Tom Poje

just what information in the SAR does the person in question not have access to? They sign the 5500 , and the SAR is pretty much a condensed version of that. I could be wrong (the brain gears are getting old), but as I recall someone once told me that though the form says 'participants' it really means employees, and owners are not considered to be an 'employee' What is my status in the business? • Sole proprietorship - you are the owner, not an employee. • Limited liability company - you are most likely an owner (member), not an employee, unless you elect to be taxed as a corporation (see below). • Partnership - you are an owner, not an employee. • Corporation - you are an employee if you actively work in a position in the corporation. You are also a shareholder and you are also on the board of directors, so you have multiple roles. • S corporation - you are an employee if you actively work in a position in the s corporation, and you are also a shareholder. Read more about self-employment and payroll taxes for S corporation owners.

well that all depends. if it is a db-dc combo I think that table works out best. if it is only dc, then in the process of calculating an e-bar, you divide each person by the APR, so if no one is past retirement (or is an oldie due to 65/5) then it doesn't really matter because at that point it is a constant. if you impute disparity then 1983 IAF works best years ago at some talk I did I ran the following as an example Using UP 1984 Mortality table was adds w/ disparity HCE 3.214 .17 3.391 NHCE 2.732 .65 3.382 NHCE is not in the rate group Using 1983 IAF mortality table was adds w/ disparity HCE 2.657 .17 2.834 NHCE 2.258 .65 2.908 In the rate group with room to spare! of course, you could probably get by grouping accrual rates for UP 1984 but why bother. ............................................................. Dang, this was the talk Otis Redding showed up and sang "Sittin' in a 401(k)" (I can't attach a 'mid' file, but if you download the file and delete the '.xls' extension the sound file should work and you can karaoke if you are so inclined) Sittin’ in a lifestyle fund I’ll be sittin’ when retirement comes Automatic enrollment kicked in The default investment’s a sin I’m sittin in a 4-0-1 K Watchin’ the funds roll away Sittin’ in a 4-0-1 K Wastin’ dimes The fees they seem to gorge-ya Nothin’ changed under P-P-A The returns are really poor Looks like nothin’ gonna come my way I’m just sittin in a 4-0-1 K Watchin’ the funds roll away Sittin’ in a 4-0-1 K Wastin’ dimes Looks like nothin’s gonna change Everything still remains the same I don’t know just what the fund will do The amount always remains the same I’m sittin’ here resting my bones There ain’t enough to take a loan Two thousand lies on the phone Just to make this investment my home I’m just sittin in a 4-0-1 K Watchin’ the funds roll away Sittin’ in a 4-0-1 K Wastin’ dimes SITTING ON THE DOCK OF THE BAY.mid.xls

be very careful of document language. DOH 5/1/13 so ee earns 1 year service from 5/1/13 to 5/1/14 if doc language is such you switch to plan year (as most documents are), ee now earns credit from 1/1/14 - 12/31/14 so has 2 years as of that date and would enter 1/1/15. Mr. Spock told me that is logically how it works This is typical document language: "Eligibility Computation Period" means a 12 consecutive month period beginning with an Employee's Employment Commencement Date and each anniversary thereof. Notwithstanding the foregoing and if the Adoption Agreement provides that the Eligibility Computation Period switches to the Plan Year, his Eligibility Computation Period for such purpose will switch to the Plan Year, beginning with the Plan Year that includes the first anniversary of his Employment Commencement Date. If the Eligibility Computation Period switches to the Plan Year, an Employee who is credited with a Year of Eligibility Service in both the initial Eligibility Computation Period and the first Plan Year which commences prior to the first anniversary of the Employee's initial Eligibility Computation Period will be credited with two Years of Eligibility Service.

I realize you are correcting timely so EPCRS doesn't apply, and these answers are a bit dated, e.g.GAP income no longer applies (though you wouldn't have that anyway) and obviously the name of the correction program has changed but they provide a good walk through for how to calculate gains and different possibilities. I believe they are still applicable. as for the safe harbor match, I think similar logic applied (amount is forfeited) of course any plan documentation applies first. http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=108 http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=109

I would include them in the count. The regs say you can exclude those who have worked less than 6 months, normally work less than 17 1/2 hours a week, normally work less than 6 months, less than age 21, non resident aliens, union folks. There is nothing in the list of exclusions that says "elect out off plan' then, at least my understanding, you rank the folks by comp. these folks might be in the top 20%, but since not in the plan, you 'lose' an HCE (in other words, there is nothing in the regs I see that says "If you have an ee in the group not eligible, you substitute the next highest paid ee) In other words something like : is the employee in the top 20% paid ees? YES (it doesn't ask Is the employee in the top 20% of ees in the plan) Is the employee eligible in the Plan? NO

how large a difference? (yes, supposedly you request ees to return the $ to the plan as a correction) arguably 6.02© under EPCRS - recovery of small overpayments could be invoked (amounts less than $100) so lets say the first time I ran the test I used comp from date of participation. Now I rerun using total comp so I fail more than I did using the bad data, but now due to the fact I am using corrected data it comes closer to my original results - . or I run the test not splitting out otherwise excludables, or one of the other optional methods of testing.

lets say the profit sharing portion was 5% across the board. since you fail the comp test, that means you have to run a nondiscrim test using total comp rather than comp less bonus and overtime. if the HCEs had no bonus overtime then if tested on an allocation basis they would be at 5%, everyone else (assuming all others had bonus/overtime) would be less than 5% so you would fail rate group testing. of course you could test on an accrual basis. In other words, yes, the 'basic' set up is ok, you simply have to test the nonelective portion using total comp and proceed from there. it should not affect the safe harbor status,

then I misunderstood your original explanation. I was thinking you only combined the 3 non safe harbor plans for coverage 1.401(k)-1(b)(iii)(B) last sentence (or maybe that is 'death' sentence in many cases) ...Similarly, an employer may NOT aggregate a plan using the ADP test safe harbor provisions of section 401(k)(12) and another plan that is using the ADP test of section 401(k)(3) the problem is that 1.401(a)(4)-9 2 or more plan that are permissively aggregated ...and treated as a single plan under 1.410(b)-7(d) must also be treated as a single plan under 401(a)(4) I have always viewed this as meaning you are stuck. The ERISA Outline Book 11 part A.3b (somewhat cryptic to me) says if 2 401k plans are permissively aggregated the ADP safe harbor is not available unless the plans treated as a single plan satisfy safe harbor. That sounds like it is saying yes, you can aggregate them but you don't get the safe harbor, but then maybe it is only referring to situations in which the plans have different safe harbor formula. It is too near the 4:15 limit on Friday for me to write more!

if plans 1, 2 and 3 were aggregated to pass coverage then you have to aggregate for the ADP/ACP test since the testing methods have to be the same for coverage as for nondiscrimination.

hopefully the famous last words "the HCEs are in the group that gets less" are true. for example, lets say the executive group gets 50% match, and the warehouse group gets 75%. then for BRF you have 2 groups - 1. how many get at least 50% which would be everyone (unless there is a last day rule or hours or something) so that passes 2. how many get at least 75% which, if there are no HCE would always pass (since no HCEs get the better of two formulas) done plenty of BRF testing, but always with fixed match formulas, but I don't see why a discretionary formula should be any different

I think I will appreciate the side effect even more, the very valuable popular and well read, oft referred to SAR gets extended as well.

Interesting question from the standpoint the 5500s for that year can get a 3 1/2 month extension instead of 2 1/2 http://blogs.haynesboone.com/index.php/2015/08/firm/benefits/recent-legislation-extends-form-5500-filing-deadline-for-tax-years-beginning-in-2016/ Recent Legislation Extends Form 5500 Filing Deadline for Tax Years Beginning in 2016 Posted on August 13, 2015 by Haynes and Boone Benefits Group in Practical Benefits Lawyer The recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the “Act“) extends the filing deadline for certain Form 5500 filers for plan years beginning after December 31, 2015. Specifically, for plan sponsors who have obtained an extension to file the Form 5500, the Act increases the extension from 2½ months to 3½ months from the initial deadline. Accordingly, for 2016, a plan sponsor’s deadline for filing the Form 5500 for a calendar year plan, assuming the plan sponsor obtained an extension, would be November 15, 2017 (rather than October 15, 2017). At this point, it is unclear whether a similar extension will apply to direct filing entities, such as master trusts, and to the deadline for filing the Form 8955-SSA. However, the extension has the effect of extending the deadline by which Summary Annual Reports (“SARs“) must be provided, since SARs must be provided within two months of the extended deadline for filing the Form 5500.

who dreams up these silly things? http://blogs.haynesboone.com/index.php/2015/08/firm/benefits/recent-legislation-extends-form-5500-filing-deadline-for-tax-years-beginning-in-2016/ Recent Legislation Extends Form 5500 Filing Deadline for Tax Years Beginning in 2016 Posted on August 13, 2015 by Haynes and Boone Benefits Group in Practical Benefits Lawyer The recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the Act) extends the filing deadline for certain Form 5500 filers for plan years beginning after December 31, 2015. Specifically, for plan sponsors who have obtained an extension to file the Form 5500, the Act increases the extension from 2½ months to 3½ months from the initial deadline. Accordingly, for 2016, a plan sponsors deadline for filing the Form 5500 for a calendar year plan, assuming the plan sponsor obtained an extension, would be November 15, 2017 (rather than October 15, 2017). At this point, it is unclear whether a similar extension will apply to direct filing entities, such as master trusts, and to the deadline for filing the Form 8955-SSA. However, the extension has the effect of extending the deadline by which Summary Annual Reports (SARs) must be provided, since SARs must be provided within two months of the extended deadline for filing the Form 5500.

The August CPI-U figure was released today at 238.316. coupled with the July rate of 238.654 (awaiting the Sept value which is released Oct 15, it appears there will be no change in any limits next year. if the Sept value was 239.7 the DB limit would increase to 215,000, but I'm pretty confident that is not about to happen. And it requires a lot bigger jump for the other limits to reach the next level. so, next year, same as this year.

I've never seen the issue raised, I certainly don't think the intent of the 'top-heavy' free rule is meant to apply to plans in which someone is eligible for part of the plan but not be able to defer (e.g. not sure how this is different than losing the top-heavy free rule if otherwise excludable folks can't get the safe harbor. A comment in the ERISA Outline Book in regards to that says "It is the definition of a plan for IRC section 414(l) purposes, not the definition of a 'plan' for coverage...which applies to the top heavy rules. (chapter 11 Section XIV Part H 2.d.1)d)) Note the comment indicates it isn't the coverage rules that apply, so whether the plan passes coverage is a moot point. I figured in the case of a safe harbor match, the govt figured someone could always defer at least 3%, therefore get the match which would cover the normal top heavy anyway, but if otherwise excludables couldn't even do that then the top heavy rules apply.

here is the revised VCP schedule for loan failure under the EPCRS program see page 15 of the PDF file. epcrs revised.pdf

Interestingly enough (or perhaps I should say coincidently), a similar type question popped up at the IRS Q and A for ABA which was just posted under the Benefits Link Newsletter. 2. § 72(p) – Plan Loans A participant who took out a loan from a Section 401(k) plan fails to make timely payment of the loan (after the cure period). As a result, a deemed distribution occurs in April due to a loan default and later in the same calendar year in November a loan offset occurs because the defaulted participant later reached age 59½ in November which is a distribution event under the plan. At the time the participant defaulted on the loan, no exception to the Code Section 72(t) early distribution penalty was available to him. Does the plan administrator who issues Form 1099-R still indicate that the distribution was a deemed distribution (Code L in box 7 of Form 1099-R) and an early distribution (Code 1) even if there is a loan offset and the participant is over 59½ by the time the plan administrator issues the Form 1099-R? Proposed Response: Yes. Once the participant defaults on the loan, the loan is considered a deemed distribution regardless of whether a loan offset occurs later in the same calendar year. IRS Response: The Service representative agrees with the proposed response. The Service representative stated that it does not matter that the Form 1099-R has not yet been issued at the time the individual turns 59½ as the general rules would apply.

the loan failure should have been reported, under VCP of EPCRS 6.07(1) ...As part of VCP the deemed distribution may be reported on Form 1099-R with respect to the affected participant for the year of correction (instead of the year of failure) I think the fee is only $300 under the new rules. so issue the 1099 now and be done with it. now, since the person has paid back the loan there is a basis. this is really not much different than if the 1099 had been issued when it should have been, and then later the person paid it back. I don't see how that is a 'reward'. to do nothing is rewarding the individual by permitting a loan payback time more than what is permitted.

cpc0506 - since you did not indicate any hours requirement, simply 6 months, you are under elapsed time. see page 6 of the IRS notes, in particular line c for all practical purposes the person in question never 'terminated' since he was gone less than 12 moths. min partic standards publication 6388.pdf

nothing in EPCRS like that. In fact, in fact, as 2 cents point out, the regs are clear you look at the prior year to determine if someone is an HCE. there is no such thing as 'annualizing' comp to determine HCE status.

My understanding is, a plan could be amended to change eligibility, and persons falling into that category would cease participation in the plan. in your particular case, if certain HCEs are excluded then I would conclude they would not receive a top heavy simply because they are no longer 'eligible' to participate - e.g not due to hours require a benefit of any type, but rather they have cease to be a participant. ERISA Outline seems to agree - see 2.72 2012 edition.

maybe yes, maybe no, but you probably want something more specific than that so.... what was beat into me years ago.... how does the document define 'limitation year' Under definitions, one document has the following: "Limitation Year" means the year specified in the Adoption Agreement for purposes of determining Annual Additions limits pursuant to Article 5. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. The adoption agreement for said document is as follows: 5. Limitation Year means: a. [ ] Plan Year b. [ ] calendar year c. [ ] tax year of the Plan Sponsor d. [ ] other: NOTE: If A.5d is selected, the limitation year must be a consecutive 12-month period. This includes a fiscal year with an annual period varying from 52 to 53 weeks, so long as the fiscal year satisfies the requirements of Code section 441(f). ............................ normally a limitation year is 12 months, so even in the case of a new plan, the limitation year is still 12 months, so no prorate. now, if , in the checklist above, 'plan year' is selected, then since the plan year is short, you pro rate things. ............. 1.415(j)-1 Limitation year- unless the terms of the plan provide otherwise, the limitation year..is the calendar year [which of course is 12 months!] (d) Change of limitation year--(1) In general. Once established, the limitation year may be changed only by amending the plan. Any change in the limitation year must be a change to a 12-month period commencing with any day within the current limitation year. For purposes of this section, the limitations of section 415 are to be applied in the normal manner to the new limitation year. (2) Application to short limitation period. Where there is a change of limitation year, the limitations of section 415 are to be separately applied to a limitation period which begins with the first day of the current limitation year and which ends on the day before the first day of the first limitation year for which the change is effective. In the case of a defined contribution plan, the dollar limitation with respect to this limitation period is determined by multiplying the applicable dollar limitation for the calendar year in which the limitation period ends by a fraction, the numerator of which is the number of months (including any fractional parts of a month) in the limitation period, and the denominator of which is 12. In the case of a defined benefit plan, no adjustment is made to the section 415(b) limitations to reflect a short limitation period. (3) Deemed change of limitation year. If a defined contribution plan is terminated effective as of a date other than the last day of the plan’s limitation year, the plan is treated for purposes of this section as if the plan was amended to change its limitation year. Thus, the rules of this paragraph (d) apply to the terminating plan’s final limitation year.

1.401(a)(4)-11(g)(3)(vi)(A) says corrective amendment is not a pattern of amendments being used to correct repeated failures with respect to a benefit, right, or feature I think I've seen some argue "I'm not correcting a BRF I'm correcting other failures" somehow I don't think that is the intent of the reg.

I think the terminology might be a moot point. even the regs under 11(g) use the term 'corrective amendments' rather than 'avoiding failure amendments'

only the draft form for the EZ has been released at this time. the IRS web site for such forms is: http://apps.irs.gov/app/picklist/list/draftTaxForms.html of course, since even that form is a draft, it could always be pulled. so I would guess she would be using 'maybe'. but if they had released the EZ form without the additional questions that would be cause to expect either a delay or cancellation of the '5500-SUP' info. ................ already planning ahead - at the moment (using Relius), every time we restate a document I enter items such as date amendment signed, trustee, etc into fields that print on a custom plan spec report. Come next year I should have all the pertinent info ready to go.