Tom Poje

Hopefully you are not a cat, because my understanding is that curiosity killed the cat, and I would hate to lose an administrator. for proposals I am using a spreadsheet, simply for the speed and ability to change allocations and groups, etc. I do a lot of testing for others so I use Relius, mainly because that is the software the company I work for uses on the DC side. I had worked for Corbel from 92-97 and actally wrote up notes on using the system back in the old 'glory' days of Pentabs. I had revised the notes for use with Quantech (now Relius) and have done some training at user-group meetings as well as some 'rent a tom' training. I think the boss just likes to get rid of me at times. I haven't revised the notes for a while, though for the most part, they are still valid -close to 20 pages. The folks at Quantechland liked them so much they have been using, though I have made some changes to them to correct one or two things, I imagine they have modified them a little as well to suit their needs. some options - such as using SSRA - I can not recomend using, since that is not the normal retirement date, and I haven't seen a document yet that says I can use that as my testing assumption. rate banding, is weak (but better than it used to be), you really have to know what you are doing. I could actually do the calculations without any software, possibility exists I will be designing something more to suit my needs in the future. it depends on how much time I can get free.

In the proposed regs (I am looking at page 53561 of the Federal Register (vol 66, no 205 dated Tues Oct 23,2001) timing rules ...a catch up contribution is made as of the last day of the plan year.. since the plan year ends in 2003, then the catch up would use the 2003 limit. looks like that is what you want to hear!

you are correct, Relius simply doesn't show HCEs who are at 0 on the overall report. (I am not sure why they chose to do things that way, but nonetheless that is what you get) It doesn't change the testing results at all since someone at 0 automatically passes, so maybe that is why they do it that way- except for a possible reference, it doesn't really matter- well, except for the fact it is confusing and makes it hard to explain to others. I never use the 401(a)(4) nondiscrimination summary because I don't like the looks of it, and I find it rather confusing, so I can't comment on that report. If that report says 3 groups out of 3 pass when there are really 5 with 2 HCEs at 0, then that report is just plain wrong.

well, now isn't that interesting. based on the Notices it looks like it should be possible Ntice 2000-3 the requirements of section V of Notice 98-52 will be treated as being satisfied for the entire plan year and the CODA will not be treated as failing to satisfy the requirements of section X of Notice 98-52, provided (1) the plan is not a successor plan (within the meaning of Notice 98-1), (2) the CODA is made effective no later than 3 months prior to the end of the plan year, and (3) the requirements of Notice 98-52 are otherwise satisfied for the entire period from the effective date of the CODA to the end of the plan year. Thus, an existing calendar-year profit-sharing plan that does not contain a CODA may be amended as late as October 1 to add a CODA that uses a 401(k) safe harbor method for that plan year. and Notice 98-1 says For purposes of this notice, a plan is a "successor plan" if 50% or more of the eligible employees for the first plan year were eligible employees under another section 401(k) plan (or section 401(m) plan, as applicable) maintained by the employer in the prior year. For example, in 1998, Employer H sponsors Plan T, a section 401(k) plan. In 1999, Employer H establishes Plan U, also a section 401(k) plan, which had 200 eligible employees, including 100 employees who were eligible employees under Plan T in 1998. Plan U is a successor plan.

I would agree - you may have to watch out on ees who are over age 65, depending on the document. That is a good point. That is because the APR is smaller at age 66 than at age 65, thus if you had 2 ees with identical comps, one age 65 one age 66, the ee at age 65 ends up with more points than the ee at 66, thus receives a larger contribution, unless the document is written specifically to prevent this. This was less of a problem when the 415 limit was 25% of pay, as older ees quite often hit the 415 limit.

Never had a problem in that area. I have seen scenarios in which it was suspected the points were different, but in reality they were the same (e.g. they differed by a common factor, for intance '12', [all points could be divided by or multiplied by 12 and you would achieve the same results] some people are 'correct' others are 'not'. this usually reflects the choice selected - age 'nearest' or age 'last'. this results in an individual either being a year younger or older than what you had figured, therefore the expected poits are off by one years worth of interest.

A corrective amendment is just that, the plan doesn't specify that option. Here is at least one problem with the fail safe language (This comes directly from a document) In the past it read 'if the plan otherwise fails to meet the requirements of Code Section 410(b)(1)...' the new language now reads 'if the plan otherwise fails to meet the requirements of Code Section 410(b)(1)(B)...' a slight change, but significant. This is saying if you fail ratio %, you have to correct by bringing more people in, even if you would have passed 410(b) using the average benefits test

yes, mainly because I have a similar situation, except there are 2 profit sharing plans - the one excludes associates, the other includes associates only

correct, and it is not just distributions. An ee who has not performed service during the one year period is also excluded

Blinky, you are correct, I have got to much on my desk to think straight. rcline got me off trackwhen he said "It is not a requirement by the DOL or the IRS." It looks like it is according to the ERISA Outline Book "the plan must be written so that it is impossible to violate the statutory requirements ...See Rev Ruling 80-360" (2.34 of the 2003 edition)

if plan is top heavy and HCE is not key then the hce will have to get the eventual gateway minimum

Blinky, I think you don't have to have the first day as an entry date, but then you will have lots of fun doing coverage testing, because at 5/1 the person is includable and not benefiting, but at a later date date he would be includable and benefiting. That means you would have to do multiple coverage tests. I wonder how the schedule T gets filled out when you have multiple conditions like that. I wouldn't touch a plan like that.

oh sure, just when I was deciding whether to 'release' my version of a top heavy report (Well, I had one plan that I took from Relius 40 page top heavy report down to 10 pages so there is a reason for creating such a report! I think as long as there are no prior in service distributions I am ok) Anyway, as to your issue. My brain is on permanent freeze, I think. If it was just a couple of problem children, I would probably try the following: set up a DER for prior distribution. Enter the 'vested balance' value that you want to get rid of (as a negative) or actually see if there is a value sitting there. If I recall correctly to determine the vested balance in an account, the system takes the end balance plus any prior distributions. It multiplies this by the vested % and then subtracts off the distributions. That way, if a participant has received a partial distribution you achieve a correct vested balance e.g. end bal = 1000, ee also had a distrib of 200 for whatever reason. ee is 40% vested. so 1000 + 200 = 1200, 40% 0f 1200 = 480. ee has already received 200, so the vested balance will show as 280. That will look real bizarre. end bal = 1000, 40% vested, vested bal = 280. Now try explaining that, but it does make sense. Maybe the sytem also takes forfeitures into consideration, if somehow they got buried into it. And if you did things through a takeover transaction, nothing would surprise me. Anyway, hope that helps!

consider 410(a)(4) after completing the minimum age/service requirements Time of participation you must enter no later than the earlier of (A) The first day of the plan year.... so plan year begins 5/1 how does the 7/1 and 1/1 entry dates get around the problem? If ee was hired 2/1/2002 he completes 1 year of service on 2/1/2003 and must come in on 5/1.

yes, the iRS indicated as long as there are no other contributions (even if there were previous one) then the plan is not top heavy.

Julie: Yes, the match can be discretionary, and not used in some years, but this would only satisfy the ACP safe harbor and not the ADP safe harbor. And yes, at the ASPA conference the IRS said if you don't exercise the profit sharing option then the plan is 'solely' safe harbor - though apparently with a caveat. Based on prior posts, if the plan allocates the safe harbor to statutory includables only, then the plan no longer is 'solely' safe harbor. (Personally I still am not convinced on that point, but what the heck, I am a bit overrated on my knowledge!)

you have 2 choices 1. each HCE is treated as a single 'plan'. does this plan pass ratio %. 2. each HCE is treated as a single plan. does this plan pass avg ben test. but the avg ben test is two parts a. avg ben % test - this will be the same for all hce, it doesn't change because it is the plan as a whole b. each hce must pass the mid-point. thus, if your ratio % was 60% you fail ratio %, but you pass the midpoint. your comment seemed to avoid part b

well, in the 'eyes' of the govt, to avoid the gateway minimum, an ageweighted plan is considered to have smoothly increasing intervels. that sounds uniform to me. if it is good enough for the govt....

interesting you should post the comment. I have a similar plan, the fun part was getting the system to generate a report to do the testing. At least I was able to create one in Relius (Quantech) without too much work.

here is a thought - in the old days - at least a year or so ago, you still had to make contributions to a frozen DB plan if the plan was top heavy. if I recall, the comments in regards to a DC plan were simply, in the case of a dc, since the key ee is probably at 0 then no contribution would be necessary. without diggin back through notes on frozen plans, it sounds like maybe you have to make a contribution to a frozen MP plan, to satisfy top heavy for the 2002!

I would make sure any dates are in mm/dd/yyyy format, you dont want the system asigning a century. strip the commas in number fields you do not have to delete columns you don't wish to import - you can use 'pad' and the system will ignore them. if names are in one cell, you can use 'combined name' to separate the import. generally I try to make sure the last column of the import has something in it - even if it is a dummy character and you pad it out. I once had an import in which the last column was a term date. not everyone had that. the first column was an id number, and one person had the number 631. the system actually read that as a term date for the previous person, and then I was stuck with a date of 6/31 which the system was none too happy with.

see the following comments http://www.reish.com/practice_areas/Techni...ps/IRStip91.cfm (I liked it better when you were an 'MD' and not a 'PA') Ha!

where in the report is the division name? I would guess it needs to be in its own group. or perhaps, put another way, you added the division, but did you add a 'group' along the side

Mike: Interesting. I hadn't thought about T-7, which for those not looking it up, says you can't permissively aggregate for top heavy unless the plans provide benefits that are comparable. Obviously, if the associates receive zippo then you shouldn't aggregate to avoid top heavy. But since you are providing the gateway minimum in the other plan, top heavy should be satisfied - unless you are providing less than 3%, which isn't likely. (or you have some NHCE who are active but received 0, or possibly you are trying to avoid giving some HCEs who are non keys any contribution) Thus, in a round about way, which changes the original question - plans are not aggregated for top heavy, thus plan is top heavy, but this has been met by the gateway minimum. plans are aggregated for nondiscrim testing, and the gateway minimum does not have to be provided to the associates since the associates are at 0 (or are HCEs, and HCEs could be excluded from gateway)

Are you saying the associates have to be provided the gateway minimum? they are not benefitting under the profit sharing portion, so I don't see where they have to receive the gateway, as long as plan passes 410(b).