Tom Poje

I am either confused by the question or by Mike's answer. If I understand the question, the associates did not benefit under a(4) - therefore they do not have to be provided the gateway minimum.

what are these, corrections for prior missed top heavy contributions? I would guess then it depends on how you want to show them. If I had absolutely no transfers, I would use a DER and run them as a 'transfer' using the takeover transaction and relabled the header to say 'prior top heavy' or something similar. that would be the easiest.

Mike: Not just T-7 but 416(g)(2)(A)(ii) says plans may be permissively aggregated for top heavy as long as the top heavy plan continues to meet 401(a)(4) and 410(b) with such plan taken into account.

you missed the other reason why someone might opt out of a plan - you are 'punished' under the IRA rules if you receive a benefit (e.g. even a small allocation of forfeitures)

what type of waiving participation are you referring to? If it is an irrevocable, one time election, the regs are clear 1.401(k)-1(g)(4)(ii) that such ee is not an eligible employee, therefore he does not show up on the ADP test at all. (That is no different than an ee who fails hours requirement for a match - they are not eligible so do not show up on the test) If the election is made after someone is eligible to participate then they would show as a zero on the ADP test because they fail to qualify for the 'one-time' election. for 410(b), since the ee has satisfied the otherwise eligibility requirements, they are treated as includable and not benefiting for coverage. If I understand things correctly, even if the ee finally terminates with < 500 hours they still are included not benefiting in the ADP test because that exclusion rule only applies to participant.

The answer is clear to me For everyone to see Just look at the Reg He said to Greg 1.414(q) IT A-3b you can use any rounding method you want as long as you are consistent, reasonable, etc.

You lost me. A profit sharing contribution is referred to as a non-elective contribution. It requires no 'election' on the part of the participant. if you require some type of 'participation'(you said deferrals) on the employees part then you no longer have a nonelective contribution. It is possible to have a 'mandatory' contribution plan, but now you are talking the DB world.

I understand that position, but, on the other hand, if the IRS has issued a determination letter for plans that have immediate eligiblity for deferrals, but have 1 year wait for ps, and those ees who have not worked 1 year are excluded from top heavy, then either 1. something got slipped by the IRS 2. they must take the stance of the possibility of 'top-heavy disaggregation', for lack of a better term. or, perhaps, put another way, if I take one of those documents that has such a determination letter and change it from 401k to a safe harbor 401k, then what happens?

I'd say more often than not, that there is usually a profit sharing contribution rather than a match, especially evident with cross tested plans

Personally, I don't know for sure. The comments I have read from others would seem to say if you go 'otherwise excludable' then the plan loses its free ride on the top heavy because the plan consist of contributions other than just the safe harbor ones. I am still hung up on Q-10 on Notice 2000-3 (The answer to this one is incomplete in the copy I have, I have looked it up a couple of times, it simply isn't there) And granted, this was written before EGTRRA Anyway, Q-10 says the plan is treated as two separate plans, and 'accordingly, a plan that uses one of the 401(k) safe harbor methods is not required to provide...blah, blah, blah. Those employees do not have to be treated as eligible for purposes of the 401(k) safe harbors, so long as the employer has elected to treat them separately for coverage purposes pursuant to section 410(b)(4). Now T-6 of 416 says I am required to aggregate plans in which the key person participates. The example says "An employer maintains two plans. Key employees participate in one plan but not the other...." End result, you only provide top-heavy to the plan in which the key person participates if you pass coverage. so, I am hung up on the concept of Q-10 saying I treat the plan as two separate plans, and then 416 implies I do not have to aggreagte them -I only have to provide the top heavy in the plan the key person participates, but since that one is safe-harbor I don't have to provide the minimum. I guess it depends on the interpretation of what 'plan' means. I have heard tell of plans that have actually received determination letters whose language does not provide the minimum to otherwise excludables (and this is in a plan that is not safe-harbor 401(k)) This would seem to be consistent with what T-6 says. But then, who am I to say?

well, suppose ee makes 100,000 for the year, enters mid year and has 50,000 in comp then the gateway is 2500 but the top heavy is 3000

I would add, if plan is safe harbor plan and plan uses otherwise excludable option, then plan does not get top heavy free ride

Merlin, so be careful. the gateway is based on date of participation, but the top heavy is still ytd. so conceivably, the top heavy minimum at 3% of ytd comp might have given the ee more than the 5% of date of participation comp would. don't reduce the top heavy minimum to the gateway amount.

Dave, Every time I return to the Board I have to hit the refresh buttom to pull in any new messages since I was there the last time. Is there something I need to reset?

There is a brief description (abour 9 pages) on Puerto Rican plans in the Coverage and Nondiscrimination Answer Book. (That book is in theseries of books like the 401k Answer Book, the Pension Answer Book) The Treasury in Puerto Rico is called Hacienda. they have a website in Spanish www.hacienda.prstar.net

EGTRRA simply says : section 416©(2)(A) is amended by adding at the end the following: "Employer matching contributions (as defined in 401(m)(4)(A) shall be taken into account for purposes of this subparagraph..." since a QMAC is a match (see 1.401(k)-13) you should be able to use them for top-heavy purposes.

I'd add my picture, but Dave said that was a prohibited transaction. Actually, I haven't been able to figure it out yet. Haven't figured out how to add other attachments yet either (e.g. rpt, xls, etx) When I click on 'go to first unread post' it goes to the last unread post.

no, ver 8 simply means what Relius level is being used. (Not ver = vertical)

Such a report almost actually exists, if but one small modification could be made. Consider the 70 1/2 report, which can be run globally - all plans. It will list company name, the names of all ees 70 1/2 and their ending account balances and then a totals line. so, suppose you supress the footer that contains the list of ees. you would be left with company and end bal totals - unfortunately, just for those age 70 1/2. it pulls a field MINDISTRBALAMT - which is apparently the end bal for only those 70 1/2. so, all they would have to do is modify the 70 1/2 feature to pull all ees instead of just those 70 1/2, and use ENDBAL (or whatever field) wishful thinking?

it could well be. I am still at 7.3 That is a good reminder on this board to specify what level one is at when asking questions, etc.

According to the latest ASPA ASAP The IRS and the Social Security Admin has decided NOT (I repeat) NOT to to impose the requirement to use multiple page 2 of schedule SSA for 2002!!!!!!!

I can't even get to the point of opening the file (I don't really have the time anyway) but I am always willing to take a quick look. Sorry, I get an error message

so the issue hinges on the term 'solely'. the question used to be, what if the plan has a profit sharing option but doesn't use it. and, at least at the ASPA conference in 2002 the IRS said if there is no ps the plan is not top heavy, end discussion. now, you are saying, if the plan uses otherwise excludable option, it is no longer 'solely'. why? again, I simply don't know one way or the other. And again, I will point to Q-10 of 2000-3 that says A plan that uses one of the safe harbor methods (I could read that as 'consists solely of...' it is not required to provide the safe harbor to those ees [who are otherwise excludable] Thus, a plan that exercises this option is still in itself safe harbor even though nothing was given to the other group. And if no other contributions are made then EGTRRA says it is not top heavy.

Are you desiring a portrait report that reads horizontal or one that reads vertical? This report reads vertical. To get the Vesting % is a pain. If your first account in specs is subject to vesting, then this report will work, unless the ee has no $ in that source (not that account). Even if the first account is a fake account that is never used this will work, but you have to click 'all accounts including those with no activity'- then it will work fine. You just have to remember to do that everytime. Of course if you have different vesting schedules for match and ps this report will not work. I think the Relius reports divide vested balance by end balance, but if I recall, that has its problems if the ee ever had a distribution (hardship or otherwise) As with any report I post, verify the work. I haven't had any problems, but you never know. Soc sec # only shows as last 4 digits, plan name is buried in plan user field 11 and 12

Interesting. There was an earlier thread (probably well over a year ago) that talked about having document language that had immediately eligibility for deferral, 1 year wait for profit sharing and the language excluded otherwise excludables from top heavy and it received a determination letter. I'm still waiting for a new copy of Sal's book, so I can't comment on the 2002 edition. (The edition I have is pre EGTRRA and the top heavy argument makes sense) M-10 says 'non-keys who participate in a top-heavy plan...' so which comes first the chicken or the egg? The plan is safe harbor, and makes only deferrals and safe harbor contribution. therefore it is not top heavy, thus M-10 doesn't apply. or because you are using the otherwise excludable option, you have a portion of the plan that is not safe harbor. therefore the free pass on top heavy does not apply to that portion of the plan. so the argument is that you have to provide top-heavy. hmmm. I still don't know. Q-10 of notice 2000-3 says if you use the otherwise excludable option, you treat them as separate plans under 410(B). T-7 of 416 says if you pass 410 then you don't have to aggregate for top heavy. But does that apply in this case???