Tom Poje

this report might work. I just modified it so it now divides (profit sharing + forf) by 415 comp instead of by allocation comp. I haven't tested it so I offer no guarantees, but it had been working before the modification. If I remember, I have it coded so it won't print people who receive no allocation, so someone active on the last day who falls into that condition would be missed. I don't think it applies to this report, but some of my allocation reports used to use 'user defined fields' and unless you had something in the field the person wouldn't print, but I don't think this report was one of those.

at the ASPPA 2005 conference, Q and A #12 the IRS agents indicated you could probably follow the same guidelines as for terminating the match. such comments of course do not necessarily represent an actual position, but they do give at least something to point to.

and apples and oranges don't mix. you could not combine the ADP tests for testing. since you get a free 3% look back for the first year of a plan, I've seen it recomended to use prior year testing the first year in the new plan, then combine the plans at the start of the new year and go safe harbor.

since hce's were the only ones who deferred, plan fails adp testing. amounts to be refunded due to ADP failure could be treated as catch-ups.

you left out, 'except in the case of a new plan, a plan year must be 12 months long'. otherwise, you have done an excellent job. 1.401k-3e1

maybe. if you get real lucky, all HCEs are catch up eligible, and no one deferred over 5000. then there would be no top heavy as catch ups don't count toward determining the % an HCE received. otherwise, yes, you have to give a top heavy

I would hold the "preferred" method is found in Appendix B, 2.07(3) of the self correction program. If it prints the same as mine, it would be page 88 fron the following web site: http://www.irs.ustreas.gov/pub/irs-drop/rp-06-27.pdf namely, leave the money in the plan, amend the plan to alow the particular person to be in the plan. There is no example elsewhere in the self-correction about returning the money, or making the person whole outside the plan or whatever, though I know in practice that is done. Again, the comment mentioned above is the preferred method. that does not mean other possibilities do not exist. one argument for returning the money is that you are to put the plan in a position as if the error didn't occur. on the other hand the IRS prefers you leave money 'in the plan' so you get stuck in a vicious circle. If you correct by amendment (making the person eligible) then you know you are safe. if you self correct by returning the money and the plan gets audited, you could always have the IRS say where is that permitted.

no more waiting, once an ee has 2 years he is 100% vested even if no match was made earlier. you do have the choice of ignoring service prior to the effective date of the plan

hours can be based on an 'equivalencie' method for example the monthly equivalencie would be 190 hours per month for each month someone works at least 1 hour. another type of equivalencie is based on earnings, which basically takes someones earnings for a year, divides by a factor set forth by the DOL and that is the number of hours. if the ee worked 750 hours under this method, that transates to 1000 in the eyes of the DOL. as for vesting, once someone receives credit for 2 years of service they are 100% vested in all money contributed at any date. I know that is a brief description of stuff, but hopefully enough to get things started

it is 2006 money, so 2006 test basically you are saying that the ee didn't have pre tax deferrals, you are saying they were after-tax. participant also has to indicate the amount for tax filing. I guess you can use the 1099 for 2006, not sure exactly what code you use.

the answer is unclear. Notice 2000-3 was written before the new 401k regs. at the 2005 ASPPA conference, Q and A #12, the IRS said you could probably follow the same rules as for a safe harbor match. though one must rememnber that such responses do not necessarily represent an actual position of the IRS. I believe in other instances they said the company really should have issued a 'maybe' safe habor as that would prevent the problem from arising.

the question that comes up (at least pension-wise) would be BRF. current availability - yes, currently available to all effective availability - that is a facts and circumstances test. such a formula might not be considered possible for most NHCEs. in your particualr case, since more than half NHCEs defer enough it wouldn't seem to be a problem. but that might not hold for other plans. That is a tough one to prove one way or the other, since there is no numerical test.

hce determination is always based on a 12 month period. no pro ration, even if there was an intial short period due to a new company being formed. so in your case, doubtful if there are other HCEs than owners.

all contributions are used in the avg ben % test. the nondiscrim classification portion ( which most people refer to as rate group testing)is SH and PS only

or possibly try using comp - deferrals as 414(s) comp (assuming document allows that, of course.

if the director of finance has less than 20 years of service then he is in 2 groups?

also, is the plan a 401k? I vaguely recall the IRS voicing an opinion at one conference you couldn't really operate under a 1 year break in service rule, because, if I remember correctly, the individual retroactively enters to date of rehire, and that botches everything up.

the BRF test is the same test as for coverage, with the excetion that there is no avg ben % test. (well at least for the current availability portion of the test) The effective availability portion is more or less a facts and circumstances issue. 1.401(a)(4)-4(e)(3) lists a number of 'rights' that might need to be tested. my guess would be the most common being the rate of match (e.g. 50% match for those with less than 5 years svc, 100% for those with 5 or more years) had to write a condensed summary of BRF in the Sept-Oct 2005 ASPPA Journal, if you can find it. might be reprinted in one of the upcoming testing manuals, but I don't remember if that was going to be c-3 or c-4 or exactly which one.

distributions would not be included on a w-2. the financial institution should have provided a 1099r to the individual as well as to the govt, thus big brother knows about the money.

The IRS has never indicated if you can 'improve' conditions (e.g. even modifying eligibility to let more people may be a problem), though they did imply (at least at one of the Pension conferences) you could add a feature like Roth. I believe they mentioned they would possibly address the issue some day, but that doesn't help at the moment.

while not specifically mentioning 402(g) the definitions of 'eligible employee' under 401(k)-6 says that you are still treated as an eligible employee "but for a suspension due to a distribution[e.g. this would be a hardship], a loan, or an election not to participate in the plan [this would be other than a one-time election]...also the last sentence adds "because the employee may receive no additional additions because of section 415©(l) as was noted, 402(g) is an individual limit not a plan limit. in other words an individual could defer 15,000 to one plan and 10,000 to another plan. neither plan has accepted deferrals greater than the 402(g) limit so neither plan is in violation, even though the individual is. so the individual was not 'ineligible to defer' now what happens when it occurs between 2 unrelated companies but the same plan is beyond me.

conceivably though a rate group could be 60%. This would fail ratio %, but would pass BRF because the avg benefits % test if given a free ride (but for BRF only not for nondiscrim) thus you could then proceed to cross test without having to have provide the 5% or 1/3 gateway. so now you are able to have the avg ben % test on an accrual basis rather than on an allocation basis. but Andy knew that, he was just throwing out a rhetorical response, I'm sure. (Dang him)

you are correct, if the plan can pass the broadly available requirements (which basically is the BRF test for each contribution group) then you have satisfied the gateway.

If I recall the 1099 gets real strange. the individual has to claim the distribution on his taxes, but wont get a 1099 until 2008 (the 2007 1099R with a code P)

there is nothing I know of to prevent you from adding a match, and since that option wasn't available then you can use the 3% prior year for testing. you would need to decide of course whether this would be done on a payroll basis, etc