Tom Poje

ok, only tested this one on one plan. this is a census verification - includes entry date and amount of deferral. will (hopefully) produce warning message if ee has comp but termed in prior year will (hopefully) produce warning message if ee has no comp but is listed as active. there are a number of counters at the end of the report - new employees-active, new employees (terminated), number of ees deferring number of ees who termed prior year, number of terms current year. number of ees paid out current year as usual, never know if I have captured all the conditions, but what the heck, maybe you want a report like this. by the way, when working with a report under Custom you have the ability to print by category. you can even put one of Relius' reports there and have that as an 'added' feature - in case you didn't know.

true, however, remember a plan is not required to be amended for the new required begining date. so, it is possible the document will say age 70 1/2 no ifs and or buts

I would add the following reminder about the group 'shareholders and spouses'. Be very careful about such titles. By attribution a spouse is a shareholder. So are kids. Unless you define shareholder as someone owning stock directly, not by attribution you open yourself up for possible future problems.

wdik: you are correct a plan need only give top-heavy to non keys. the premise in the opening statement of the thread makes no sense. "plan is standardized protoype and requires 500 hours to receive contribution" if plan is standardized, then there can be no hours requirement for active people. the 500 hours can only apply to terminees, so the person in question would have to receive the full contribution. I think it is a misreading of what the hours requirement in the document. now, I suppose if it was a 401k and only top heavy was provided (no other ps) the key ee wouldn't get.

the plan in question was described as a 'standardized prototype' if my memory serves me correctly it is impossible to exclude anybody in any way shape form desire etc from such a beast. once you are in the plan you get get get get and continue to get

Maybe to clarify:for purposes of the ADP safe harbor there are no restrictions - at all. However, any enhanced match above those limits listed by Weddell would have to be tested in the ACP test.

your comment is confusing. If you are using prior year testing, then whatever happens to a NHCE (comp and deferrals) is not considerred. Now, if the NHCE deferred 0 last year, then that is a different issue, and possibily up for debate. Sal Tripodi holds that if in the current year the plan there are only HCEs, you use the special rule under the regs, a plan that consists of only HCEs automatically passes testing. He holds that the testing method (prior or current) is a different matter and done 'after the fact' so to speak. I am not so sure. The prior/current year rules were written after the HCE rule. I don't think the issue is clear. If anything, the plan could be amended to use current year testing and that would elimnate the problem. However, even that is unclear, when the plan can be amended from prior to current.

I think it is simply in the 1099-r instructions which says 'corrective distributions of an excess plus earnings are reportable on form 1099-r for the year of the distribution regardless of when the distribution is taxable to the participant.' thus, one 1099-r in the year of distribution. the double whammy is in the instructions says ...if the distribution occurs after April 15, the excess is taxable in the year of deferral AND the year of distribution.

never used Trustmark, assuming I speak for others who might actually have a report you are looking for, just exactly what did that report show?

interestingly enough, read the regs 1.402(g)-1(e)(4), the last sentence ...A plan need not permit distribution of excess deferrals.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! In fact, what if your document doesn't permit it! However 1.401(a)-30 says 'see 1.402(g)-1(e) for rules permitting the distribution of excess deferrals to prevent disqualification of a plan or trust for failure to comply in operation with section 401(a)(30)' Assuming the language is in the document, the failure to do so would be a violation of the terms of the document, so eventually you simply refund the $. The drawback of course is that the ee gets taxed in 2002 for excess deferrels (his W-2 statement would prove this) and he will get taxed again in the year the distribution actually takes place. The self correction rules allow for distribution of excess deferrals, so even if you are 'late', they still can be done.

does the document say 'A QNEC will only be given for a failed test" I doubt it. does the document say "A QNEC will only be given up to the amount needed to pass testing' Again, I doubt it unless you have failed your test by exactly 3% every year - otherwise you have done things incorrectly in the past. Therefore, you probably don't have a problem allocating it.

If my pea-brain is still working properly, I thought that a new 401-k arrangement (or adding such an arrangement to an existing ps plan) did not require 30-day notice. as long as people are given notice bt the effective date you are ok.

it depends on when the check is cut. If you actually pay him out in 2003, then he will need a 1099R for 2003 which will be included on the 2003 tax form. There are reasons for paying someone out before 4/1/2004. suppose distribution = 20,000 and the 12/31/04 distribution = 20,000 that would be 40,000 in 2004 as oppossed to 20000 in 2003 and 20000 in 2004. it might make a difference tax wise.

how is one allowed to calculate whether a plan provides a meaningful benefit? looking at a cash balance plan that uses the GATT rate in the calculation to avoid the whipshaw effect at payout time. when determining if participants receive at least .5% does one also use the same assumptions (e.g. the GAR mortality at the GATT interest) or is one allowed to use any standard mortality table and interest rate?

see 1.410(b)-6(b)(3) ..without regard to section 410(a)(1)(B) this is the code section that deals with a 2 year wait in otherwords, you can't apply otherwise excludable rule to a 2 year wait, only a one year wait.

I would agree, even though ee may get contribution (top heavy) based on full year of comp you are permitted to use comp from date of entry. there is no requirement to do as such, simply that you are required to use 414(s) comp. hopefully document simply says use any definition that satisfies 414(s) The new Corbel documnets say that, the old ones use to be more specific, and went so far as to say from date of entry. anyway, you can always override Relius, and simply enter in census, computed comp = total comp for the year and then run the test. If you pass, then it doesn't really matter, unless you want to argue the gateway minimum should be based on that comp figure. I don't think there is any guidance how to handle the scenario you describe. well, I guess you could always test 'otherwise excludables' separately and this ee wouldn't show up.

Not sure about your question if the person is considered 'active' as of the last day of the plan year. However, top heavy is NOT based on plan entry comp. It is always based on the full year comp. Gateway minimum can be based on date of entry comp. Interesting scenario, if indeed eligible, ee receives the greater of 3% of total comp or the gateway - 5% of date of entry which = 0.

I would hold that in-service = took distribution while still working, hence, still in service. so they come from profit sharing plans since those are the only plans that allow them. pre-retirement = took before hitting retirement (generally age 65). ee has terminated, is no longer 'in-service' of the employer. any distribution will do, best example that comes to mind is the QPSA. That is not Qualified Poje Stupid Answer (though many of my answers may be), but rather Qualifed PRERETIREMENT Survivor Annuity.

Tim: Another way of looking at it. Do you fill anything out on the schedule T for your ADP test? no. The non discrim test for your allocation is the same thing, except it is for nonelective contributions. thus, as Mike indicated, the sched T is only for coverage. Mike: Go Wolves!

I would say yes, simply because a QNEC is still a non-elective contribution. And once you receive any amount of non-elective contribution you have to receive the gateway minimum. Once you receive the gateway, you are now permitted to cross test. But when you test under a(4) you have to perform the test twice - once with QNEC and once without QNECs or at least that is my understanding of how it works.

according to the ERISA Outline Book (2003 edition, see chapter 15, there is a whole section of short plan issues A short plan year is created when....2) a new plan is established with an EFFECTIVE date other than the first day of the normal plan year cycle. so it looks like the effective date that is the killer. ......... 1.401(a)(17)-1(b)(3)(iii)(A) ....the...compensation limit is reduced in the same proportion as the reduction in the 12 month period......numerator equals number of months in the short plan year there is no guidlines to say how to round the months. in your case it sounds like you could use 2 months. I suppose there is nothing to stop one from using 1.25 as well.

one additional point - if the plan does not provide the safe harbor to 'otherwise excludable employees' then the top heavy freebie ride is negated as well.

Good news! we just created a new document using Corbel. the language for the gateway minimum is now in there, so that will cover you for the future on new plans. I believe for plans in existance you adopt the snap on amendment for the gateway. It is there!

no one knows for sure (unless it is buried in the proposed regs somewhere.) Sal argues for as late as 12 months after the end of the plan year because that is the time limit for correcting an ADP failure. but then he adds that IRS has indicated that future regs may require 1st day of plan year for which changes takes effect. so what's a body to do? I don't know - are we still in the restatement period, if so, then that is the easy way to go. ......... I still find this one real interesting. the schedule T you will check 'the employer employs only HCEs' which is Sal's argument 'ah, then you pass'

Blinky: I think the problem is that if you don't amend to current year testing, you end up with the situation of never using the NHCE results. (e.g. if the prior year results were real low for the NHCEs then you have circumvented the sytem using this logic) the reg cited is 1.401(k)-1(b)(2)(i)(B) "an arrangement does not fail to satisfy...merely because all of the eligible employees under an arangement for a year are highly compensated" I understand Sal's argument. It just seems strange, probably more so as a result of the fact this reg was written before the ability to use prior year testing. personally, to be safe, I think I would amend to current year.