,161 / 115.39 = $573.37 a month [monthly benefit] Or, an annual amount of 12 * 573.37 = 6880.44 if compensation was 220,000 then 6880.44 / 220,000 = 3.127% the 3.127% is the E-Bar. if you impute disparity then you would add on an additional piece (most of the time .65 for those with comp less than covered comp, less than .65 if comp > covered comp) all contributions except after tax, and catch-up contributions are included. you can not impute disparity on deferrals. match, shnecs, qnecs.

participant died over a year ago. amount in excess of $5,000. spouse makes no response as to receiving distribution. what happens after 5 years?

not sure what you are really asking. once you hit the 402(g) limit for the year, anything above and beyond will be refunded. it doesn't matter if you have already received a refund for a failed test. you can't 'redeposit' a refund - deferrals can only come from money currently available as well.

this article might help, though no cites are given http://benefitslink.com/modperl/qa.cgi?db=...bacon&id=10 at 2006 ASPPA conference the IRS indicated that QNECs could not be used to satisfy the gateway (only the SHNECs could be used for extra duty)

just wait 'til J4FKBC gets audited, and when the IRS asks him why he did he did, he will say "Austin Powers bloody well told me it was ok." what are they going to think, even though the advice was correct?

no no no no no no no. safe harbor notice is only a piece a paper. it is the document that is binding. if it has safe harbor language the plan is safe harbor. it must be amended, and then you give an SMM (or SPD) saying the plan is no longer safe harbor

legally it is certainly possible of course you have to follow the terms of the document, you can't simply 'give' one HCE 10% and another 20% or whatever %s they turn out to be. thats why administrators assign people to different groups either by name or, if possible by position. by 'name' may cause issues with some IRS agents for it may look like you have a CODA rather than an actual profit sharing contribution - but in the situation you described, it shouldn't be a problem as they are simply maxing out at the limit. gee whiz, nothing like responding at the same time as Andy the expert

I am not necessarily assuming it will only benefit HCEs - or put a better way- that only HCEs would take advantage of such a change, but therein does lie the problem. it could happen. lets take it to the extreme and assume the change went into effect the last payroll check. the HCE gets the end of year bonus and defers booka-booka bucks and get the true up over the whole year. the lowly NHCE defers what extra he can, but the true-up over the whole year will amount to little. I would not recomend such a practice unless the IRS puts something in writing.

I think the samples themselves are probably open to the public so I don't see that as a problem. as long as people realize that by the tome 2008 rolls around there may be further modifications. hope you enjoyed the conference! one of my highlights was meeting at least a few people from Benefits Link land.

I'll put my money on a fan throwing out the first snowball. The only question would be which Red Sox he throws it at.

Kim: most of the simplification apparently doesn't take place until 2008 (based on the talk I attended at the ASPPA conference) and no sense in going into more detail as by the time that date rolls around they will modify things again. if you really want to know I'll dig through my stack of handouts and find that talk and go into further detail. I'm not even sure 'simplification' is a good term. instead of using attachments, it seems like we will end up include some of the info included on the misc attachments all on one form.

I'm on your side Effen. I can't really pull for either the Red Sox or the Yankees. and your comments are right on the 'money'. why bother even playing the season except as you indicated. the sports gurus only want to see certain teams in the world series, otherwise 'nobody will watch'. though, if I recall correctly, the lowest rated World Series was when the Yankees played the Mets - go and figure. Interesting note, two of the people I work with in the office went to high school and played baseball with Pappelbon of the Red Sox.