Tom Poje

I don't think so since regs clearly indicate you are permitted to modify a vesting schedule however, there are other issues 1.someone hired early in 2015, assuming 1000 hours each year would have 3 years at this point and therefore get his choice of old schedule or new schedule. 2. at the minimum, $ accrued under the old schedule must remain 100% vested. there is some argument whether the vesting itself is protected - if you have ERISA Outline Book see chapter 4, section III Part F

I used random luck, trip across method to find such things. but that luck discovered it in Chapter 4 Section VI Part A.2.b - provides some info, not a lot. I don't think it mentions tracking as after tax, but that only makes sense to track $ that way in most cases (I may be a Grinch but I'm not that cheap). since you mentioned there was 20% withholding that implies no IRA rollover anyway.

that would be my understanding, anything the participant pays back (if not from an IRA rollover), including the 20% withholding would be 'tracked' as after tax. ERISA Outline book points out with the change to the regs years ago, the pay back should include deferrals as well

I think example 5 of the regs (p35 - 36) implies you can. even has a sentence, though it doesn't come into the example used. so if he hit the 415 limit the deferrals made become catch up the calendar year they were made, if I understand things correctly. Plan R does not limit elective deferrals except as necessary to comply with section 401(a)(30) and section 415. while I never used it, I do have an old worksheet someone created back in 2005 that might help. good luck. catch up contribution regs.doc catch up for non calendar year plans.doc

Planned Outage: December 6, 2017 - January 8, 2018 FIRE Prod: This service will be unavailable from approximately 6 p.m. Eastern time on Wednesday, December 6, 2017, until approximately 8 a.m. Eastern time on Monday, January 8, 2018, due to planned maintenance. We apologize for any inconvenience. ..................... I guess you can click the box special extension and fill in the reason as DUH! It's late cuz I couldn't file because you shut the thing down for a month. I wasn't ready anyway, but now I have a good excuse and you can't do anything about it.

don't mind if I do.

let's change the conditions a little. I have a controlled group. one plan has deferrals only, and only the husband is in it. when you run the avg ben pct test, you would count all contributions from all plans, wouldn't you? so the fact you only have 1 plan and he isn't eligible for other contributions shouldn't make a difference. Now, if he never worked 1000 hours you could test of course test him as otherwise excludable. ..... the Grinch loves it. defer the max on nominal salary. that will do wonders for the e-bar for the avg ben pct test. and young.

most likely matching contributions can be used for top heavy purposes, but I suppose you could have a document that says otherwise.. ft William has the following language (in one spot it says deferrals and match won't be used except as provided by (b) which says (b) Matching Contributions. Employer Matching Contributions may be taken into account for purposes of satisfying the minimum contribution requirements of Code section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer Matching Contributions that are used to satisfy the minimum contribution requirements shall be treated as Matching Contributions for purposes of the ACP test and other requirements of Code section 401(m). however, matching contributions only count toward the average benefit percentage test. they won't help toward the rate group test. and only nonelectives count toward the gateway, so matching contributions won't help satisfy the gateway minimum either. so if you have new comparability and the HCE gets 15% you have to give 5% ps to the NHCEs anyway, even if they receive a match. hmmmm. the Grinch is too cheap to want to do that....

I guess the net effect, you can intentionally beat the system by taking a loan and then defaulting. so much for no in service withdrawals of safe harbor contributions, etc.

personally I think it smells. especially if the HCEs can put away the max. in effect, just looking at only the 6 people coming in, you have a 1 month plan year, which of course is forbidden for safe harbor. the exact reason safe harbors are supposed to be at least 3 months long to prevent HCEs from putting away a lot in a short period of time. this situation appears to be different than if the plan always had monthly entry dates. especially given the fact 25% of the new people are HCEs but then, remember I am a Grinch.

I would add the following possible exception, comment from the 2010 ASPPA Q and A (assuming the IRS officials are correct in their interpretation) Does the rule of parity for vesting permit the disregarding of years of service for a rehired participant who was nonvested at termination in employer contributions but had salary deferrals? What about someone who made no deferrals but could have? If there was a vested amount, prior service cannot be disregarded, even if the vested account is attributable to deferrals. IRC 411(a)(6)(C) and (D). However, if there is a vested percentage, but no vested amount (i.e., no deferrals made in this example), the rule of parity does permit prior service to be disregarded.

Code Section 410(a)(5) Breaks in service (A) except as provide in (B), (C) or (D) all years of service shall be taken into account (B) is the 2 year 100 vested rule so doesn't apply (C) is the one year hold out rule. This is nasty. you disregard all years until ee completes a year. but then once that is attained, you restore all years so retroactively he was eligible! (D) Nonvested participants - so the rule of parity only applies to nonvested participants ERSIA Outline book sums it up as [Section C, part V of chapter 2] 2.d.Partially-vested participant. Note that once a participant becomes even partially vested (e.g., 20% vested under the plan's vesting schedule), there is no break in service rule that will permanently disregard his prior service for eligibility purposes. If a partially-vested participant incurs a break in service, the only rule that may apply is the one-year holdout rule discussed in 1. above, under which it is possible to get the prior service re-credited. In fact, the one-year holdout rule would apply even to a 100% vested participant who incurs a break in service

mike - I don't think anyone here suggested that the argument is can you include someone's comp who could defer but doesn't. (or for that matter, whether you should ignore any 401k eligibility since deferrals don't count toward deduction. under the coverage rules anyone who could defer even if they don't are considered benefitting. I think the IRS biggest concern is providing a big cash balance to HCEs, then nothing (or just deferrals) in a DC plan, but being able to use their compensation toward the 6% maximum. it seems like cheating.

there are 2 schools of thought. anyone 'benefitting' under the coverage rules can be included whether they defer or not. the other thought is that, since 2002 since deferrals are no longer counted toward the 25% deductibility issue it doesn't make sense to consider deferrals at all. so if someone doesn't receive a ps contribution (or match) don't include their comp. in other words, since for purposes of the 25% deduction limit you only consider employer contributions, then only folks who receive employer contributions should be considered.

lady macduff - can't help you with Relius on loans since we don't really use that feature, but here is an excel sheet we use. seems to work pretty well (famous last words). just choose the tab you want for whatever period. 'prettying up a report' is up to you loan amortization schedule copy.xls

Austin - just tell 'em the Grinch and Dr. Evil combined on this effort to confuse everyone. I looked to see how the change effected me and my projected soc sec for 2017 dropped almost $1 / month on my worksheet. Dr. Evil ran the numbers and said if there are 1 million people out there like me that would be $1 million dollars

probably. let's suppose the HCE wasn't catch up eligible. would it have been too aggressive to say "retroactively to 1/1 HCE are no longer eligible for the plan" and therefore we need to remove the deferrals? I think the IRS would say at the time they made the deferrals they were eligible, so you can't do that. The same would hold true for someone who switched from non union to union. you can't go back and take away simply because they are now ineligible. somewhat along the same lines, if the only deferrals were by HCEs and they were refunded does that get you out of top-heavy? the research I put into the Coverage and Nondiscrimination Answer Book was: The top-heavy regulations do not directly reference this issue. However, excess contributions, are still considered for purposes of Sections 404 (deduction limits) and 415 (individual contribution limit), even though distributed from the plan. This regulation is silent in regards to Section 416 (top-heavy). [Treas. Reg. § 1.401(k)-2(b)(2)(vii)(B)]. Excess contributions that are recharacterized as employee contributions are specifically mentioned as being continued to be treated as employer contributions for purposes of Sections 404, 409 (employee stock ownership plan (ESOPs)), 411 (vesting), 412 (minimum funding), 415, 416 (top heavy), and 417 (qualified joint and survivor annuity (QJSA)). Therefore a top-heavy minimum allocation to non-key employees would be required. [Treas. Reg. § 1.401(k)-2(b)(3)(iii)(C)] At the 2004 Annual ASPPA Conference, the IRS representatives indicated that a top-heavy minimum would be required. (IRS Q and A #29) As a reminder, note that any such comments in regards to the Q and As might not reflect an actual position of the IRS.

the folks in Washington reduced the 2016 avg wage from 48664.73 to 48642.15. just $22 dollars but that was enough to change the TWB. previously the divide by 300 was 428.60 which rounded up to 429. the calculation is as follows wage Divide by Multiply by Divide Multiply Year Index 1992 index 60600 by 300 Round Year by 300 2016 48642.15 2.120831 128522.3593 428.4078 428 2018 128400

they have revised the 2016 avg wage down from 48664.73 to 48642.15 This also changes the TWB from 128,700 to 128,400 so for the worksheet to be correct the numbers need to be adjusted

I guess that depends on how often plans are getting audited by the IRS many moons ago I had someone call me about a plan being audited. The old Pentabs system, but Relius is the same. there is a check box 'plan passes avg ben pct test' Might be useful if running component plans or something like that, but apparently someone had checked this box and the plan didn't pass avg ben pct test, so of course the IRS was not pleased with the testing results. I asked to see the data, turns out the rate group was close to 70%, maybe grouping accrual rates would have worked, but that would have been 'significantly' higher with the HCEs - I'm sure, especially with an agent looking at the data.. fortunately they were close enough that switching from age def last to age definition nearest was enough to make a difference and they didn't need to group rates to pass testing but that doesn't mean I told the guy he could get the plan to pass." Let him suffer" is my motto. after all, I am still a Grinch. just kidding, though I never did hear back from the guy.

no real guidance so I suppose it is facts and circumstances so if the HCE is at the HI range and the NHCE is at the low range that probably doesn't pass a smell test. if you had an HCE close to the midpoint and an NHCE at the HI point and an NHC at the low point that would probably be ok

the example in the IRS memorandum dated July 2017 is somewhat similar, but you are correct, it would serve no purpose to 'pay off the loan' and then take another loan as you are back at the same point. I was not aware that the outstanding loan could have been calculated either way as indicated by the IRS For example, a participant borrowed $30,000 in February which was fully repaid in April, and $20,000 in May which was fully repaid in July, before applying for a third loan in December. The plan may determine that no further loan would be available, since $30,000 + $20,000 = $50,000. Alternatively, the plan may identify "the highest outstanding balance" as $30,000, and permit the third loan in the amount of $20,000. loans max.pdf

thanks for the kind words. indexed limits and soc sec.xlsx yes, in fact I thought it did, though I think it was only doing the projection to age 65 at that age. certainly unintentional on my part. I copied the cells down further and increased the range. this version should do the trick

the LRM issued 10/2011 (language required modifications) had the following This information package contains samples of plan provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code, taking into account changes in the plan qualification requirements, regulations, revenue rulings, and other guidance in the 2010 Cumulative List of Changes in Plan Qualification Requirements (Notice 2010-90, 2010-52 I.R.B. 909). Such language may or may not be acceptable in different plans depending on the context in which used. bears to the total compensation of all employees in the group. In the event that an eligible employee is included in more than one participant allocation group, the participant’s share of the employer contribution allocated to each such group will be based on the participant’s compensation for the part of the year the participant was in the group.

Forsooth, she putteth in such eligibility and then sayeth