Tom Poje

'Lady MacDuff' Forsooth! In Florida as the dawn breaketh it tis beloweth freezing, thus it tis pretty cooleth here! not Shakespeare

Notice 98-52 V C 2a merely says the notice must be timely based on all facts and circumstances. 2b says you are deemed to satisfy if notice is given 30 - 90 days beforehand. (But there is nothing to say that you could provide the notice in a shorter time frame, merely that you don't get the 'guarantee' you are ok) so, if you give notice now, you simply fail 2b. so, do you pass 2a? if it was a safe harbor match one could argue the ee only has 10 days (and over Christmas) to make an informed decision to defer. that doesn't sound like a reasonable amount of time. If the contribtuion is the SHNEC, then the employee's decision to defer has little to do with anything. I suppose one could argue that the ee might not defer if he was guaranteed a 3% contribution. Though if it is a 'maybe' notice then there is no guarantee. So it might be possible to argue you could still provide notice at this late date and it is reasonable based on the fact it is a 3% SHNEC.

usually you also have to fill out a deferral election form as well - especially since you can't defer on $ already earned.

see #3 at the following http://www.abanet.org/jceb/2001/qa01irs.html (and then will someone please organize all these notes I have so I won't have to keep looking them up)

Andy: I'd like to say something as simple as "Look at the schedule T", instructions for line 3 "If this plan (singular) is required to be disaggregated..."

thnaks for anything you can find. the wording in the EGTRRA under the section Certain Mandatory Distributions (ii) Eligible Plan..the term eligible plan means ....present value does not exceed $5000 shall be IMMEDIATELY DISTRIBUTED to the participant. now, the Federal Register (vol 69, no 187) indicates a new section IV(i) defines the term Mandatory Distribution [can't say I have found that term defined in the misc. stuff I have printed in regards to this issue] I have some mental problems with seeing terms like "Mandatory" and "Immediately distributed", and the boss here just returned from a meeting which seemed to indicate 'immediate' means what it says.

When do they occur? I don't mean when does the law take effect, but what triggers them? Is it simply that an ee quits with a balance/PVAB less than $5000 you have to do it 'immediately' , or the famous 'when administratively feasable' - e.g. the administrator doesn't even know who quits until the annual census info comes in.

Agreed, though I couldn't follow from Fred's example exactly what was going on, and I didn't have time to research further (Talk about being swamped with work again!) except for pointing to The ERISA Outline Book. I would certainly agree, any deferrals not counted as catch ups would be included in the test. The question is 'how much is treated as catch up. The example was total deferrals of 13455.09. Fred asked if the amount used was 11,202.63 (deferrals after excess contributions) or 8950.17 I am not sure how the system arrived at a catch up of 4797.37. that makes no sense since, if the plan year was 2004 the maximum catch up was 3000. Maybe that is where the big problem is, the software is producing a value which is a sum of excess deferrals and excess contributions and it didnt cap it at 3000. I simply cant tell from Fred's numbers. (Or maybe its a non calendar year plan and then I gracefully bow out and throw my hands up in the air and say good luck!) Lets suppose plan fails ADP test and refund for corrective contributions was 2300. One check is cut. for tax purposes, 455.09 is excess deferrals and the remainder is excess contributions. it looks like ee doesn't reach 3000 in catch up. I base this on the examples from the ERISA Outline Book, noted below. The examples are not even talking about catch ups, but simply what is going on in the test. the example from the ERISA Outline Book 11.249 and 11.250 (2003 edition) in example 4.b.1 plan year 2002 ee deferred 11,600. so, and I will use my terminology, the smart administrator immediately refunded $600 in February, because he knew he might not get to the ADP test until later. Later in the year he runs the ADP test (and includes the excess deferrals, even though they have been refunded). he discovers plan fails and the excess contribution is 1000. Well, of that amount, 600 has already been refunded, so only 400 remains as excess contributions. EE received 2 separate checks. in the 2nd example 4.c.1 test wasn't run until March. Of course same results, plan failed, 1000 excess contribution. One check is cut. But 600 is still treated as excess deferrals.

Ok, the other one I have had for years. I found this one out on the internet, haven't even looked at it Christmas Song Puzzle: Below are possible original titles of 40 well known Christmas Songs. To get you started, the answer to the first one is "I'll Be Home For Christmas" . (Don't ask me for the solutions!) Expect My Arrival At My Domicile For Yuletide The Primary Carol Tinkling Chimes Stone My Singular Desire For The Impending Yuletide Season Is A Pair Of Central Incisors. Precious Metal Inverted Cups With Clappers Righteous Darkness Celestial Messengers From Splendid Empires The Yuletide's Dozen 24 Hour Intervals I'm Fantasizing Concerning A Celebration Day Without Color The Event Manifest Itself At the Onset of a Transparent Day The Diminutive Male Of Less Than Adult Age Who Plays A Percussion Instrument The Seasonal Tall Coniferous Plant (Woody?) Proclaim It To the Hills Diminutive Nazarene Municipality During The Dark Hours When Herdsman Supervised Their Charges Are You Listening To What I Am Listening To? The Mannikin Of Crystalline H2O The Event Occurred At One Minute After 11:59 PM, Visibility Unlimited Tinkling Cup Shaped Metal Pieces Loyal Followers Advance Are You Detecting The Same Aural Sensations As I Am? I Apprehended My Maternal Parent Osculating With a Corpulent, Unshaven Male In Crimson Disguise Delight For This Planet Please Permit Crystalline Formations To Descend Aged Matriarch Plowed Under By Precipitous Darlings Our Desire Is Your Yuletide Cheer Casteneous Colored Seed Heated In a Conflagration Season Without Color Listen, The Heavenly Messengers Harmonize Caribou With Vermillion Olfactory Appendage Soundless Nocturnal Period Happy Elderly Martyr Without Five Cent Pieces Bipedal Traveling Through An Amazing Acreage During Mother Nature's Dormancy Omnipotent Supreme Being Tells Happy Males To Relax In Another Place Meant For Bovine Storage Tranquillity Upon The Terrestrial Sphere The Approach Of The Holiday Commemorating The Birth Of Christ Is Becoming Evident What Offspring Abides Thus? A Visitor Is Coming To The City Embellish The Corridors With Large Sprigs Of Berry-Bearing Evergreen.

you guys are too clever. oh well, have fun and pass it around the office.

The object is to identify the following 24 Christmas songs. ................................................................................ ............ Hey, Merry Christmas all! May God Bless your homes with peace. For those who may be Jewish, maybe I am late but Happy Hanukkah. (My apologies for those whose religious beliefs are not encompassed above)

While the concept 'smells' of lending itself to being discriminatory, the following from Reish Luftman % Reicher's IRS technical tips (which is from an ASPA Q and A) would support the idea that it is nondiscriminatory. I love the wording of the response "I do not think..." Does that mean "...but maybe we missed this one?" Split Eligibility: Is it Discriminatory? (Posted November 22, 2000) Technical Tip 37: The following question and answer were from the IRS Q&A Session at the 1999 ASPPA Annual Conference: Reg 1.401(a)(4)-5(a) says that the timing of a plan amendment or series of amendments must not be discriminatory, and that the establishment or termination of a plan is considered to be an amendment for this purpose. If a new plan provides for immediate entry for those employed on a certain date, and a waiting period for those hired after that date, might this be considered a discriminatory amendment? IRS Response: This provision is often seen in standardized prototypes which are supposed to be nondiscriminatory by design. I do not think present and future eligibility would have been approved in standardized prototype plans if this were not acceptable. We do not see this eligibility provision as a discriminatory amendment under the -5 rules.

min. gateway applies to anyone receiving a nonelective contribution, and a SHNEC is still a nonelctive, so Yes they would get the gateway. (lesser of 5% or 1/3 the HCE rate) remember, when testing on allocation basis you can still impute disparity (not on the SHNEC portion) and that may be enough to help pass. if testing otyerwise excludables separately the gateway would not apply to those ees unless that portion also has an HCE in the group, though I guess it would be 1/3 his rate.

if ps contribution was less than 6%, then the most an HCE received was less than 9% (3% SHNEC plus 6% ps) - therefore gateway minimum would be satisfied. Plan could test on allocation basis, thus no gateway required. If less than 30% of the ees received SHNEC only, that implies over 70% received the ps contrib, and if that contribution was the same for all ees then you would pass ratio % test. If more than 30% received SHNEC only it is possible that you could pass the nondiscrim classification test. yes, sched T would indicate all benefit, since all did. the confusion comes in that people think you have to report the fact the plan is cross tested or otherwise. that is not the purpose of the schedule T - it simply indicates if people received something, no matter in what amount, no matter how discriminatory.

3rd (at least my understanding of the rules)- you now have a plan in which some people are receiving 3% nonelective (The SHNEC) and others are receiving 3% + additional. This is no different than having a class allocation plan and so might require cross testing. or put another way: Class 1 = SHNEC Class 2 = SHNEC + additional ps (The 3% SHNEC is not a top-heavy, so the special rule for treating those ees as not benefiting, running a 'dummy' 410(b) test to see if plan is still considered to have a safe harbor formula does not apply.) for example, suppose all NHCEs terminated and only HCEs received additional. the govt tends to frown upon things like that. hopefully you can pass using allocation method, or your additional ps contribution is not greater than 6% and therefore require a gateway minimum.

Fred: According to the Erisa Outline Book (8.48, 2003 edition) corrective distributions should be included in the avg ben % test excess deferrals, recomended to include (I'd go by that, rather than what limited knowledge I have oicked up along the way basically, the logic is that you include them in the ADP test, at least initially. Of course, it is possible that an NHCE would have excess deferals and you dont include those in the ADP test, so then what should you do.

no, as long as the discretionary match is capped at 4% of compensation you are fine. The combined overall match can be greater than 4% of comp. (Otherwise once you provided a Basic Match you could not provide anyother match. It would also be next to impossible to have an enhanced match much different from a Basic Match)

your reasoning sounds correct.

Austin- its in 1.410(b)-6 (f) certain terminating employees item (ii) the employee is eligible to participate in the plan an ee from B is not eligible to participate in A so he cant be excluded when testing A under this scenario. see the example (3) at the end of the section. This is one of the 'few' things that is actually plainly spelled out in the regs.

I have gotten a summons every other year for the last 8 years, so stop your griping! Had to serve once, once was over the 4th of July so no cases that week. Once my 'number' was large enough that I didn't have to serve. The remaining time almost got on another jury. now for the humor, a true story, which beats anything. before getting selected people try to use all types of excuses to get out of serving. A man approached the judge and argued he shouldn't serve because he was owner of a landscaping service and he had a big job that started on Wednesday. The judge calmly told him, no, he still had to go through the process, just make sure he made it known that he needed a short term case. there were planty of cases that should only take a day or two. well, the guy grumbled a bit and turned and walked away. suddenly the judge called out 'sir' and the guy turned around. the judge continued "I just noticed you are not properly dressed" The guy had on shorts and some type of colored t-shirt. The judge asked the baliff if there was a dress code, and yes indeed, plainly printed on the back of the summons. So, the judge told the guy, you didn't want to serve, so you definitely will not be serving. However, I tell you what. You go home and change into some proper clothes. then come back and sit outside my office. And if, if I have some time in my busy schedule we will talk.

The question implies that the NHCEs deferred 0, therefore the plan had to refund all the deferrals and there were no other contributions, so plan would not have a top heavy minimum. strange, or at least poor plan design. why bother with the plan in the first place. Or at least make it a safe harbor with a match, owner gets everything as long as the NHCE is not deferring. I guess conceivably you have a plan in which only catch up contributions would be made every year. Interesting. and no top heavy required if that is all the owner does AND the NHCE never ever ever ever defers so all HCE deferrals are treated as catch up. WDIK: current year catch ups are not used in determining if plan is top heavy. Only prior year catch ups are used. strange reg.

Fred: I got lost a bit. ee deferred $14,000 so he has 2000 in excess but plan also failed ADP test and correction is $1600. now, it looks like I can refund excess deferrals first or I can refund corrective contributions first. In the example I was talking about, was a scenario with the question "Do I automatically count excess deferrals as catch up before running the ADP test" If I do, plan still failed the test and I would have additional contributions to make. If I don't treat the excess deferrals as catch ups 'immediately' but rather run my test, I have the situation where the corrective measure is less than the amount of excess deferrals. Therefore, I treat 1600 as excess contribution - I now pass my ADP test.,I then treat the remaining 400 as excess deferrals, so I end up at 12000 in deferrals to be tested. At that point I have to look up and see how to handle or actually report things on the 1099. I believe the ERISA Outline Book has a real good explanation. But in my example I never end up at 10,400.

One question for you: Your document doesn't say 'forfeit ees whose vested balance is 0?" Lets make an interesting example out of it. This wouldn't happen in the real world, but what the heck Only one person in the plan, and he quit, 0 vested with an account balance. so ee not entitled to future benefit, so he wouldn't show up on line 7c. therefore line 7f total ees shows as 0. Now, if I treat the ee as having a balance I have 1 person with an account balance - even though line 7f clearly said I have 0 particpants. Bet the IRS would write back about that one! actually, if you look at the instructions for line 7g it says 'enter the number of participants included on line 7f...' since you didn't include the ee on line 7f you would not include on line 7g. Now that I think about it, maybe that example is not so impossible. An owner could exclude himself from the plan and he sets up a plan for any employees. His sole employee works one year, gets a contribution and then quits at 0 vested. the new help is not yet eligible for the plan. Interesting. A plan with assets and no participants! bet the IRS would love that!

try IX B 1 of notice 98-52 .....a plan...covers both collectively baragined employees....treated as two separate plans....and the ADP safe harbor need not be satisfied with respect to both plans....

taking a stab at it: I don't think it is truly clear how to handle forfeitures in a class allocated plan - one of those fairly new animals. however, suppose in your example the company had set up two plans - one for each class. (I honestly believe that is why class plans are allowed - you could accomplish the same thing setting up separate plans) now, if you had forfeitures, what would happen? They would simply remain within each class itself. I don't know if that is possible to run easily on Relius. But another way of looking at it, would simply to say forfeitures reduce contributions. In other words, forfeitures get tossed into suspense rather than showing them allocated to participants. mentally my mind can handle that, though I know some clients like to see forfeitures 'reallocated' so to speak. I suppose if the document says forfeitures increase contributions you may conceivably have a problem, but I would argue the following (example only): class 1 got 9%, class 2 got 3%. without forfeitures I would only hav run 8% and 2.67% so I have indeed increased my contribution by forfeitures. I am simply not showing people as receiving 'forfeitures', but rather as a contribution