Tom Poje

yes, though I suppose you check 3d on the schedule T, because 100% of the nonexcludable NHCEs benefitted.3a says the employer employs only HCEs, which really isn't true.

assuming that the NHCE never had 1000 hours and the plan has a 1 year wait for eligibility, then the plan passes since no NHCE are eligible. If the plan has with immediate eligibility, then the person has entered the plan. If there was an hours requirement to receive a profit sharing then chances are you pass coverage because such a plan would be top-heavy, and the part timer would receive a contribution. but then you might fail 401(a)(4) testing. (all this assumes of course you are not excluding part timers by definition, which of course you are not allowed to do)

I would agree thar free erisa is very good. The problem with freeerisa is that I don't think the 1999 forms are listed yet. either that or evry plan I researched didn't file in 1999. but you can always try.

This one may get interesting. In the past it has been suggested (including Corbel) that you could leave vesting as is. Just attended a meeting today in which the individual from Corbel said the answer is unclear. (It should be noted that some documents have been submitted clearly stating that vesting stays as is, and that they received a determination letter, so it wouldn't appear to be a problem in those cases. However, it is one of the Q and A's to be discussed at ASPA at the end of the month, so I guess we will find out then.

actually, if he is age 50 it appears he can also kick in an extra $1000. What a great deal, huh?

I found the article, but I have problems with simply copying an article and sending it. (copyright rules and everything) you might try www.utdlibrary.com/aspenreprint the latest issue lists that, but says it is for article 1998 or later.

Don't ask me how the SSA makes these projections, but here are the estimates for the next 9 years. (last year's high cost estimate was 80,100 and we ended up at 80,400). The actual wage base for 2002 is usually released in October. Projected Taxable Wage Bases Year low cost intermediate high cost 2002 85,200 84,900 84,600 2003 89,100 89,100 87,300 2004 93,600 93,300 90,600 2005 97,200 97,200 96,600 2006 101,100 101,400 100,800 2007 105,000 105,900 105,900 2008 109,200 110,400 112,200 2009 113,400 115,200 117,900 2010 117,600 120,000 123,300 www.ssa.gov/OACT/TR/TR01/V_programatic.html

sorry, I am trying to attach a report, but it is not working. I will try later. this report provides a list of plans that do not have a match = 2/20. with new rules, all plans in 2002 must have at least a 2/20 vesting schedule. to run this report: open report in crystal goto Report/Select Expert and del plan name in this area (not from the report itself) Then goto File/Print Preview You might have to run Refresh Report Data

since a SIMPLE plan must be exclusive, I don't see how you can arrive at a situation of having both a SIMPLE and a DB plan in the same year.

Dawn: Assuming you are calculating E-Bars on the DC side using current allocations, the calculation of the Ben Pct for the DB side would simply take This years annual accrued benefit - last years annual accrued benefit, and divide this by the average compensation. This produces a benefit % and you simply add this to the DC E-Bar. In the case of DB you end up with two ben pcts, because you have a most valuable benefit as well. and you have to pass both of them. (their is no most valuable E Bar on the DC side)

one comparison (current law vs Act provision) list is www.groom.com/WHot_PEBP_econ_growth.htm remember this does not include changes to new comparability.

that is my understanding of the rules. again, I don't think it is that the rules changed in regard to 'eligibility', but rather that the rules simply state that a safe harbor plan is a plan that is not top heavy even if the owner has 99% of the assets. in fact, if the safe harbor method was a match rather than the 3% nonelective, and no NHCE deferred then the HCE would be the only one who received contributions in that year. and again, I stress the word 'solely'. (in regards to making other possible contributions)In all the articles I have read on top heavy and safe harbor, I have yet to see that mentioned, but I don't see any other way to read it.

I think it depends on if there are other contributions - at least begining in 2002. under section 613 Modification of top-heavy rules (d)definition of top-heavy plan .........the term 'top-heavy plan' shall NOT include a plan which consists SOLELY of - (i) a cash or deferred arrangement which eets the requirements of section 401(k)(12), and (ii) matching contributions with respect to which the requirements of section 401(m)(11) are met. I still read that statement to say if you make other contributions, you blow the free ride on top-heavy. In other words, if you only make safe harbor contributions the plan really isn't top heavy! in an earlier post someone indicated that they had approval language on a plan that had immediate deferral eligiblity but 1 year wait for ps (including top heavy). I have never seen that before, the ERISA Outline Book indicates you have to give top heavy to all as well, but who knows what you might get approved.

my take (and I am clueless anyway, so i wouldn't put a lot of weight on it) ...are only available to pay benefits for that employer's employees ... now, when I have a controlled group, I have 1 'employer' with a bunch of employees. and so it still seems to me, for example, company B and C are a controlled group, so one employer, so I file one 5500 (but I would assume 2 schedule Ts) for those two companies. by this logic I am back to 4 5500 rather than 9. ...but what do I know. certainly not my area of expertiece.

I didn't see this one listed as known problems, but was told it was a bug, so be aware. If you reverse a transaction (e.g. contribution) in which the allocation was to a particular division, and that division has a space in it, then the system will reset the transaction to ALL. you have to re enter the division name before reposting. this is supposed to be fixed with the next service pack.

guess I would be curious to see what others say, but filing 4 5500 sounds correct according to my reading of the 5500 preparers manual. "If more than one employer participates in a plan or program of benefits in which the funds atrributable to each employer are available to pay benefits only for the employer's employees, each employer must file a separate form 5500 even if the plan is maintained by a controlled group.: (page 1-18, 2000 plan years)

lets look at your question from another poimt of view. testing must be done on a definition of 414s compensation, not allocation comp. And that definition can be from date of entry (e.g. 7/1) even if you gave someone a top heavy allocation which is based on full year comp. so allocation comp has nothing at all to do with testing comp. of course, if your allocation comp is different it still must pass one of the safe harbor definitions or you perform the compensation test to prove nondiscrimination. the way you worded your question doesn't sound quite right. the company is not electing to increase their plan's compensation limit for testing. the company is following the regs and using the comp limit as required by the law. the company can amend the plan to limit comp for allocation purposes to 170,000, and since that discriminates in favor of the NHCEs you should be ok. at least that would be my understanding of the regs.

1.415-6(B)(7) Time when annual additions credited (ii) ...unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) and 404(a)(6) says contributions deemed made ....not later than the time prescribed by the law for filing the return (including extensions)

one other thing, especially if the plan is integrated, you probably want to run the forfeitures and contributions at the same time. also if you log onto relius website click on the frequently asked questions. there is a lot on forfeitures.

Hi Cindy - forfeitures drive many people crazy... if plan specs are coded 'forefitures occur upon a 5 year break or payout' AND your employees are coded as fully paid out, then running a forfeiture transaction will cause them to forfeit. If specs are coded 'forfeitures reduce contributions' then no one will receive forfeitures. Instead you look at your bottom line number for contributions and subtract off the amount of forfeitures for a 'net contribution' due by the employer. that is in the carefree world where the $ are pooled. If people have individual investment choices and you have to split the allocation, well, then it gets a bit more complicated. hopefully the above info is sufficient to get you by. do not check on the item in census 'ee has forfeited'!

you indicated plan was 401(k). this probably means there is no QJSA rule, and therefore spousal consent is not necessarily required. see IRC 417(a)(4) which refers back to 401(a)(11) now it might be possible the loan policy for the plan requires it, but you didn't indicate that.

the problem is that the contribution resulted in the plan document not being followed. to simply 'leave' the $ as is, even if it is only NHCEs is still a problem. for a discussion of inclusion of ineligible employee you might want to look at #146 and #150 of Correcting Plan Defects Q&A (on benefits link, but located at the Q&A board, not this message board)

see q & A 10 of notice 2000-3 ...Accordingly, a plan that uses one of the 401(k) safe harbor methods is not required to provide safe harbor contributions to participants who have not yet attained age 21 and completed a year of service.... ...these persons do not have to be treated as eligible employees...so long as the employer has elected to treat them separately for coverage purposes pursuant to section 410(B)(4) this means, if you invoke 410(B)(4), you have 2 plans - a safe harbor plan for those age 21/1 year service and those that don't. the conclusion of the answer does say that this group of employees (otherwise excludable) must be tested for ADP (and, if applicable, matching contributions) so it does look like it is possible to provide this group of employees with a match, and since it is doubtful there would be any hces in the group (especially under the new rules) it looks like you can actually accomplish what you want. why you would want to, who knows, but you can discriminate in favor of nhces all you want.

The Butler did it. my brain doesn't always work either. I supect probably less than yours. that is why I said you may have problems in the following year. given a standardized plan it should work. (of course, standardized plans go against everything I would do, but in a small company it should work)

if each rate group passes you do not have to use the average benefits % test. If all you had was a SHNEC, then ratio % would be 100% for coverage. you have a uniform formula for all employees (same % to everyone) and so you wouldn't have a reason to cross test. remember, the only time you need to cross test is if you have a non safe formula. In fact, if you were to actually test a safe harbor formula using the accrual method you could end up failing the test - but you aren't suppose to do that. (I have seen people do it and ask what they are suppose to do at that point!) You are correct, having a 401(k) component has no effect if each rate group passes ratio %. I myself have never run a cross tested plan in which each rate group passes ratio %. It is almost impossible since the purpose of a cross tested plan is to heavily favor the hces.