Tom Poje

no, 26 is not blue velvet

the puzzle does not involve the missing movie people. instead, this one is all about movies (27 in all) that have some scene with a doll (or more) involved. well, ok, a couple are cartoons, maybe toys are a better description in some cases, etc. hey I actually knew one of the movies this time. oooops. #17 The title begins with 'The'. I forgot to put a space between the word 'The' and the next word in the title, so you might have the correct movie but since I messed up it might not say 'correct'

just to make sure Rev Ruling 2004-13 makes it clear that one portion of the plan would be considered safe harbor (no ADP test) but the plan as a whole does not get a free ride in regards to top heavy. Situation 4. The facts are the same as in Situation 1, except employees are permitted to make elective contributions immediately upon commencement of employment but are not eligible for matching contributions until they have completed 1 year of service with the employer. In Situation 4, under the plan, newly hired nonhighly compensated employees who make elective contributions will not be eligible to receive any matching contributions until they have completed 1 year of service. Since this will result in a greater rate of matching contributions for highly compensated employees than for nonhighly compensated employees, the matching contributions do not satisfy the requirements of § 401(k)(12) (or § 401(m)(11)). Further, since all eligible nonhighly compensated employees under the plan do not receive safe harbor nonelective contributions or safe harbor matching contributions, the matching contributions made under the plan do not satisfy the requirements of § 401(k)(12). However, certain plans that provide for early participation may satisfy the requirements of § 401(k)(12) with respect to the portion of the plan that covers employees who have completed the minimum age and service requirements of § 410(a)(1), while satis fying the ADP test of § 401(k)(3)(A)(ii) for the eligible employees who have not completed the minimum age and service requirements. Unless a plan (within the meaning of § 414(l)) meets the requirements of § 416(g)(4)(H), no portion of the plan will satisfy § 416(g)(4)(H). (See Notice 2000-3, 2000-1 C.B. 413, Q&A-10.)

exactly what is a 'full empty suitcase'?

oh great. next you will be telling me I will have to pay gift taxes on the stuff I pick up at the vendors booths at the ASPPA conference.

the answer may surprise you - there actually is no penalty. of course, you may want to show such clients the following http://www.dol.gov/ebsa/newsroom/pr032901.html nothing like having the DOL sue you. and everything else they made the plan do. not recomended to go this route. and in the case of a small plan with enough nonqualifying assets I believe you have to have an independent audit as well.

so supposedly, based on what is in the code, cost of living adjustment uses base period for the calendar quarter beginning July 1 2005 the CPI-U values for July - Aug 2005 were 195.4 196.4 198.8 the value for July 2006 was 203.5. If there is no change the next 2 months you would have (203.5 + 203.5 + 203.5) / (195.4 + 196.4 + 198.8) * 15,000 = 15,506 amounts are increased in increments of 500. so deferrals might go to 15,500 (if I correctly understand what the code says) this would mean catch ups will not change since they increment in units of 500 as well. very close at the moment. the web site for the cpi-u values (generally updated about the 20th of the month) is http://data.bls.gov/cgi-bin/surveymost?cu check the first box, and then scroll down and click retrieve data

for those interested, Trekker is correct in regards to the Notice 98-52 - it does specifically say you can't use the safe harbor match for top-heavy, and it references 1.416-1, M-19. EGTRRA overrode that in 2001. the regs, in regards to section 1.416-1 even says that they have not been updated for PL-107-16, which was EGTRRA

ok, test #2 for Walt...er for Dave.

I believe the logic is as follows: Match satisfies top heavy. this particular match happens to be 100% vested, it is only distributable like deferrals (and no hardships), there are no eligibility conditions, and it was x% of pay. what luck, it meets all the conditions of a safe harbor match so I get a free ride on ADP as well.

Stephen, looks like it is really particular- you are missing a comma? I believe Wild, Wild West works. that is the only one I knew

yeh, well, I actually knew one of the movies for a change. the guy in the office here told me #8 of the first group is mispelled (its missing an 'e'), but that's from whoever created these silly things not at my end. then the one guy here said there should be clues - ha, kind of hard when you are not a movie goer. oh well, as long as a few folks are having fun!

did the spreadsheet work? (e.g. by typing in movie title in highlighted field, do you get a 'correct' to appear.)

ok, 24 more. I wouldn't want WDIK and company to be bored on the weekend. it is either this or read the 900 pages of new pension law. hmmmm. tough choice.

at the 2002 ASPPA conference the situation regarding late contributions was asked. "It would appear that the plan is no longer safe harbor and must perform ADP (and possibly ACP) testing. Additional safe harbor contributions still must be made. Contribution is made (with earnings) 18 months after plan year end. In performing testing, can the safe harbor contribution be considered a "corrective" QNEC per Rev Proc 2002-47?" [EPCRS] Answer: The premise posed is incorrect. If you don't make the required Safe Harbor contribution you have a potentially disqualified plan! The above correction seems reasonable. as always, any such IRS responses do not necessarily represent an official position. the response in this case seems consistent with things. the document says plan is safe harbor. thus plan is safe harbor. end discussion. you make the contribution and go on with life. the plan does not cease to be safe harbor simply because the contribution is late. that is a false premise.

which, in some ways gets back to the ridiculousness of reporting the coverage results. lets see plan either passes or fails coverage. if it fails, what are you going to do? look the other way? lie and tell the govt it passes? tell the truth and write a note, oh by the way, we fail coverage - guess we are disqualified, huh? if it passes, does it really matter if it passes by avg ben % test or ratio % test? do you also tell the govt if your plan passes ADP test? I don't see a big deal (except force of habit) as to why this particular item is so important to report. remember when they used to ask 'did you limit compensation to $200,000'. did anyone ever dare to answer no to that question?

once they have met the plans eligibility requirements, they are includable and not benefiting. since they are not eligible, they would not show up in the ADP test (with a big fat 0), but if the plan is a safe harbor 401k that would be a moot point anyway. in other words, if they are HCEs, they help coverage testing, if they are NHCEs they hurt.

if you fail 414(s) test, then you can not run your adp test (or whatever) using plan's definition of comp (e.g. exclude bonus) you would have to test using a definition of comp that satisfies 414(s). thus, someone who deferred 5% of (comp - bonus) when tested would be less than 5% because you use total comp. this of course could cause the plan to fail testing. (of course you could use comp - all deferrals in testing because that satisfies 414(s) as well) good question.

this is the whole issue of safe harbors, and why the document must contain the safe harbor language. if a notice is not issued, you have an operational failure. the IRS has indicated (informally) in the case of a 3% SHNEC, self correct by issuing the notice. no guidelines were offered if the plan was a SHMAC. in the case of deposits not being made - again, an operational failure - no different than if you had a money purchase - you have a required contribution to make.

for a safe harbor 401k, what comp test would need to be run? the regs even give an example of excluding overtime. Comp definition need only be reasonable – not required to satisfy nondiscrimination requirement 1.401(k)-3©(6)(iv) see example 3 (excludes overtime) as long as an employee has a chance to receive the max match you dont have a problem

also: in the case of a plan that eliminates a match during the year Treat the termination of the plan as a reduction or suspension of safe harbor matching contributions 1.401(k)-3(e)(4)(i) Notice of suspension provided 1.401(k)-3(g)(i) 30 days notice 1.401(k)-3(g)(ii) Employees have reasonable chance to change deferral elections 1.401(k)-3(g)(iii) Plan amended to provide ADP test will be satisfied using current year method 1.401(k)-3(g)(iv) now, if plan has testing language in it, then the last point makes no sense, why would you need to amend the plan to provide a test? as the preamble indicated, a lot of this was 'clarification' of safe harbor plans. Thus, it doesn't surprise me, at least in regards to new documents the IRS doesn't want the language in there. (Though they haven't explained how you 'documentize' plans that do a maybe SHNEC each year.

Janet: My comment was meant in reference if the plans were merged. They get the free ride transition ride on coverage, but safe harbor is lost so ADP does make a difference. (as opposed to you get a transition on both coverage and nondiscrim) ugh, now I see I have to modify my ASPPA talk on safe harbor 401k to include the automatic enrollment safe harbor. granted it won't be available for a year or so, but what the heck.

I don't believe you could merge them in the current year and maintain safe harbor status. I don't see how that would be any different than what you have - 2 plans, currently you are not permissively aggregating them for nondiscrim testing. furthermore, I believe the transition rules only apply to coverage and not nondiscrim, so the ADP testing does make a difference. I always have to look that one up cuz I get a brain freeze on the issue.

if you use status code or category codes then you will have work to do as these are being replaced. there will no longer be things like 'new participant' and 'terminated and fully paid out'. (Terminated ineligibles will now also have term dates) oh joy of joys! guess I will have a lot of work to do on my report. I promised someone at the Southern User group meeting I would post a census report that would show 'new ees'. I didn't do anything else but add a few formulas - I did not eliminate fields on this report that will have to go as soon as 12 is loaded. Granted update 12 will not be released or loaded for awhile, but as someone asked how to write a formula I am posting this report, so they will be able to copy the fileds into their reports. so now, this report will indicate new ees (even if they also terminate) also what I call '5500'. these are new employees entering the first day of the plan year. (e.g. I would expect the 5500 begining year participant count to increase over last years by these folks) this report curently will also provide warning message if ee has current year comp but term date of last year. ee has no comp but is not terminated. ee is 69 years old or older (a quick check for 70 1/2) There are a bunch of counters at the bottom - guess these have to be zapped when 12 comes out.

I believe you have a BRF issue on the service issue. those with less than 10 years and those with more than 9 years. if the only people with 10 years or more service are HCE you will fail. even if you have some NHCEs you could still fail. see 1.401(a)(4)-4(e)(3)(iii)(G) 'the right to each rate of match'