Tom Poje

without looking at the wording of stuff, I would disagree with the comment. If Congress does not extend the law it would simply mean no more future Roth contributions in the plan - so one would do like they do today - make Roth contributions outside the plan.

no, some say you need to be cross dress-ed all kidding aside - you really have to know what you are doing, rather than just use a spreadsheet. I tried attaching the spreadsheet I got from Fred, but it says I can't upload that type. sounds like something is wrong with the sytem again. I will have to ask Dave the Baker. by the way, with the spreadsheet there are no instructions. it needs to be updated for the latest TWB and other limits etc etc to simply plug numbers and get results that say 'PASS' is no guarantee without some good practical knowledge. for instance, one software has an option to use SSRA as testing age. yes, it works great to check that item, but the 'legality' of that under the regs is questionable. As indicated the ERISA Outline Book provides some very useful ino, I have tried as well to provide some info in the Coverage and Nondiscrimination Answer Book

well, well ,well first, good luck....no its not luck, I guess I mean to say I wish you all the success in the world. now, I assume you mean C-1 and C-2(DC) but the way things have gotten renamed I get all mixed up you did not indicate how much experience you have in the field - that makes a big difference. if you have a good working knowledge, then I would go out on a limb and say that yes it is possible to pass both exams at once. if you have only been working in the field a year or so, then I would think 2 tests might be difficult. you didn't say what your work load is right now, usually spring with all the 401ks is more burdensome and there is not as much study time, but every situation is different. besides actual working with the material is good 'study/review' time - you are actually using the stuff. do you have the resource materials - certainly that helps.

in addition, consider the following: group 1 owners group 2 rank and file group 1 was provided 20% throughout the year group 2 was provided 5% throughout the year group 2 is now bumped up to 7% over the whole year you have a possible BRF in the fact the HCEs were given a chance to earn at a greater rate throughout the year.

austin - what is really sad is I can never remember without looking it up. I just finished my crystal report that shows plan passes ADP test after refund under old rules along side the actual refund due to leveling (I have always read you would never have proof, but that is a bunch of...) anyway, the description if the help notes is: Waiting Period Exclusive: Would only affect employees hired the day after an entry date. Example: 12 months wait, quarterly entry, 2002 calendar year plan. Employee hired 4/2/01. If the box is checked, employee enters 7/1/02. If not checked, employee would enter 4/1/02. Copyright © 2003-2004 SunGard Corbel (Relius Administration Help 9.1) interesting, you copy it and the extra little copyright comes along with it.

well, of course, the IRS comments always carry the caveat that they might not necessarily represent an actual position, but I figure in this case it seems pretty reliable.

this should depend on how you answered waiting period 'inclusive' or 'exclusive' one would give you a 5/1 entry, the other would give you a 6/1 entry date I think as long as you are consistent, then it is up to you...er...your boss, how to handle

sorry. you cant get out of it. top heavy % is determined before distribution of contributions. Q # 29 at the 2004 Fall ASPPA conference

as I said, I 'think' the 30 day notice is implied. all the regs say is that you have you satisfy the rules for a safe harbor match if the plan is terminating for other than merger/hardship. I could of course be wrong on that, but it seems implied also by the fact that you could have had the plan have the 'optional' SHNEC rather than required - remember the 'optional' SHNEC must be done 30 days before either. 1.401(k)-3(d)(4) speaks of the final plan year. my apologies for not putting that down. I try to include cites whenever possible. my original comments were meant to say something like "in addition to the regs, it doesn't hurt to read the preamble - sometimes the comments are clearer than the regs." I have been working on getting some of this in the supplement for the nondisrim answer book, so I have some of the regs readily available:(sorry, the book isn't going to have your situation, as indicated I am not 100% sure on requiring 30 days notice) A safe harbor 401(k) plan may be amended during the plan year to reduce or eliminate the safe harbor matching contributions provided all the following conditions are met: 1. notice of suspension is provided to all participants (see Q. 12.52.1) 2. reduction or suspension of the matching contributions is effective no earlier than 30 days are eligible participants are provided the suspension notice 3. eligible participants are provided an opportunity to modify their deferral elections (and after tax contribution elections if applicable) 4. the plan is amended to provide that the ADP /ACP test will be satisfied for the entire year and the current year testing method will be used 5. the safe harbor matching contributions have been provided through the effective date of the amendment. 1.401(k)-3(g) and 1.401(m)-3(h)

anyone who receives a nonelective contribution (this includes forfeitures) must receive the minimum gateway if the plan is to be cross tested. does not matter whether they are eligible for the ps or not. the one exception is if the plan is broken into two parts for testing purposes - statutory includables and otherwise excludables. a match is geberally not considered a nonelective contribution (because you have to 'elect' to defer to get the match) thus, if ee has satisfied top heavy via the match, it would appear ee would not have to get a minimum gateway.

I'd agree with you MWeddell. Without the notes I doubt I would read Treas Reg §1.401(k)-1©(2) to say that. that cite refers one to 411(a)(3) whereas the notes refer to 411(a)(6)(D)(iii). though the notes, when referencing the cite simply say ...for example... thus I would conclude you are not just limited to that section alone. what is interesting, at the fall ASPPA conference the IRS agent said the opposite - but of course the final regs weren't out yet, though the proposed regs had been.

probably the best advice is to read the preamble??????? No, really, I found the preamble a lot better way of understanding what the regs were trying to say. Unfortunately, the preamble to the final regs left out the comments on ACP safe harbor that were in the proposed regs, but your question deals with ADP safe harbor so that shouldn't matter. anyway, the preamble says A plan could have a short plan year in the year the plan terminates, provided it is in connection with merger/acquisition or employer incurs financial hardship. could also have short plan year if it terminates for any other reason if it makes contributions for the short plan year, ees are notified of change, and plan passes ADP test. employer must make safe harbor contributions through date of termination. the actual regs say if plan isn't terminating due to merger/acquisition/hardship, then it must satisfy the requirements for suspension of safe harbor match. of course, in this case you are talking athe SHNEC rather than the SHMAC, but if you follow those rules the best you can it looks like you would have to give 30 days notice rather than simply shutting everything down.

bottom-up QNEC become darn near impossible to use in testing for plan years begining 1/1/06. 1.401(k)-2(a)(6)(iv) of the new regs

1.401(m)-2(a)(5) would hold if a match is not deposited within 12 months of plan year end then it may not be taken into account for the ACP test but instead be tested under the a(4) rules (that is, as a nonelective contribution- and not only that, but as if they were the only nonelctive contributions) There is a similar rule for deferrals. Since the safe harbor rules cross reference these reg cites(see 1.401(k)-3(h)(1), I would conclude the SHNEC and SHMAC (though required to be made under terms of the document) could not be used to satisfy the ADP or ACP test. Thus you would have to test and pass the ADP and ACP test, plus also test the safe harbor as a nonelective ...hopefully one wouldn't get into a required minimum gateway! the self correction program(section 3 of Appendix B talks about earning adjustments, whenever the appropriate correction method for an operational failure is needed. since the safe harbor was not deposited timely, that would seem to be an operational failure. of course, then it seems as if you have the possibility of an ADP failure, and corrections need to be made for that as well.

based on the regs that seems reasonable, although of course, the plan would still have to perform the ADP and ACP test, and any amounts due to test failures would still have to be distributed.

well, you did not indicate if plan is top heavy. if plan is top heavy, then ee received a nonelective contribution. at that point you would have to include, plus a possible minimum gateway. or, you could test otherwise excludables separately (both rate group and avg ben % test) then, if I understand things correctly, the otherwise excludables don't get the gateway unless you have the bad luck to have an hce in that group.

the new regs say 1.401(k)-2(a)(3)(ii) an HCE who participates in multiple arrangements of the same employer is the sum of all contributions during such 12 month period that WOULD be taken into account with respect to the HCE under all such arrangements in which the HCE is an ELIGIBLE employee, divided by the HCEs compensation for that 12 month period (determined using the compensation definition for the plan being tested)... see example 4 there are 2 plans, one is calendar year. plan year = 7/1/2005 - 6/30/2006 ee enters one this plan on 1/1/06 you still use comp over the 12 month period when testing this plan.this example does not specify 'comp while eligible' but it does say in the example 'use comp for the period being tested.'

I believe you are correct, by the end of the year. deduction would then be in the year made, and I believe it counts toward the 415 limit in that year as well

the 5% is based on plan comp, and can be from date of entry 1.401(a)(4)-8(b)(1)(vi)(B) however, ee must still receive at least 3% top heavy which would be based on total comp which as a result could easily be greater than the 5% gateway

I believe you are correct, since the comp period used is 12 months long and the limitation year is 12 months long as well, no proration. watch hours for vesting, as that needs to be 12 months as well. safe harbor- that is suppose to be 12 months long unlessyou have a new plan, if I recall you could not even put in a successor plan and say you have a new plan to get around the issue. However, the new regs do permit safe harbors less than 12 months so that should work. I believe you are required to follow all the rules of the new regs in that case, but I don't see anything else in the new regs that would effect the operation anyway (e.g. you dont need a bottom up QNEC, there will be no gap period income for a failed test, etc)

if 'plan' is treated as 2 separate 'plans' then the gateway does not apply to the otherwise excludables (unless that group also has an HCE and therefore needs to be cross tested.) I suppose where it gets confusing is if the plan is safe harbor, the plan still loses its free ride on top heavy since other non electives were made.

well, something is amiss. you said the plan is cross tested, but also said there are no other non elective contributions, but then also asked if the NHCEs need to receive a ps contribution which is a non elective contribution. Plan is safe harbor, with a safe harbor match. If there are no other contributions at all then the plan is not top heavy so no other contributions needed. if there is no eligibility requirements, but the safe harbor is provided only to statutory includables, then the plan does not get the free top heavy ride and will therefore have to provide a top heavy to the NHCEs. (assuming of course the plan is top heavy)

years ago, in the pre-ERISA Outline Book era it was the Answer Book that got me through the ASPPA exams. each has its strengths and its weaknesses. I certainly consider both the Answer Books and the ERISA Outline Books to be extremely useful - not just for studying to pass the tests, but simply for reference as well. (Since I help on the Coverage/Nondiscrim answer book I don't feel in a position to make an unbiased comment about that particular book. I can guarantee you I have yet to use a cite like 'cuz Blinky the Fish said so' )

I understand. you are trapped. you need the ps comp to do rate group testing but you need a combo value to do Avg ben % test I haven't played with the software I use enough to know, but there are 2 fields one says 414s and the other 414s avg ben % test - I wondered why there were two fields, and maybe one is used for rate group and the other for the avg ben % test. have to try an experiment. If that is the case, then at least the system can be 'faked' out to produce the desired results. years ago I had to come up with a scheme to fake the system out when family aggregation was involved, I suppose the same would be possible if you have similar software. figure out what the combo ebar should be, plus a fake comp to prodcue the desired results. a little extra work, but still possible. good luck!

there are some confusing terms being used - if this is a controlled group, then you really have only '1' employer, with two companies not an ee working for 2 different employers - or at least that is how I understand things. now w/o digging into the current regs the new regs 1.401(k)-2(a)(ii) says ADR of an HCE who is an eligible employee in more than one arrangement of the same employer is calculated by treating all contributions of that HCE under ANY arrangement as being made under THE PLAN being tested. I'm willing to yield to someone who has more experience with controlled groups, but this sounds like it could get ugly. my own opinion, if the match is on a payroll by payroll basis I don't see how anyone gets a true up. If the match is only done on a payroll basis simply to spread out the match rather than one big sum at the end of the year then I think its clear as mud - mainly to prevent one from playing games with comp in regards to testing, etc.