Tom Poje

well pleased with FT William. they told me when I create the 5500, I can create the form 8955-ssa as well, and as soon as the form are available the system will simply convert what is on the 2013 form into the 2014 form. for me the biggest plus is the easy import function. I wrote a custom report to pull the data from Relius and import write into the second page of the form, so I never have to enter names, etc. in addition, once I get enough of the forms it is easy to file electronically, and I think for a very reasonable price. we switched to ft William when the electronic filing was first required years ago and have never had a problem or an issue.

the math - algebra is correct except for one thing: you can never divide by zero. In this example, x=-1 or 0 hence you can't 'cancel' things out by dividing both sides by either (x + 1) or x because you would be dividing by zero. but I do thank you, I was wondering if and when I would ever be able to work an equation like that into the response. but I could have modified the numbers to be anything 1 = 8, 7 = 3 or whatever. now if I was an actuary then of course it would have been 2 + 2 = "what do you want the answer to be"

no need to buy a new calculator it already does equal that 4x^2 + 4x = 5 * (x+1) * x Factor out x on the left side (4x + 4) * x = 5 * (x+1) * x Factor out 4 on the left side 4*(x + 1)* x = 5 * (x + 1) * x But 4 can be written as (2 + 2) So (2 + 2) * (x + 1) * x = 5 * (x+1) * x Divide both sides by (x + 1)*x And you have 2 + 2 = 5

well, 1.401(a)(4)-4(b)(1) says current availability requirement... an employee is treated as benefiting only if the benefit, right, and feature is currently available to the employee. I'd say if they termed that benefit was not available, since they termed > 500 hours they can't be excluded.

if the plan is tested on an allocation basis then the gateway rules do not apply. According to the LRM from a few years ago, the plan document is supposed to specify which gateway is to be used, one is not to be able to use the broadly available method one year and another gateway method in a different year. from the LRM: (Note to reviewer: There are other gateways that may be used in order for a defined contribution plan to cross-test using equivalent benefits under §1.401(a)(4)-8(b). The plan may provide for a different gateway other than the minimum allocation gateway (for instance, the broadly available allocation rate requirement of Regulations § 1.401(a)(4)- 8(b)(1)(iii) or the gradual age or service based allocation rate requirement of § 1.401(a)(4)-8(b)(1)(iv)); however, sample language for other gateways is not provided herein. If a sponsor wishes to use other gateways, it is important to ensure that the benefits provided under the plan remain definitely determinable. In order for plan benefits to remain definitely determinable, the plan document should specify which gateway is used. The plan document could allow adopting employers to elect between different gateways, but in order to provide definitely determinable benefits it is not sufficient for the plan document merely to specify that one of the gateway requirements will be satisfied.)

well, if you go by this IRS publication... see page 6 of the pdf file in regards to elapsed time if you return to work at all after 12 months then everything is counted. with a 90 days svc requirement I'd argue that is elapsed time. min partic standards publication 6388.pdf

the basic concept is you start with sched C and subtract off contrib to others, to determine comp/fica etc to the owner so this was done and plan fails now if you provide a QNEC to pass testing that is a contrib to others but then you have to go back to step 1, which means the owners comp will be reduced but now you have to rerun the test, and with smaller comp it means the plan will fail so now you give another QNEC, but now you are stuck in a loop my thought are that instead of working back through the process, I think you can subtract the contrib the following year, thus getting you out of the loop. since you have 12 months after plan year end, if you make it real late in the year it seems to me that is how things would or could work. of course the loop above stops eventually, each succeeding QNEC will be smaller and smaller but it sounds like Zeno's paradox. given a head start the hare could never catch the tortoise. if the tortoise had a mile head start, by the time the hare got to the mile mark, the tortoise has moved further ahead, so now the hare gets to where the tortoise has moved to. but the tortoise is sitting around waiting he has moved further. so now the hare has to get to the next spot.

If I understand how things work with schedule C, etc you have done an initial calculation based on the contribution to the rank and file, and that left you with the owner's comp. now ADP test fails. I'm guessing you could make a QNEC and leave the owners comp as is in the current year, providing you reduce next year's schedule C by that QNEC amount ( suppose you had missed one ee for top heavy 2 years ago and you were correcting under EPCRS, I don't think you go back and redo things -you would do the same thing as well) of course there could be issues the following year because now you have reduced things....

I think all he is saying is that if you have a plan that offers both deferrals and Roth deferrals, and the only $ in the plan are Roth, it is ok.

I suppose in an absolute worse case scenario you could divide comp by minimum wage and that would give at least some people who never worked 1000 hours.

I don't recall anything other than using the spouse's life expectancy, but that isn't exactly my area of expertise (if I have any !)

in other words, most documents (at least I think) have gateway language similar to top heavy language, basically saying even if not otherwise eligible you get

I believe the answer is 'yes' to the document issue. my power presentation notes from 2010 have the following for death before RBD: 5 year rule: Benefit must be completely distributed within 5 years of the death. IRC § 401(a)(9)(B)(ii), Treas Reg § 1.401 (a)(9)-3, Q&A-2 The ‘5 years’ extends to the end of the calendar year (December 31) e.g. EE dies January 1, 2003. 5 years is January 1, 2008, extended to December 31, 2008. Does not matter who the beneficiary is. If no beneficiary specified, and document does not contain a provision, must use this method Treas Reg. § 1.401 (a)(9)-3, Q&A-4(a)(2) Or see Publication 575 Life Expectancy Rule: Makes a difference if beneficiary is spouse! Non-spouse: must start receiving payments by December 31 of the calendar year following the calendar year the participant died. IRC § 401(a)(9)(B)(iii), Treas Reg § 1.401 (a)(9)-3 Q&A3(a) Spousal exception: 12/31 of year participant would have turned age 70 ½ (or, if later, must start receiving payments by December 31 of the calendar year following the calendar year the participant died). If beneficiary specified, and document does not contain a provision, must use this method Treas Reg § 1.401 (a)(9)-3, Q&A-4(a)(1)

I'm guessing you might have to treat the person as having 4 years. Let's say I had a 6/30 pYE. At 6/30/14 he has 3 years. If I amended to a short plan year, ending 12/31/14 he would get credit for the period 1/1 - 12/31 (even though that results in some hours getting twice.) otherwise you have a period from 6/13 - 12/31 (in your example) that is not counted at all. I have a problem with that. see Labor reg example below. I don't see how this is any different. § 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.

of course, what if the plan had been in existence for a few years, and now all of a sudden they want to expand the coverage to include the owners kids and a couple of executives they just hired. that smells bad. (That sounds like something Dr. Evil would want to do. Austin Powers has to stand up to that)

this is an attempt to produce a count for the 5500 SF for the active count at beginning of year and end of year nothing fancy or pretty - the counters should be pretty obvious 5500 count.rpt

I would agree, if the issue is a non-qualified plan that is something different issue as those are normally not 'funded', usually are for a select group of employees. since this was not mentioned in the original post I assumed the issue was a qualified 401k. (and just to make sure, any comments made above are not taken incorrectly, they were certainly not intended to be rude or offensive, but an attempt at a little humor - I did get a chuckle out of John's response in green) makes an otherwise rough day a little lighter!

I have taken my copy of the regs, and, in crayon (I used green, I hope that is ok, not sure what color is permissible) under 1.401(m)-2(a)(4)(iii)© which says to be included in the ACP test "The contribution is actually paid to the trust no later than the end of 12-month period immediately following the year that contains that date I have added "Unless the employer only chooses to fund the match once someone terminates" hopefully that will suffice and at least I will have something to point to if the IRS asks. I assume the same rule should apply to funding QNECs, QMACs and safe harbor contributions.

the ft Williams basic document has the following definition for 414(s) comp (e.g. it is not defined in the adoption agreement) "Section 414(s) Compensation" means compensation as defined in Code section 414(s) and Treas. Reg. section 1.414(s)-1. since one of the definition that satisfies 414(s) is comp less deferrals that is a legitimate testing option (generally you can use any def of comp that satisfies 414(s) for testing, unless you have something real specific in the doc) BUT: that means all deferrals including cafeteria (people tend to forget that) [though you might pass the comp test using plan deferrals only, which would also be legitimate] that means for all people. you can't use total comp for current year and comp less deferral for prior year.

well, the instructions for form 5500-ez still say: Who Does Not Have To File Form 5500-EZ You do not have to file Form 5500-EZ for the 2014 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2014 plan year does not exceed $250,000, unless 2014 is the final plan year of the plan. this holds true even if you were to file the 5500-sf as a one participant plan (which is simply the IRS way of getting you to file a 5500-ez electronically.) if you have other 'participants', then you can't file the EZ, so it wouldn't matter what the balance is.

I think you are saying you had a non calendar year plan and amended the plan to a short plan year. so doesn't it depend on the tax filing deadline on the original plan. sorry, it is Friday and the old brain gears really start slowing down. there is the deductibility deadline issue and the 415 limit e.g. my mind says something like for a calendar year plan the contribution is due 9/15 for deductibility, but for 415 it could be 1 month after that, but all that is true if the tax year is on extension. so I guess for the 8/31 fiscal year the contribution is due 5/15/15 or something like that, but again I thought that's if it was on extension.... or maybe I'm hopelessly muddled. why should today be any different than any other day.

well, if 1.401(k)-1(f)(4)(ii) is worth anything (ii) Special rules for direct rollovers. A direct rollover from a designated Roth account under a qualified cash or deferred arrangement may only be made to another designated Roth account under an applicable retirement plan described in section 402A(e)(1) or to a Roth IRA described in section 408A, and only to the extent the rollover is permitted under the rules of section 402©. Moreover, a participant's designated Roth account and the participant's other accounts under a plan are treated as accounts held under two separate plans (within the meaning of section 414(l)) for purposes of applying the automatic rollover rules for mandatory distributions under section 401(a)(31)(B)(i)(I) and the special rules in A-9 through A-11 of § 1.401(a)(31)-1. not sure what happens if it is considered a 'transfer' rather than a 'rollover', but I thought transfer was for situations in which a person didn't really terminate, but you needed a reason for having a distribution event, and then at that point for all other purposes it would be considered a direct rollover.

the average CPI-U for the period July-Aug-Sept 2014 was 238.044 the values for Oct-Nov-Dec were 237.433 236.151 and 234.812, all well below that average. based solely on the regs, this would mean that some (If not all) of the limits would actually drop if those numbers hold true throughout the upcoming year. But the only other time this happened a few years ago they said we can never drop from one year to the next (otherwise soc sec would also drop and the folks in Washington have a problem with that!) so the real early look for 2016 would say don't plan on any changes.

chc93 - probably the main reason I even know some of tihs stuff 'off the top of my head' so to speak was because I did prepare an ASPPA talk. - otherwise I probably would have leaned towards the same logic that if each plan worked separately you are ok. a few years ago for that talk I had the following example (this was from an actual situation) retirement age = 62 3% contribution credit int rate was 4.42% and so the 3% contribution credit translated into .499% accrual, which, by the way, would fail the minimum benefiting .5% for minimum participation (if you following that rule) the 3% profit sharing translated into a 1.42% accrual which means the person received .499 + 1.42 = 1.919% accrual so by comparability the top heavy was not provided. of course the variable interest rate (the db used x months for the lookback) so in another year this might not have been a problem. or the fact the ee was now another year older makes a difference from a prior year.

you are correct, if it was 2% accrual in cash balance that would be ok. but if you provided that, then there wouldn't be a need to provide anything in the DC plan as you would have already satisfied the top heavy minimum for a DB/DC combo, so at that point such language as I found makes no sense). by the way, the statement that if each plan provides it's own minimum (2% db accrual and 3% DC allocation) even though it would seem logical, is not in the regs for combo plans the regs require either 1. 2% accrual in the DB plan (which, as mentioned, if provided, you need nothing in the DC plan - though top heavy satisfied no guarantee gateway minimum is satisfied if needed)) 2. 5% allocation in the DC plan 3. prove by comparability you satisfy the requirement 4. floor offset arrangement