Tom Poje

so in other words, what you want to do is render useless the idea of the 'midpoint' because as long as you can pass the unsafe harbor and facts and circumstances test you are ok. if true, why bother even having a concept of midpoint. I will post the IRS notes again see in particular p 68 and 135 when doing rate group testing it is the midpoint that you must pass not the unsafe harbor. irs nondiscrim notes.pdf

I don't think so. let's suppose you have a plan (not cross tested) that because of last day rule/hours/controlled group, etc passes coverage because the ratio % is greater than the unsafe harbor % and you pass the facts and circumstances test because you have a letter from mom or you slipped some $ under the table to the IRS agent or whatever. since the plan passes coverage, and you do not have a cross tested plan you don't have to perform nondiscrimination testing. but instead now you throw a wrinkle into the matter - you also have a formula that needs nondiscrimination testing. now you have to have each HCE have a ratio % > midpoint AND pass the ratio % of the plan. but if your midpoint is 35% that is not going to be greater than the plans ratio % of 32% so you have a plan that as a whole passes coverage, but fails nondiscrimination testing.

but that is more so out of convenience (thank goodness!). but they could have paid the person every day.

I was thinking about this some more. let's say the person doesn't quit. he worked 3 days before his entry and 4 days after, so really you should pro-rate his comp that first week of deferrals because you can't defer before you enter into the plan.

also, check the document for example one such document provider has the following language "Post Year End Compensation" means amounts earned during a year but not paid during that year solely because of the timing of pay periods and pay dates if: (i) these amounts are paid during the first few weeks of the next year; (ii) the amounts are included on a uniform and consistent basis with respect to all similarly situated Employees; and (iii) no compensation is included in more than one year. def 414s comp: ...The Plan Administrator may include Post Severance Compensation and/or determine Section 414(s) compensation using Post Year End Compensation.

what is often missed (or at least in my opinion) the regs clearly state you can exclude 'participants' who terminate with less than 500 hours and are not benefiting. thus, for example in a controlled group situation, and plans are NOT aggregated for testing Company A Company B when testing Company A you can not exclude those terminees with less than 500 hours from B since you are looking only at Plan A, and the B folks are not 'participants'

I assume you mean it has been a controlled group before 2013. the whole purpose of the transition rules is to give a chance for fixing things before they happen. so, while I sympathize with the situation, I'm not sure one can say 'there was never time to fix it', since the transition rules span 2 plan years. I realize things gets missed, and it would be nice if their was an easier fix. good luck!

according to the IRS newsletter in 2008, when March 15th fell on a Saturday, there was no extension (despite the idea that there is always an extension if the day falls on a Saturday or Sunday. the IRS did note some items were extended to Mar 17 in this newsletter, just not the ADP refund) see page 9. maybe they have changed their mind since then, but they didn't send me a newsletter indicating such. (and remember, I'm half crazy for saving a bunch of this stuff when I find it) irs newsletter 2008.pdf

you didn't say how much you fail the ADP test, and the regs don't say how much to provide someone in order to be considered 'benefiting' and pass coverage if you take the NHCE avg from the ADP test, then the ADP test is going to stay the same if you provide more then the ADP test would improve.

it was indicated this is a 50 person plan, so lets say all the NHCEs make 30,000. a 3% safe harbor would costs 45,000 (900 * 50). That is probably a minimum amount. so the company has a choice between spending 45,000 to fund the plan or having refunds, which I'm guessing are easily under that amount. that is what it usually boils down to - simply the cost involved. plus under the safe harbor rules, someone who is in the plan might work 1 month and quit, yet you still have to provide the 3% (granted the comp for one month is small, but you still have to fund it. a lot of owners grumble about having to give someone who quit additional $)

I don't believe a problem exists. I believe most plan documents default to include paycheck paid in the first few weeks (and that isn't even considered severance) I think the problem exists in the 'thinking process' Let's say document says W-2 comp is used. you quit Dec 28, 2014 but that week's paycheck shows up in the following year - 2015. Now, when you file your 2014 taxes do you include that paycheck? No, that paycheck is counted in 2015 for tax purposes. so I don't see why the plan should be treated any differently. so even though the plan year runs 1/1/2014 - 12/31/2014 the compensation runs from, let's say 12/27/2013 - 12/25/2014. so the person's term date fell within the 'comp year' not the plan year. if we were smart we would have a nice 364 day calendar (52 weeks of 7 days) and one 'free day' every year (sort of like New Year's - it doesn't count) and every leap year 2 free days instead of one. I forget which culture it was - the Mayans or one of those, they had 12 months of 30 days, and 5 'party' days. but maybe that is my imagination.

that was about the time I started in the business. the one actuary called me in his office, and said the IRS agent had asked him to justify using something like 9% interest in the DB plan. Way too high. The actuary pointed to the assets (over the last 3 years or so) and said "based on this, I should be using something closer to 15%" and that ended that conversation.

can't speak for others, we use ft William, for govt forms only

quite possibly one could say it doesn't meet a definitely determinable formula while the match is discretionary I think that refers to setting a total $ amount or % for allocation purposes, but not also to 'eligibility' in the sense of 'only 4 of 15 NHCEs will receive the match'

Q and A #28 ASPPA Conference 2012 Assume a calendar year 401(k) plan. Plan has a 100% match on deferrals up to 6% of compensation and plan will fail the ACP test. The employer's return for 2012 is on extension until 9/15/2013. Because of cash flow issues, the employer will not make the matching contribution for 2012 by 3/15/13. Based on deferrals for 2012, the matching contribution will result in a violation of the ACP test for 2012. 1. Is there a way for the employer to make a corrective distribution by 3/15/2013 to correct the impending ACP failure, even though the matching contribution won’t be made until after 3/15/2013? IRS response: If contributions aren't made by 3/15/13, then a corrective distribution attributable to the impending ACP failure may not be made by such date.

just a quick note, I see FT William has the 2014 up and running

Belgarath - I guess you type as well as I do, especially when referring to reg cites - I guess you refer to 1.401(k)-1(d)(4)(i) (you missed a number or whatever) I simply pulled my reference from some material I had handy your cite is valid, interestingly labeled "Rules applicable to distributions upon plan termination - no alternative defined contribution plan" my cite is labeled 'successor plans', which is probably why I found it vs your choice. I think 'successor plan' is buried under prior year testing because the question came up "Can you use the 3% look back rule for the new plan" somewhere buried in the ERISA outline as I recall is even an example with a 12 month wait, but I tripped across that one and can't find it. in a plan advisor magazine reference I found the following So, how does this rule work? Consider the following example: Employer A terminated Plan A (a 401(k) plan) on October 1, 2007, and completed distribution of Plan A’s assets by March 30, 2008. Employer A then established Profit Sharing Plan A on January 1, 2009. Is this permissible? No. Employer A’s actions violate Section 401(k)(10)(A) because it established a successor plan within 12 months after distribution of all assets from Plan A. http://www.planadviser.com/MagazineArticle.aspx?id=7767

my understanding of the rules is no you can't have an effective date of 1/1 - the regs say if anyone was 'eligible' in the prior year 401k plan. so if the payout date was 10/1 the person was eligible through that date. Having an effective date of 1/1 for the new plan implies to me the person is eligible in the new 401k as of that date (even though not eligible to defer. A plan is a successor plan (i.e., not a new plan) if 50 percent or more of the employees eligible under the 401(k) (or 401(m)) feature were eligible under another 401(k) (or 401(m)) plan maintained by the same employer in the prior year. The employer for such purpose is determined after application of the controlled and affiliated employer rules found in Code Section 414. [Treas. Reg. § 1.401(k)-2©(2)(iii)]

I don't believe so, since the IRS 'approves' software vendors that can be used. The notes from the software we use are as follows: Form 8955-SSA can be submitted electronically using third-party software and the IRS Filing Information Returns Electronically (FIRE) system. Filers submitting Form 8955-SSA electronically through FIRE will need: ◾Software to create files in the proper format for filing electronically to the IRS. ◾A Transmitter Control Code (TCC) obtained by submitting Form 4419 (Application for Filing Information Returns Electronically). Note that if the transmitter already uses FIRE for submitting other forms, the transmitter will need to get an additional TCC used only for Form 8955-SSA. ◾A FIRE account to log into and use the FIRE system. Visit fire.irs.gov to create a FIRE account. If the transmitter already uses FIRE for submitting other forms, an additional FIRE account is not required. ..................... by the way, Let's say I have one large plan with 300 separated participants. Does that count as 1 return? I would say yes, I'm not filing 300 returns, so I don't think the count is based on number of participants. ................. you could always contact the IRS at the following number Contact the IRS Monday through Friday •1-866-455-7438 Toll Free

March 15 is the deadline for a failed ADP test for a calendar year plan. you do not have that April 15 is the deadline for return of excess deferrals. you do not have that either but as indicated above you simply correct under EPCRS. If the person is age 50 or older, then you do have a catch up contribution.

let's see, chances are the only ones who hit the limit are HCEs, so in a given year the only people who get advantage are HCEs, which at the minimum probably fails BRF (if such a method were written into a document, which I find hard to believe)

The instructions indicate: A filer must file the 2014 Form 8955-SSA electronically if the filer is required to file 250 returns of any type during the calendar year that include the first day of the plan year. “Returns” for this purpose include information returns (for example, Form(s) W-2 and Form(s) 1099), income tax returns, employment tax returns (including quarterly Forms 941), and excise tax returns. If a filer is required to file a Form 8955-SSA electronically but does not, the filer is considered not to have filed the form even if a paper return is submitted. there is an exception is for short plan years The requirement to file the 2014 Form 8955-SSA electronically does not apply to certain short plan year filers even if they file more than 250 returns. The requirement does not apply to a 2014 Form 8955-SSA required to be filed before July 31, 2015 (not taking into account extensions). Thus, for example, if the plan has a short 2014 plan year ending October 31, 2014, and is required to file a 2014 Form 8955-SSA by May 31, 2015, the electronic filing requirement does not apply and the Form 8955-SSA may be filed on paper regardless of whether the filer files over 250 returns. ................................... Based on the instructions, if you < 250 of everything combined you file can get out of electronic filing.

since you said the company did better "in the first 6 months" I can't tell from the question what year is being referred to or if the plan year is not a calendar year, etc. I assume you mean amend a current year and not prior year. as pointed out, there are possible issue if the plan is a safe harbor, however at one ASPPA conference the IRS folks indicated you could probably amend for less stringent eligibility if this is part of a restatement, I believe our document provider said "NO you can't amend a safe harbor mid year"

I'm sure you must have a copy of EPCRS , so I can only guess someone must have stolen p.114 of the pdf file, in particular example 24. since I'm not sure what other pages might be missing, here is the whole thing. hopefully a good paper airplane or maybe a nice origami animal was made out of the missing page EPCRS revproc2013-12.pdf

ah, Dr Evil told me I could trick you. the formula was 4(x^2) + 4x = 5 * (x+1) * x without dividing (which of course is the fun part because people miss what is going on): 4(x^2) + 4x = 5(x^2) + 5x moving everything to the right side you get 0 = x^2 + x the only answers that work are x = 0 or -1