Tom Poje

Prudential put out the following back in 2000 which sums up loan rules fairly well. whether a plan is 'safe harbor' or not shouldn't matter. I've never heard of the loan regulations being described as 'safe harbor', it is simply rules you follow. there are 'safe harbor' guidelines for hardship distributions, so maybe that is a term you heard. loan rules.pdf

this is the report I have been using SSA report (saved as excel file) then copied and pasted into the FT William 8955 Sample which imports quite easily. of course, no guarantees use at own risk, but I have been running this for years. this reports people an A the year following termination not the year of termination. if someone went from active to ineligible (e.g. person was active but now excluded class) they will show as an A, it will indicate "Verify Data", you might have to delete them from the report. If terminee is 0% vested it should show person as a D and indicate 0% vested. Since I am not sure if the person was ever reported as an A (if it was a takeover) they will show up on the report as a D. of course such people should forfeit. 8955Sample.csv notes on SSA report.doc SSA .rpt

that you did an excellent job singing... wait for it...groan good yesterdy.mid 401 [Karao] - k

one of mine, so you have to blame me for suffering through it. I think I only heard Derrin once, his are probably a step above mine I'm sure.

Austin - despite the humor I am serious, I'd start out with something to grab their attention and yet still drive home the point.

Aug 11, 2010 of course if that is not enough, there is always the Lockhorns!

I know Elvis had a few motivational songs, and Louis Armstrong and others and surely you are familiar with the Beatles sang Yesterday Yesterday, sixty-five it seemed so far away Now it’s come today, it’s here to stay I wish I had a 4-0-1 k Suddenly, I’ve not half the cash I used to see The bill collectors shadow me Retirement came suddenly My sa-vings are so low, I don’t know just where I’ll stay I did something wrong, should have saved and put away 4-0-1(k)s, oh it’s such an easy way to save now I need a place to hide away and it’s too late for a 4-0-1 k My sa-vings are so low, I don’t know just where I’ll stay I did something wrong, should have saved and put away 4-0-1(k)s, oh it’s such an easy way to save now I need a place to hide away and it’s too late for a 4-0-1 k .....................................................

And welcome to the business world, and having the smarts to ask, and even finding the web site. If there were only more people out there that had the sense to realize saving now will make a difference, especially with a generous match like your company has! so if you can manage it, defer at least 6% and get the maximum match you can.

I'd STEAK my life I've HERD some of this before, but it beHOOVES me to stoop to such standards. Besides, I'm too much of a COWHERD, and I'm sure it PASTURE time to even care. thanks for the morning chuckle.

on the other hand I know I am crazy, so you have to be careful about any comments I make. ... the best bit of insanity -( or at least proof of it according to the rest of my coworkers) is a custom Relius report I wrote that includes a random message from a cow

well, I would say if you start excluding some comp, then you have, in effect, while you haven't suspended it, you have reduced the safe harbor during the year. The IRS has the following comments in regards to that: Some changes, such as reduction or suspension of safe harbor contributions, adding or dropping safe harbor status, or changes in plan years, are permitted only as described in existing regulations https://www.irs.gov/retirement-plans/mid-year-changes-to-safe-harbor-plans-or-safe-harbor-notices

my understanding of the rules in this case: you are not aggregating the plans for testing, you are testing the separately. plans pass without the need for the avg ben pct test so someone not in the plan being tested is treated as includable and not benefiting. if you receive nothing in the plan, then there is no gateway I think that is different than having a single plan and splitting it into component plans, in which case the regs are clear you can't do that to avoid the gateway. but then I could always be wrong.

since no Key employees will receive a contribution in 2018, then there will be no top heavy required. so if the plan was only frozen and the assets weren't paid out there would still be no top heavy due. as a side note 1.416-1 T39 Must ratios be computed each year? A. No (it goes on to say, basically, with a caveat that basically says as long as it is clear one way or the other, and you can demonstrate it if the IRS asks)

msmith, yes, I did mean 401(a)(4) I started to write 410(b), and knew I didn't mean coverage, but when I changed it I only partially changed it. my bad. my apologies.

still, in comparison, it does have a kind of similar "ring" to it. hope you have a good ending to it.

probably fails 1.401(a)(4)-5 plan amendment (a)(2) facts and circumstances on my humble opinion, eligibility to let in an 'executive', I assume someone who will be an HCE, but simply isn't because he was just hired. they didn't treat any other employee this way. and then, to follow up by changing eligibility back clearly indicates the intent to favor an HCE because now we are no longer letting 'everyone' in. but then, maybe I take a different view of facts and circumstances. I don't look at just year one and say, "But he is not an HCE yet" I suppose if the executive is not going to be an HCE it isn't a problem, but that seems like an awful lot of trouble to bring someone into the plan you want to favor.

agree with MoJo, can be done but you have to be real careful. one of the issues is coverage testing you have to use the 'minimum' requirements. so everyone falls under the 3 month rule at that point, whether eligible or not. so you have some people who would be includable and not benefitting for coverage purposes. chances are 'otherwise excludable' rule will save the day, but once you use that for coverage, now you have to use that for ADP testing (if this is a 401k plan) again, it might not make a difference, but it might.

reading something like Lord of the Rings is probably more interesting, but you must have read the regs. sounds like your plan is somewhat the same as Sam trying to get passed the Silent Watchers - he could not PASS either without some 'light' on the subject 1.401(k)-2(a)(6)((ii) which says if you use a QNEC in either ACP or ADP then you have to pass 410(a) with and without the Qnec

at the 2010 ASPPA Conference (Q and A 3) emphasis mine. DC plan is top heavy and has a plan year ending 12/31. The plan terminates on September 15, 2010. Normally, TH minimums are provided only if the employee is employed on the last day of the plan year. (Assume that there are salary deferrals during the year so that, if a top heavy minimum is required, it needs to be made.) Questions: (1) For the 2010 plan year, is 9/15/2010 treated as if it were the last day of the plan year, so that only non-key employees who are employed on that date are entitled to a TH minimum? (2) If (1) is Yes, is the 3% minimum calculated for compensation from 1/1/2010-9/15/2010? (1) Of course, if there is no employer contribution, there would not be an obligation to provide top heavy minimum contribution. But, if there were contributions to keys during the year, including elective deferrals, there is a top heavy minimum based on compensation and employment through 9/15/10. Plan must liquidate within a reasonable time under Rev. Rul. 89-87 or else 9/15 date may not be reasonable. There is effectively a short plan year for top heavy purposes. (2) yes ............ As I recall from the discussion, if the assets weren't paid out at all, the top heavy comp could possibly shift to the end of the year. using that logic, let's say instead of 'terminating' the plan, you simply freeze deferrals 7/1, so no more match as well. instead, terminate the plan 9/1, now the seasonal help is 'gone' so not eligible for top heavy. but of course now top heavy is based on 2 more months of comp for everyone else.

I am a bit confused on the facts. If you defaulted on the loan 15 years ago and received a 1099R then you should be finished. e.g. you took a 10,000 loan. lets say nothing was ever paid, so you received a 1099 indicating a 10000 distribution. so the issue is finished. technically the 'unpaid' loan continues to accrue interest, but that would only count against you if you tried to take out a new loan in that 401k plan. (it would reduce the maximum loan permitted)

for example the FT William doc has the following obviously other docs may be different. this is from the contribution section. but elsewhere in the doc you may have excluded, for example terminees from the QNEC, so it might not be the lowest paid employee (A) First to the Qualified Non-Elective Contribution Account of the Participant who is a Nonhighly Compensated Employee with the lowest Compensation and is eligible to share in such allocations in an amount determined by the Company not to exceed 5% of such Participant's Compensation (the "Base QNEC Rate"). If any Qualified Non-Elective Contributions remain after the foregoing, the Company may then allocate Qualified Non-Elective Contributions to other Participants who are Nonhighly Compensated Employees eligible to share in such allocations with the next lowest Compensation in the amount of the Base QNEC Rate of Compensation until such contributions are fully allocated to one half of eligible Nonhighly Compensated Employees within the meaning of Treas. Reg. section 1.401(k)-2(a)(6)(iv)(B) (the "Base NHCEs"). Notwithstanding the foregoing, the Base QNEC Rate may exceed 5%; provided, that the Company contribution is sufficient to provide the Base QNEC Rate to all Base NHCEs. ... (E) Notwithstanding the foregoing, the Company may instead allocate the Qualified Non-Elective Contributions as a flat dollar amount pursuant to this Subsection (2). The Company may first allocate a flat dollar amount determined by the Company (the "Base QNEC Dollar Amount") to the Qualified Non-Elective Contribution Account of the Participant who is a Nonhighly Compensated Employee with the lowest Compensation and is eligible to share in such allocations...

EPCRS VCP submission Appendix C Part 2 Schedule 8 says Defined Contribution plan only - The plan will distribute the required minimum distributions (with Earnings from the date of the failure to the date of distribution) to affected participants. For each affected participant, the amount to be distributed for each year in which the failure occurred will be determined by dividing the adjusted account balance on the applicable valuation date by the applicable distribution period. For this purpose, adjusted account balance means the actual account balance, determined in accordance with § 1.401(a)(9)-5 Q&A-3 of the Income Tax Regulations, reduced by the amount of the total missed minimum distributions for prior years. my old notes had (so maybe its a 2 step process, 1 is the self correction, the 2nd begging for 50% waiver You can’t ask for the penalty to be waived until you have actually taken the distribution. This is proof you are trying to fix the situation as soon as possible. Fill out form 5329. Write letter begging for mercy, explaining the reason you didn’t receive the minimum distribution was the incompetence of the investment house or something similar. Years ago, it was required to send in the 50% penalty and hope the IRS would have leniency and waive the penalty and return the money. Now simply send in the letter with the Form 5329, and if they don’t accept your lame excuse they will bill you. Make sure there is enough evidence in the folder that your co-worker gets blamed

I think the logic is something like this: ok, you can have a 2 year wait, avoid giving someone a contribution the first year, but the penalty is 100% vesting. now after 2 years I am going to get around the penalty and change the vesting to 2/20. thus I have 'cleverly' gotten around things and avoided giving you a contribution the first year. This is different than, say having a 1/20 schedule which is more generous than it need be and later amending it to a 2/20 schedule. (Of course even in those cases, you have to apply old schedule to old money, and the 3 year svc get to stay on old schedule if desired) or at least that is how I would see it.

Congrats Belgareth! one of the things I truly like about the posts, when they sometimes 'switch' to other insights. MoJo: for me, Cat's in The Cradle is a classic, partly because it is so true. we can go along and get so busy in our own life we miss things if we are not careful. remembering the words of his song helps me pause and take time out along the way. one of the very first parodies I attempted.

one of the pension parody songs I did was Cat's in the Cradle (1974). not quite 50 years, but getting there. One always hopes when choosing a song that at least some of the people have heard the original. one lady in the crowd informed me later that she got a big kick out of the parody because it turned out her husband played back up drummer for Harry Chapin. The plan arrived just the other day The company added a 401(k) They put in a match, and what can I say I deferred in the usual way The cash was growin’ ‘fore I knew it, as I put away I’d say, “I’ll have a lot some day, yeah You know I’ll have a lot some day.” And the cat’s in the cradle and the silver spoon, Little boy blue and the man in the moon. “When will I retire?, well I don’t know when, But I’ll have a good time then You know I’ll have a good time then. The plan turned 10, just the other day I said “Thanks for it all, I’m doing okay” I invested low, now its high today I’m glad I deferred 10% of pay As I saved away, my wife her smile never dimmed Said she “I admire him, yeah, You know I admire him.” Refrain The plan was tested just the other day It failed ADP in a big time way They put in a QNEC once in a while Good news for me I said with a smile The deferrals were too high for the HCEs See you later, can I thank them please? Refrain I retired just the other day I was sick of work and the rate of pay But I said “The 401(k) was such a good find The money is there and it grew over time” Well the job it was a hassle, but now I’m free I recommend you save like me Recommend you save like me. Refrain ................ all kidding aside, today (6/6) is 73rd anniversary of D-Day. Many thanks to those who gave their lives for freedom's sake.