Tom Poje

kmciver: EGTRRA said the term 'top heavy plan' shall not include a plan which consists solely of "(i) a cash or deferred arangement which meets the equirements of section 401(k)(12), and .............. to meet this, a plan can offer either the SHNEC or the SHMAC, not just matching contributions. ............... (ii) matching contributions with respect to which the requirements of section 401(m)(11) are met ............... there is a lot of matching stuff that meets this, but a SHNEC would never. note, one of the matching features that would satisfy this would be a discretionatry match = 0. Interesting, a strict reading of the reg would say the word 'and' requires both. If you had a plan with a SHNEC only (no match language at all), then you would appear to fail this. And yet if you had discretionary match language that you never used, you would be ok. .................. as to the disaggregated portion, I hadn't thought about that before. I have always read 'plan' to mean the whole thing, regardless if I disaggregate the otherwise excludables or not. Otherwise would I just look at the otherwise as a separate plan and test just that portion for top-heavy?

I'd be curious on the document language! Lets see, there are 40% employees in the DB plan. unless there are more than 50 employees in the DB, just one new hire could cause Minimum Participation failure, or a terminee from the DB plan would produce a failure as well.

I've done the same 'cheating' thing. I have gone as far as to type in the info into the address fields and anything else in census I wasn't using. I see there are some rollover fields available as well, so always plenty of spots available.

can't you just put in a formula If cash value = 0 then ' ' else 'Cash Value = ' + FIELD NAME and be done with it on all statements?

question #1 were there any other contributions besides deferrals and safe harbor? If the answer is no, then your opening statement is incorrect. you have a safe harbor 401(k) plan, but it is not top heavy.

ooooh. That makes the QNEC even more. Oh wait. even if I gave 100% of pay I can't pass. ............. on a brighter note..... the CPI - U rate shot way up. DEc=180.9 Jan=181.7 Feb=183.1 So, through Feb I have the comp limit at 204,660 and annual addition limit at 40,932. Looks like those two values will increment for 2004

Actually, I thought about using the definition of 414(s) that excludes all deferrals. What is that, about 1200% for the deferral rate?

the regs (1.410(B)-6) basically say you can test seperately those who could have been excluded if the plan had the maximum eligibility requirements. Elapsed time really shouldn't have any bearing. you have to be careful about using 18 month logic. Consider a calendar year plan, ee hired 12/1/2001. EE quits 2/1/2003. He has worked less than 18 months, but maximum exclusion includes 1st day of the plan year, so he would have entered 1/1/03. You would also exclude those ees who never worked 1000 hrs. Under elapsed time ee could be in the plan, yet never have worked 1000 hours.

yeh, right Mike. I am currently looking at a plan someone asked me if there was anything they could. They let the kid defer 11,000 with a comp of 11,911.21. Produces a great ADP % of 92.35%. doesn't that % look familiar. Can you say 'refund, boys and girls?'

There is no such animal. the 402g limit is based on calendar years. Thus the person could defer 11,000 in Dec 2002 and 12000 in Jan 2003 and as long as there were no other deferrals he would be ok.

Wolverines may be a lot of things, but they ain't blood suckers, so you aren't fooling anybody, Mike. Now buckeyes on the other hand.....

dang, you put one report out there and you get someone who wants another. Ha! This is the ADP report. Same rules as before, be careful, save a copy of Relius's version somewhere if you hate this one. Also note, be careful when you download an update or anything because this report will be overwritten and then you will lose it if you actully happen to like it. This report is different from Relius in that it: sorts alphabetically rather than by comp. heck, the old 1/3 2/3 rule for determining HCEs went away a long time ago. Well, ok, I have been using this report so long, maybe Relius' report sorts alphbetically now, I don't know. It is hardcoded that if an NHCE's comp is greater than 90,000 there will be a note indicating ee is an HCE next year. Maybe I should make it say 'maybe'. I did not look at top paid group or possible termination status. Age will print if ee is 49 or more to indicate possible catch-up availability, now or in the near future. Verify in census, as I don't know if age nearest or last logic is coded in specs. An indication if ee is excluded from ACP test, and the reason. There might be a few other totals that show up as well.

MWeddell is correct in what he says, but I think you also have to be careful about what terms you are using. There is a big difference between 'invested' and 'segregated'. For example, the company withholds the deferrals and deposits them in a non-interest bearing account in the plan's name. Therefore, the money has been segregated. At that point the money is out of the employer's hands, so the DOL would look at that differently than if the money was sitting elsewhere. Depending on who is determining the investment split, if someone else is calculating a match associated with it, etc., it may take a while [do not read that as a long period of time] to actually 'invest' the funds. In your particular case, you indicated the funds were always deposited the same day, so it sounds as if there is a legitimate reason to be concerned.

This was from the Q & A board. maybe a little dated, but probably still okay. (There is a lot of good info sitting on the Q and A Board, if you are not aware of it) http://benefitslink.com/cgi/qa.cgi?databas...d=122&mode=read the other item was http://www.reish.com/practice_areas/Techni...ps/IRStip91.cfm that was real recent

You have to be careful with this one as it can only be used under the Relius reports and not custom. Thus it will overwrite the landscape version of the correction report. so if you are going to try this make sure to save Relius' report if you don't care for this report. This report will show the testing results under the pre-SBJPA Rules (thus the proof the plan passes) as well as the results under the new rules. There is a Totals row at the bottom. It works fine as long as there is both an ADP refund and ACP refund. Otherwise if there is only an ADP refund it doubles the numbers. That doesn't effect anything else, but I haven't figured out how to control it. (Actually I added fields to divide by 2, but they are supressed) But someone asked once how do you prove the plan passes with the refunds, so here it is.

actually, what I was saying was that you have to follow whatever formula you have, which is probably comp to comp. you could allocate 15% to one group and 13% to another, but when you test, test on an allocation basis and impute disparity. dad burn it, Andy answered the same time as I did ,but included a better example

well that depends on how things are run. (If I understand things correctly) Since the screen is toggled on 'trade date' it doesn't do much good to change things if you don't have trade dates. (e.g. you aren't buying shares) I believe the default is 7 days into the new year (e.g. to cover deferrals, match deposits). Therefore, I would suspect that the profit sharing would not normally be included if you are running things with trade dates, since you probably wouldn't run the ps contribiution one week into the new year.

actually check the top heavy screen. with Relius there is a toggle something like 'include contributions made before trade date' so you might not have to rerun the transaction, just change the date on the screen and rerun top heavy. As I tried to indicate, it really becomes important to know how the software operates. Fun being a newbee isn't it. we all have lived through it. hang in there! as for distributions, I am not sure what it does. My gut feeling is that it writes the distribution into the top heavy screen in the year of the distribution regardless of when the ee quit. therefore some adjustment may be necessary. but I am not 100% sure. and when you are at 60.02% I can see where all this may make a big difference.

Lets see. You said you had 2 classes, and the formula is comp to comp. Unless all members of one class make the same comp (e.g. all memebrs of class 1 have comp > 200,000) it would be impossible to end up with a contribution that would duplicate an integrated formula for that class. You might come somewhat close - I suspect Larry Deutsch was simply pointing out that class 1 could still receive a slightly higher rate of pay than class 2, not by cross testing, but, as Andy pointed out, by testing on an allocation basis and imputing disparity. My logic says, in that scenario, class 1 members end up with less than they would if the plan had been integrated. That sounds like poor plan design or poor planning. I have seen too many studies that look good, but fall apart if but one NHCE quits.

I agree with Mike. There does now, at least seem to be a choice. and, at least based on the numbers given, would seem to make a difference. I would say I focus my attention on the comment 'the 'software' says the ratio is 60.02%', and exactly what contributions are included in that calculation. I suspect most software includes the contribution made after the end of the year. perhaps it is more of a warning about simply relying on software. And that is not meant to be a negative comment on the software - it might depend on how specs are answered, etc. Especially when you are that close to the magic 60% mark. Another example would be in regards to a terminee. Lets say he quit 3 years ago. You would not include his account balance. Now he gets paid out. I've seen software pick up on the distribution and include it in the calculation, under the rule that says you include distributions made within the last year. That wouldn't seem to make much sense since the ee hasn't performed services for more than a year.

it depends. the regs would seem to indicate you do not include ps contributions made after the plan year end. However at the 2002 ASPA conference when asked that question the IRS 'accepted the argument to include them in the balance' I think this is contrary to what most people have learned about not including the amounts. The IRS agents also stress that the comments at the conference reflect an opinion and do not necessarily represent an official position. Some of the people on the board here say the IRS is wrong on this one. I am unsure. So what's a body to do? Well, if they are going to make a contribution in 2003 anyway it doesn't make a difference. If you don't include it and the plan is still over 60% then it doesn't make a difference either, does it?

and also, if the 2002 ratio at 60.02 is at 12/31/2002 is this value including ps contributions made in 2003 for the 2002 plan year?

my understanding is that the ADP tests would have no bearing on whether you disaggregate the nonelective portion. as regards your other question, I guess that depends on your document. If I have a class plan, and all NHCEs receive x%, then that individual receives x%. If the document further states no NHCE shall receive less than the gateway minimum, then I would read that as saying the ee receives the gateway as well. If the document was worded differently, e.g. in no case shall the contribution cause the plan to fail the gateway, then I would hold he would receive x%, because the otherwise excludable group does not have to receive the gateway

how you ever gonna pass the C-1 test? I generally think of the optional benefit as being an optional type of benefit distribution e.g. taking an in-service at age 59 1/2 you can disregard the age, so you will pass currently available.

Almost all the bells and whistles are there, I guess it depends on your learning curve. Seriously. I am tied in with the Southern Users Group, and have even done some Relius training myself. I think one takes a different approach to teaching when doing it from an administrators point of view than from a vendor's 'how to' run the software. There are pluses and minuses to both. I have seen people locked into former software and unable to make a smooth transition. Hopefully you have some experience with Crystal, the ability to modify reports to your liking is extremely important. Or 'steal' some custom reports from others. I've posted a few on the board here from time to time and so have some other people. There is an ugly rumor from people that I know everything about the software - hardly - but it is fun to keep them fooled!