Tom Poje

but in all the discussions on the plusses or minuses of Roth I haven't seen the following, and maybe I don't understand the rules properly, or maybe the effect would be minimal. if you are receiving Soc Sec, you will be taxed if your adjusted gross income is above 25,000 (for a single person, 32,000 joint filing) and I believe Pension income counts toward that 25,000, but I don't believe Roth would as that has already been taxed.

I'm not even sure (unless it is individually designed) if most documents would have such an option available.

The cite is from Labor Regs (not from Treas Reg or Internal Rev Code which most are familiar with) but it is always a 12 month period, so generally you would only have an overlap if there was a short plan year involved, as was sort of mentioned above. this is different than the situation in which eligibility may overlap. § 2530.203-2 Vesting computation period. (a) Designation of vesting computation periods. Except as provided in paragraph (b) of this section, a plan may designate any 12-consecutive-month period as the vesting computation period. The period so designated must apply equally to all participants. This requirement may be satisfied even though the actual 12-consecutive-month periods are not the same for all employees (e.g., if the designated vesting computation period is the 12-consecutive-month period beginning on an employee's employment commencement date and anniversaries of that date). The plan is prohibited, however, from using any period that would result in artificial postponement of vesting credit, such as a period meassured by anniversaries of the date four months following the employment commencement date. (b) Plans with 3-year 100 percent vesting. For rules regarding when a participant has a nonforfeitable right to his accrued benefit, see section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the Code and regulations issued thereunder. © Amendments to change the vesting computation period. (1) A plan may be amended to change the vesting computation period to a different 12-consecutive-month period provided that as a result of such change no employee's vested percentage of the accrued benefit derived from employer contributions is less on any date after such change than such vested percentage would be in the absence of such change. A plan amendment changing the vesting computation period shall be deemed to comply with the requirements of this subparagraph if the first vesting computation period established under such amendment begins before the last day of the preceding vesting computation period and an employee who is credited with 1,000 hours of service in both the vesting computation period under the plan before the amendment and the first vesting computation period under the plan as amended is credited with 2 years of service for those vesting computation periods. For example, a plan which has been using a calendar year vesting computation period is amended to provide for a July 1-June 30 vesting computation period starting in 1977. Employees who complete more than 1,000 hours of service in both of the 12-month periods extending from January 1, 1977 to December 31, 1977 and from July 1, 1977 to June 30, 1978 are advanced two years on the plan's vesting schedule. The plan is deemed to meet the requirements of this subparagraph. (2) For additional requirements pertaining to changes in the vesting schedule, see section 203©(1) of the Act and section 411(a)(10) of the Code and the regulations issued thereunder. (d) Service preceding a break in service. For purposes of applying section 203(b)(3)(D) of the Act and section 411(a)(6)(D) of the Code, (relating to counting years of service before a break in service for vesting purposes), the computation periods used by the plan in computing years of service before such break must be the vesting computation periods. (For application of the break in service rules, see section 203(b)(3)(D) and section 411(a)(6)(D) of the Code and regulations issued thereunder.)

one possible workaround is to open that file in excel and create a DER to import the QACA Match. I've had to do something like that in other situations when I couldn't get a file to import assuming all other date imports, for the QACA probably only need to import contr, gains, div, fee, distrib so it is not that bad.

1.401(k)-3(c )(2) refers to a safe harbor match equal to a % of "elective contributions" there is no 'not including elective contributions that happen to be ROTH' in the Regs that I know of. Code section 401(k)(12) has similar language. I will go out on a limb and say that the payroll is treating the Roth as if it was an After Tax contribution, but that is a different animal one website http://guidestone.org/retirement/aboutus/articles/RothVsAfter-Tax describes it this way: How is this different than after-tax contributions which have been available in the past? Both Roth elective deferrals and after-tax contributions are similar in tax treatment initially and during the years before retirement. The primary difference involves tax treatment for withdrawals. At retirement, qualified distributions of Roth funds are tax-free whereas withdrawals of after-tax contributions will have taxes due on the earnings. Another difference involves liquidity — after-tax contributions are not subject to the same distribution restrictions as Roth elective deferrals (i.e., Roth elective deferrals are only available at death, disability, separation of service, attainment of age 59 ½ or hardship).

that match is fine under the rules. Again, one only has to defer 2% to get the max match, and it is reasonable to assume all can do at least that much

if you are a pirate with a patch, I would go with 'aye' instead of 'eye' if you are a Detroit Lion fan I'm not sure you can go with 'won' and if you work in pensions, especially with the 5500 deadlines approaching and how well clients get you data, then 'ell' is the obvious answer.

BG5150 even an enhanced match has to be capped at 6% otherwise it fails ACP safe harbor dang you make me look it up code section 401(m)(11)((B)(I) match may not be made in excess of 6% I think my former teacher would give you twenty lashes with a wet noodle for that.

Though it is a QACA, I think the ACP safe harbor is still limited to 6%, so you would lose that if you matched above 6%. A few years ago at one of the ASPPA Conferences someone asked if you could start auto enroll at 6%, and IRS response was "Probably not, as not all NHCE might be able to participate at that rate" for example, let's say you put in something like that and 80% of the NHCEs opted out. that probably fails the smell test.

many moons ago (2000) I had written a Q and A on Benefits Link on how to calculate the limits. I had no idea, so it took a bit of research on my part simply because I had no idea (except for attending the ASPPA Conference and finding out what the new limits would be) someone actually sent me a kind note indicating I failed to mention the calculation is done to 3 places. Though it doesn't really matter that much, I do like having an idea months before the numbers are actually released. shortly thereafter someone sent me a spreadsheet based on my Q and A to see if the person had understood the article correctly and if the calculations were correct. It had never even crossed my mind to do something like that. the excel sheet has a date of January 2001, so I guess it goes back that far. I'm grateful for the original version, though I certainly have modified over the years, so more than willing to share it.

while it is possible to draft a document to stop things once someone has reached the comp limit that would be unusual, at least in my opinion. The preamble to the final 415 regulations states that: As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415©(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year. Issue 2012-1 March 20, 2012 of the IRS Employee Plan News offers the same advice: "We're Glad You Asked #2" We have a 401(k) plan and some employees’ compensation will exceed the annual compensation limit this year. Should we stop their salary deferrals when their compensation reaches the annual compensation limit? How do we calculate the employee’s matching contribution? Unless your plan terms provide otherwise, the salary (elective) deferral limit is applied uniformly to the compensation that the employee receives throughout the year.

not even close, not even worth mentioning the other limits are pretty much guaranteed but you are more than welcome to the spreadsheet so you can plug in your numbers every year indexed limits.xls

the Consumer Price Index was released today July was 240.647 Aug was 240.853 so unless Sept drops below 238.5 the comp limit will be 270,000 415 limit 54,000 db limit 215,000 key ee 175,000 assuming my spreadsheet is still working and I plugged the numbers correctly

in 4/2015 (over a year ago) FT William had the following regarding their 403 b documents We are excited to provide you with draft versions of our 403(b) defined contribution plan documents that we will be submitting to the IRS through its 403(b) plan pre-approved document program. The deadline to submit 403(b) plan documents to the IRS is April 30, 2015. Due to the late release of the List of Required Modifications (LRM) from the IRS just a few weeks ago, the IRS has informed us that we will be able to make changes to the documents during the IRS review process. LRM’s provide the IRS’s sample language for use in pre-approved prototype and volume submitter documents. Knowing that changes can be made during the submission process, we ask that you review and comment on these documents and provide us your feedback to support@ftwilliam.com by May 15, 2015. We will review all comments and suggestions. We may not able to incorporate all suggestions, but they all will be considered. We look forward to your comments and suggestions on these documents; they are your documents and we want them to both suit your needs and be the best documents possible. Please keep in mind that these are draft versions for IRS submission, and updated documents will not be available for use on the ftwilliam.com system until the end of the submission process, possibly another two or three years. While these documents are under review, you will not see these changes on the current ftwilliam.com 403(b) documents.

one of the places he idea to use total compensation comes from: [Q and A #62, 2009 ASPPA Conference.] What happens if a safe harbor plan fails the compensation test? IRS officials have indicated that the correction method would be to make up the difference in contributions using a Section 414(s) definition of compensation plus earnings for all affected years. A reminder that the answers reflected in Q and A’s are the ASPPA representatives’ interpretation of the IRS officials’ responses, and not direct quotes. They are intended to reflect as accurately as possible the statements made by the government representatives. This material does not represent the official position of the Internal Revenue Service, the Treasury Department, or any other government agency; nor has it been reviewed or approved by the Service or Treasury.] ..... the concept may work fine if it is a 3% SHNEC, but I think when a match is involved there are other issues. Do you match only on total comp? that may make a difference if the ee deferred more than 5% based on comp less deferrals. But, let's say the ee deferred 3%, and his bonus was $1000. so if he was allowed to defer on bonus he would have deferred $30 more, so it would seem he should receive a match on that 'missed' deferral. clearly though the plan you have is discriminatory because the HCEs have no bonus.

In addition, there may be other issues. If plan is top heavy, I believe you lose the "get out of top heavy free card" and need to provide top heavy for mid year entrants. In addition, at least based on the response at the 2010 ASPPA Conference if assets aren't paid out within a reasonable time, the plan's term date might not be considered reasonable. so, while the safe harbor ceased, the IRS, I guess, could require top heavy through the end of the year. And so, the plan has stopped and everything is 100% vested anyway. I believe 'reasonable time' is considered a year. 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? (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

unless I am reading something wrong in the original post, you aren't refunding after 12 months. the refund itself was done timely, it just didn't make it to the participant. if the check was cut and was lost in the mail would you argue it wasn't done timely? the only problem I see is that instead of being mailed to the participant it was put in suspense. without further guidance I would correct by getting it to the participant and go from there. it would put the plan in the same position as if the error hadn't taken place, the one difference being the person will be taxed this year rather than last year. if the pan is auditing and the IRS questions it ask them to come up with a better on how to handle an amount slightly above $100.

only because I sat behind BG5150 in class and I copied his answer, but since I used a faster website my answer appeared before his did. Hopefully the teacher doesn't read this.

ignoring the fact of an ACP test, lets suppose it was simply a termination distribution, and it was thought the person wasn't 100% vested, so an amount was put into suspense. Under EPCRS you would want to put the plan in a position as if the error hadn't occurred so you would simply remove the amount from suspense and pay the participant. I don't see why, just because there was an ACP there is anything different in the logic. remember, EPCRS doesn't provide answers to every possibility, but it does give guidelines. when you don't have an example, I would try to, as EPCRS requires, put the plan in a position as if the error didn't occur. so I would refund to the participant and get on with life. ... even if he wasn't 100% vested last year, as long as he is active, you are permitted to refund the full amount as long as a 'vested' balance is tracked. 1.401(m)-2(b)(5) example 7. thus, in a few years the person might be 100% vested anyway....

I'd still hold that the deferrals of a 403b are not included. 4.403(b)-5 (a) is pretty specific in its opening line "Nondiscrimination rules for contributions other than 403(b) elective deferrals (I) section 401(a)(4) (ii) section 401(a)(17) (iii) section 401(m) (iv) section 410(b) and then 1.403(b)-5(a)(2) the requirements of this paragraph (a) do not apply to 403(b) elective deferrals.

there are options when testing (e.g. otherwise excludables, comp less deferrals, etc) I don't believe it matters 'when' you actually run the test, they are still permitted. at least I don't recall anything in the regs that says these optional testing methods are only permitted if you run the test within a year, after that you van only test all at once and use total comp. If the plan fails and it is over a year then EPCRS kicks in and restrictions on how to fix things kicks in (as pointed out, no otherwise excludable)

the old Accudraft document provided the following scenrios Reemployment of an Employee Before a Break In Service and Before Eligibility Requirements Are Satisfied. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer prior to satisfying the eligibility requirements in Section 2.1 and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted in determining the satisfaction of such eligibility requirements, and for all other purposes, as applicable, and (2) the Eligibility Computation Period, Vesting Computation Period, and/or benefit accrual computation period, as applicable, will remain unchanged. Reemployment of an Employee Before a Break In Service and After Eligibility Requirements Are Satisfied. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment prior to the Employee's Entry Date in Section 2.1, the Employee had satisfied the eligibility requirements in Section 2.1 as of the Employee's Termination of Employment, and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee will become a Participant as of the later of (A) the date that the Employee would enter the Plan had he or she not Terminated Employment with the Employer, or (B) the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged. Reemployment of a Participant Before a Break In Service. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment after becoming a Participant and is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the reemployed Employee will reenter the Plan as of the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, as applicable, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged. Reemployment of an Employee After a Break In Service and Before the Entry Date. For any Plan Year in which the eligibility requirements in Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer either prior to or after satisfying the eligibility requirements in Section 2.1 (but before the Employee's Entry Date in Section 2.1) and the Employee is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Years of Service that were completed prior to the Break in Service will be recognized. Reemployment of a Participant After a Break In Service. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee (1) was a Participant in the Plan, (2) Terminates Employment with the Employer, and (3) is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Year(s) of Service that were completed prior to the Break in Service will be recognized. Ignoring Service for Eligibility If Service Requirement for Eligibility Is More Than 1 Year of Service. Notwithstanding anything in the Plan to the contrary, if this Plan (or a component of the Plan) provides at any time that an Employee must complete more than one (1) Year of Service for eligibility purposes, and such Employee will have a 100% Vested Interest in the Participant's Account (or the sub-Account that relates to such component) upon becoming a Participant in the Plan, then with respect to an Employee who incurs a Break in Service before satisfying such eligibility requirement (1) the Employee's Year(s) of Service (and Hours of Service) that were completed prior to the Employee's Break(s) in Service will not be counted for eligibility purposes, and (2) the Employee's Eligibility Computation Period will commence on the Employee's Reemployment Commencement Date and subsequent Eligibility Computation Periods will be based upon the provisions of the definition of Eligibility Computation Period (with the Reemployment Commencement Date substituted for the Employment Commencement Date, if applicable).

my guess would have been they are not counted at all. they are a 'mistake' - if you are self correcting you are putting a plan in a position as if the error hadn't occurred. this is different than if there are excess deferrals in which the regs clearly spell out what is to be done.

curiosity- just what was the top-heavy ratio at the end of last year? let's say the ratio was 61%, and if the company had made a profit sharing contribution of 1% to all employees last year the ratio would have been only 59%, so not top heavy. at the 2002 ASPPA Conference Q and A 49 Receivable Contribution and Top Heavy Determination? Is a discretionary profit sharing contribution for the prior plan year that is deposited after the end of the prior plan year included in the top heavy determination for the current plan year? Let’s say we have a calendar year plan, effective several years ago. We are determining the plan's top heavy percentage for the 2002 plan year. The determination date is therefore 12/31/01. The employer makes a contribution in February, 2002, which is allocated and deducted as of 12/31/01. There is a question as to whether this contribution is included in the top heavy determination for the 2002 plan year. The question relates to Q&A T-24 of the 416 regulations, which says that if a plan is not subject to 412, then the account balances are not “adjusted” to reflect a contribution made after the determination date. A. The key phrase here is “account balance”. The participants’ account balances, as of (say) 12/31/01, include the profit sharing contribution that is allocated and deducted for the 12/31/01 plan year end. So the guidance regarding “adjustments” does not apply to the receivable profit sharing contribution; it is already part of the participants’ account balances. The following is my analysis: The question as to what contributions are considered due on the determination date is determined under §1.416-1, Q&A T-24, which says that it “is generally the amount of any contributions actually made after the valuation date but on or before the determination date”. It then goes on to say that any amounts due under §412 are considered due, even if not made by the determination date. One could take the position that this is a exclusive statement; in other words, if a contribution is NOT due under 412 and is made after the determination date, it is not considered 'due'. However, the answer to the question (T-24), “How is the present value of an accrued benefit determined in a defined contribution plan” is answered, “the sum of (a) the account balance as of the most recent valuation date occurring within a 12-month period ending on the determination date, and (b) an adjustment for contributions...” The term, "the account balance" includes contributions credited to the account of a participant, it does NOT mean only the contributions actually made that have been credited. For example, if a 100% vested participant terminated after the determination date but before the contribution was actually made, the distribution would include that contribution, even though it had not yet been made to the plan. This is because the account balance, as of the last day of the plan year, includes the contribution. So, when the regulation addresses adjusting the account balance for contributions made after the determination date, we must start with the account balance, and then apply the adjustments. Since the account balance includes the receivable profit sharing contribution, the adjustment does not refer to the receivable. The reference to §412 in §1.416-1 is with regard to a waived funding deficiency that is not considered part a the participants' “account balance”, as the term is defined. Q&A T-24 refers to a DC plan with a waived funding deficiency that is being amortized. Such a plan must maintain an “adjusted account balance” (reflecting the amount of the contribution that has not been deposited) which must be maintained until the actual account balance increases to the point where it equals the “adjusted account balance”. It is to this (unadjusted) account balance that the (waived) contribution must be added, since the amortized contribution only becomes a part of the actual account balance as it is paid to the plan. The requirement therefore has the effect of determining top heavy status as though the contribution required under 412 had actually been made. In other words, the “account balance” would not include the waived minimum funding contribution, so an adjustment is required. IRS response: We accept this analysis. a reminder that such response do not necessarily reflect an accrual Treasury position. but if valid, then it is possible a contribution for the prior year might be less than a 3% top heavy this year. since we are still before 9/15 it might be possible....

use Relius with MEPs, no controlled group. the plans are separate, but coded as in one 'group', created a crystal report to pull contributions and generate the required attachment for the 5500. e.g. run reports for all plans in the group in report writer, then generate a report in crystal which will combine the data. somehow figured out how to accomplish that... also run an 'ssa' report for all plans in the group and then combine the data for import into FT William as well. couldn't live without the convenience of FT William 5500 system.