Tom Poje

actually, in your haste you simply said that 'employees' eligible for the 401k must get a safe harbor, rathor than 'NHCEs'. ....... Talk about calling the kettle black, my desk is probably tops when it comes to sloppy.

a bit sloppily written: "Notice 98-52 says that employees that are eligible for the 401(k) deferral arrangement must get the safe harbor contribution." the actual wording 98-52 V-B-1a "The matching contribution requirement...i satisfied if...either the basic matching formula or an enhanced mtahcing formula...is made on behalf of each NHCE who is an eligible employee" a similar rule exists for the nonelective. so it appears you can pick and choose those HCEs to receive a safe harbor, but not NHCEs, of course.

as a follow up, the question was asked where to find the user fields open up plan specs, then select 'activity' user fields are easy to use and great for everything, but try to limit the usage to the first 12 items. They have distinct field names and can be easily pulled. same thing exists for census. hope the reports help and save a little time!

don't know as we are still at 7.3 I had one person ask about my plan spec report yesterday. they said it worked fine at 7 but quit at 8.0. (Yes, people actually use some of the reports I have made available!) Obviously at this point in the game I have no clue if there is a problem with custom reports or if something needs to be reset.

by the way, if you are not aware of it, you should be able to use FREEERISA.com to look up an old 5500 and find the effective date of the 401k plan

the C-4 ASPA Book '2001 Current Topics for the Retirement Plan Consultant' has a few articles (maybe 4-5 pages each) Ha! Go ahead and study for the test at the same time. Its a decent reference. (and I managed to sneak in a '7' on the test on my first attempt myself) 'Analyzing Incidental Insurance Limitations', from Journal of Pension Benefits, winter 95 'Should a Qualified Plan Invest in Life Insurance' from Practitioners Publishing Company, 7/23/1996 (ppcinfo.com?) 'Life and Health Insurance in Qualified Plans (Parts 1 and 2) from Journal of Pension Benefits, Autumn 97, Winter 98

I guess the answer might depend on when the DRO was received. you said what happens if the doc's balance drops to below the amount specified in the dro. After the DRO was received, I thought the $ had to be segrated while determining if it was a QDRO. It is no longer the doctor's balance. (I guess it would also have to be segrated in a non-interest bearing fund as well, based on your description) At that point it looks like the burden falls on the administrator for not following the requirements of the law. If the dro was received after the drop in value, then I don't see how you have a QDRO, since you can't follow the terms of the DRO, and I would agree with jane123 it would be back to the courts.

ah, 2b or not 2b, that is the question or at least 1.401(a)(4)-2b you did not indicate if the NHCE had less than or more than 500 hours. I will assume > 500 hours, and so must be treated as includable and not benefiting. Therefore, for the Schedule T you have 2/3 / 2/2 or 67%, fails ratio % need to check avg ben test. since ratio % > 50%, plan passes nondiscrimination classification test avg ben % test should pass using allocation test. people get so used to using accruals for testing, and miss the obvious! Now, the question is, do you have to perform the nondiscrim test because of the top heavy issue? see 1.401(a)(4)-2(B)(4)(vi)(D)(3) if you were to treat the HCE as includable and not benefiting then you have 2/3 / 1/2 = 133% which passes so no further testing required. I also suspect you could have also used 1.401(a)(4)-2(B)(4)(v) - lower allocation for HCEs, instead

here is the report that I forgot to attach!

similar to the other report, but forfeitures do not reduce contribution. I suppose I could have coded the formula to look at plan specs to determine that, but too lazy.

I am in a good mood. enclosed report is a 'heavily' modifed summary of accounts report. A crude attempt at pulling info to go on the schedule I, and the format looks like most of the SCh I Some minor adjustments may be necessary for things like corrective distributions since they are treated the same as other distributions by the system

here is the latest on the issue of ees who receive top heavy minimum or safe harbor nonelective but are not eligible for other profit sharing contributions, yet need to be kicked up to the gateway minimum. This was posted on the 401khelpcenter.com (1/27/03 newsletter) Summary: Sungard/Corbel is providing the information for the benefit of subscribers to the Corbel, PPD and FDP volume submitter cross-tested plan documents. This information concerns options for amending an employer's plan to provide under a top-heavy or 3% nonelective safe harbor 401k cross-tested plan, the "minimum gateway" allocations generally required under Treas. Reg. § 1.401(a)(4)-8(B), (the "cross-tested regulations"). Located on: Sungard/Corbel. http://www.corbel.com/news/technicalupdate....asp?ID=196&T=P I would add, of course, something similar to this document language should be in any document that is being cross tested. Let's be careful out there!

yes maybe so. that is the best I can answer. It is so cold even here in Florida I think my brain is freezing up its thinking process. If the plan is non pension, then I would say the answer is yes. If the plan is a pension plan then I would say the answer is yes only if 45 is the normal retirement age and that NRA is reasonable for that particular industry. I think the pension industry must be around 40 before the mind goes (or the hair), but I don't think the IRS recognizes that.

re: Safe Harbor Notice 98-52, IV H is clear (amazing, you can't even question this one) "...must not be distributable earlier than separation from service, death, disability, an event described in 401(k)(10), or, in the case of a profit sharing plan or stock bonus plan, the attainment of age 59 1/2.....hardship is not a distributable event for contributions other than elective contribution." in the case of the person who is 72, what does the document say? Under the new rules, there is no minimum distribution if the person is active, unless the document retained such language. .................. As for other comments on how much time the $ must be in, This was in the C-4 current topics 6th edition (section on insurance) Rev Ruling 54-231 "....distributing funds accumulated after a fixed number of years, the attainment of a stated age, occurance of some stated event such as illness, disability, retirement, death, or severance from employment. the term 'fixed number of years' is considered to mean at least 2 years. accordingly, a plan that permits...withdrawal of the employer's contribution 18 months after it has been made...is not a profit sharing plan..."

yeh, but my response is an opinion only, perhaps a good faith effort opinion to apply the rules as they appear to be.

I would use 12,000 on the ADP test. ee is an hce and has 1000 excess deferral and the regs say to use excess deferrals for an hce. 1099 would indicate 1000 in excess deferral. the w-2 can't get around it. I don't think the annual addition really comes into play. while there is no example I know of to indicate your situation, the ERISA Outline book does have an example of a plan that refunded both excess deferral and excess contributions. there was 600 in excess deferral. so what happens? The plan could treat 1000 as 'excess contributions'. since this refund was more than enough to cover the excess deferral, no additional refund was required. However, the 1099s would indicate 600 in excess deferral, and 400 in excess contributions. (plus gains of course) so, I would think logically apply this to the annual addition. the excess deferral refunded before 4/15 is not an annual addition. thank heavens. what code would you use on the 1099 if it wasn't? you would be stuck with a combo excess deferral and annual addition. the govt graciously avoided that problem for you by ignoring the excess deferral for that purpose. But I would hold that purpose only, I don't see where the govt also said ignore it on the ADP test. I am not sure if it will make a difference anyway. with the top down rule for a failed test you are going to have to refund $, and this ee is going to eat up the first 1000 anyway

we process the plan (granted it is a nonqualified) for one of the sports. retirement age is later of 49 or when the person quits actively If professional football is anything similar, it wouldn't surprise me if NRA is 30 and 5 years. And that would be a legitimate and realistic retirement age.

ok, you run the ADP test for 2003. Obviously the HCE avg is easy, cuz you look at 2003 results. you compare that to 2002 NHCE avg. There is none, it doesn't exist - there were no NHCEs in 2002. It doesn't matter that the comps of some employees are now low. If those people had comtinued to work in 2003 they would be NHCEs and you would have an NHCE avg in 2003, but that would be used to test the 2004 numbers

It all depends on the document. For instance, the Corbel checklist has the following option: top heavy minimum contribution earned by a. only non-key employees b. all participants in this case just what part of 'only' or 'all' is not clear - and therefore what gives you the right to allocate to a key employee if the document says 'only non keys? so, suppose plan is 401k and is top heavy and a key ee defers 3%. The plan has to, at the minimum, put in 3% for the non keys. Now the key ee says, and I get nothing? Well, then make a 3% ps contribution. that will cover top-heavy and give the key ee 3% as well. if the key ee fails the hours requirement, then he is out of luck. don't like it? amend the document so keys receive top heavy as well.

at the 2002 ASPA conference the IRS voiced an opinion (Q and A #21 and 33) that as long as no other contributions (besides deferrals and safe harbors) were made then the plan was deemed not top heavy. As with any Q and A, such comments do not represent an official position, nor have they been reviewed or approved by the Service or Treasury. Personally I think their comments are probably reliable in regards to this particular Q and A

see Q and A #129 under 'correcting plan defects Q and A.' granted this one goes back a few years, but it is still applicable. Q and A 146 and 150 also discuss the issue

correct, and if plan is cross tested you would have to provide additional (subject to vesting contribution) to cover minimum gateway. The only exception is if in your notice you excluded those people who were otherwise excludable. e.g. plan has immediate eligibility, it is possible to impose a 1 year eligibility on the safe harbor

The schedule T only looks at coverage, and my understanding is that you look at the 'item' with the lowest eligibility requirements. So you should have enough room. the only time you might not have enough room if you disgregate your testing into 'otherwise excludable' and 'met statutory exclusions'. HOWEVER, all that being said I believe in the case of two different matches you will have a BRF issue..e.g. the right to each rate of match. But that is a different issue. Remember, you don't include your ADP results anywhere on the 5500, so not including the BRF results is the same type of deal.

yes, you have to test coverage using the lowest eligibility requirements. In a calendar year plan everyone hired before 9/2 is includable, whether they come into the plan or not. Actually, that is a rather simple way of looking at it. Consider also the following. 2 people both hired 5/1, one in the exempt group, one in the non exempt group. Both quit on 10/1. Both are includable, even though only one entered the plan. Chances are, using 'otherwise excludable' option, you wouldn't have a problem, but if you had 5% owners who were hired in the exempt group, they would enter the plan, but you would have a bunch of NHCE, nonexempt group who didn't enter, clearly discriminatory

this all reminds me of an interesting story. the lady went into the Credit Union to get a loan, but was told she couldn't get one because there was an outstanding loan. since she didn't know about it, she asked to see the paperwork, and yes, there was indeed a spousal consent signed, though it didn't match her signature. not sure exactly how that story ended up, but....