Tom Poje

I will take a guess at this one: In the same plan - I think not (unless I guess no HCE receive a match) - otherwise the plan would fail one of the requirements for a safe harbor match that no HCE receives at a higher rate than an NHCE. In 2 plans - I believe this is possible as long as the plans do not have to be aggregated for coverage. if aggregated for coverage, then plans fail for same reason listed above.

I don't recall Mr. Holland's opinion being this.(or actually my 'feeble' recollection is that he was addressing a similar sounding issue - do you count this person in the ADP test in 2005. (or put another way, if the ee didn't defer, are you stuck with a big fat 0 in your ADP test for 2005. 1.401(k)-2(a)(4) deals with what deferrals to use in the test. my copy of the regs (1.401(k)-2(a)(4)(B)(2) says "is attributable to services performed by the employee in the year and, for the employee's election to defer, would have been received by the employee within 2 1/2 months after the close of the plan year, but only if the plan provides for elective contributions that relate to compensation that would have been received AFTER THE CLOSE OF THE PLAN YEAR to be allocated to such prior year rather than the year in which compensation WOULD HAVE BEEN RECEIVED. in other words, the comp (and any deferrals) still count. but do you test it in the year paid or in the prior year? The new regs are clear the plan must indicate (rather than the administrator make the decision). I don't see how the safe harbor can be excluded for this person based on that. so, ee gets the safe harbor, but in this example either 2004 or 2005.

ee from date of initial participation could have worked 42 years NRD = 1/1/30 they worked 5 years, quit 1 year then returned and worked another 12 years. (thus when they returned they could only work 36 more years to retirement) [entered plan 1/1/88, quit Dec 92, returned Oct 93, calendar year plan] what is the fractional accrual? rev ruling 81-11 seems to say you would calculate as follows: first accrual period + second accrual period 5 / 42 + (1 - 5/42)(12 / 36) = .4127 so this person comes out ahead of someone who never quit and worked 17 straight years? e.g. 17 / 42 = .4048. the second method under this rev ruling looks like you would have 17 / 41 = .4146

I'm confused on the question itself. The first half refers to 2004 and the second half of the question refers to 2005. e.g. Is this a non calendar plan, etc.

final regs can be found here; http://www.irs.gov/irb/2005-05_IRB/ar06.html I give a serious recomendation to reading the safe harbor section (or even the preamble). remember, you dont want the language in the plan if you issue a maybe notice. you amend the plan to contain the language if you decide to go with the safe harbor. and it could be only for the given year, though I am not exactly sure what the amendment would say in that case. ................ sample language would be like this or something similar for the notice A Nonelective Contribution equal to: (i) % (not less than 3%) of your compensation. (ii) a percentage (not less than 3%) of your compensation may be contributed to the plan. A SUPPLEMENTAL NOTIFICATION TO ELIGIBLE EMPLOYEES will be distributed to you at least 30 days prior to the end of the Plan Year informing you of the amount of the Nonelective Contribution, if any.

yes, I would say if the document says use W-2 comp this means box 1 - otherwise the statement 'add back in deferrals' makes no sense

but make sure you read the whole definition of comp in the document. usually there is a paragraph that 'adds back in deferrals'.

Birdie birdie in the sky do that do-do in my eye me know care me know cry cuz me not in a four-twelve-i

so, while you can sort by name, the sort is as follows: if {PLANKMTEST.EESORTOPTCD}='2' then ({PLANEEKMTEST.LASTNAM} + {PLANEEKMTEST.SSNUM}) so when it sorts you get by name, but if two people have the same last name then it sorts by soc sec number. so my plan with a flock of Smiths is, well.... you would need to modify as follows if you want the first name to be considered in the sort. if {PLANKMTEST.EESORTOPTCD}='2' then ({PLANEEKMTEST.LASTNAM} + {PLANEEKMTEST.FIRSTNAM}+ {PLANEEKMTEST.SSNUM})

I don't think a document has to specify which test a QMAc would be used - it is simply that you can use QMACs to satisfy either ADP or ACP as long as as you don't use the same in both tests. hence, you could split a QMAC and use part here and part there. and yes, just because a match is 100% vested does not necessarily make it a QMAC. now, the definitions to the regs 1.401(k)-6 provide teh following definition QMAC means matching contributions...... satisfy (k)-1© and (d) as though the contributions were elective contributions (to me that says 'in all other aspects they are like deferrals...vesting and withdrawal rules) whether or not they are actually used in the AP or ACP test in addition, such matches are forfeitable if as a result of being a match with respect to excess deferral, excess contribution or excess aggregate contribution. so based on that, it sounds like you can do what you want (if you have described your document thouroughly) If you document describes the ADP test as consisting of all deferrals then I dont think you could use the match.

not quite sure what is really being asked. are you talking about eligible for an allocation (e.g. match or safe harbor contribution) then yes - or are you talking about testing? if for testing, then no, you could include otherwise excludables in testing one year and test separately in a different year, though if you are using prior year testing you have to be extremely careful. remember, technically step 1 is coverage testing. if you test seperately, then you MUST test seperately for the ADP test. but there is no requirement for coverage to specify in the document what your testing options will be.

I haven't checked the wording of the new regs but I recall the old regs saying something like "if the document allows..." Usually the document would say something like (ACP test ..and those deferrals not used in the ADP test...) ceratinly you can't simply move a discretionary match to the ADP test because you have vesting and everything else associated with it. That definitely has to be a QMAC. exactly how does your document describe what is used in the ACP test? If it is very restrictive and only says Match and after tax, I thinkk it is time to amend to better language.

well, I put together a powerpoint presentation of the Grinch and worked all the employees at work into the story. I did keep pretty close word for word. for instance the guy from New York ended up as... The XXXXXX hated Christmas! The whole Christmas season! Now, please don’t ask why – No one quite knows the reason. It could be his head wasn’t screwed on just right. It could be, perhaps, that his shoes were too tight. But I think the most likely reason of all the Jets out again from playoff football ........ someone else ended up with the follwoing but whatever the reason YYYYYYY heart or his shoes he stood there on Christmas Eve hoping for booze I am hanging my stockings he said with a sneer I'm hoping that Santa will fill them with beer

ah, but you folks missed out on the version of the Grinch story I told at the company Christmas party. that was even better.

well, no, actually I am only one of his creations. somewhere on one of these threads is my actual photo from Christmas. (But you will have to go back 60 days to find it)

no. safe harbor gives you a free ride on ADP testing. you can't have a 2 year waiy for deferrals, and therefore the safe harbor follows similar logic. I know its buried in the regs or one of the notices, but I am just too lazy to dig through to find the exact cite.

my logic says it would be simply the average of the group you are looking at. the -11(g) correction is to go to those employees who were not eligible.(they met the 1 year wait but were excluded for other reasons. you have split the plan in two, and are treating the otherwise excludables as if they really weren't eligible (as if the plan had a 1 year wait)

would you read them on the plane? you must think that I'm insane!

my understanding is as follows: you have 3 coverage tests 401k 401m nonelective you have 3 corresponding nondiscrim tests ADP ACP a(4) or what most people call 'cross tested' (though it could be done on an allocation basis. anyway, my understanding is each situation could be tested differently (one could use otherwise excludable, while another didn't) as long as you are consistent between coverage and the corresponding nondiscrim test. (somewhat similar to the idea that you could run an ADP test on current year and the ACP on prior year.)

it is certainly an operational failure, as such probably correctable under self correction (making up for lost earnings) about as close to any guidlines as to the deadline would be in 1.401(k)-3©(5)(ii) which requires such matches to be made by the last day of the following quarter. that section deals with safe harbor match, but I would hold similar logic for calculating gains would apply to a regular match (absence any other guidelines) by the way, I could read that pargraph to say that if it was a safe harbor match, in additional to everything else, plan would have to run an ACP test as well.

Avg ben % test is independent of the rate group test, so yes, the ee who could defer is included in that test. by the way, 1.410(b)-6(f)(2) says terminees with less than 500 hours who do not benefit 'may' be excluded. you could actually include him in the rate group testing as well, provided you treat all terminees the same way.

I believe he is one cent short of being an HCE in 2005 since his 2004 does not exceed the 90,000 amount.

I'd say yes. the document must be followed and it said a 3% would be provided. (I did not go back and look and see what happens if you are talking about distress termination) rememebr, the plan did have the choice to make the 3% as a 'maybe', so I think the IRS argument would take that into consideration. if you didn't use that option, out of luck. in other words, it doesn't sound much different than terminating a money purchase plan, you still have to make the contribution through the date of termination.

With lots of ees I guess that makes sense. The example in the ERSIA Outline Book was with clearly defined classes - Hourly and salaried. I'd hate to think how you would operate 2 plans under a 'pick and choose' who is in what plan. hopefully that is not what you have.

my brain hurts thinking about this so I could be wrong. if plan year runs 1/1/05 - 12/31/05 then I look at the data from 2004 to see if he was a key. so I look at all the data from 2004 (w balances) to see if plan is top heavy in 2005. now it turns out he quit in 2004 as well. if he was a 5% owner it doesn't matter he would still be key. I guess if he was an officer and his comp is now less than 130,000 (as indexed) he would becaome a former key. in 2005 it shouldn't matter how much of a distribution he received because he hasn't performed service for a year, and I though those individuals were eliminated - so it doesn't matter if you call him former key or not.