Tom Poje

and this was the example from the preamble to the catch up rules. so changing the limit is no problem, but in you case and at this late date, it would seem to be too late..let's suppose it was Jan and your rate was 100% (no cap) and you amend to 0%. then the weighted effect would be what - 100 / 12 or 8.3%. even that wouldn't help. These final regulations retain the rule in the proposed regulations that a plan that changes an employer-provided limit during the plan year is permitted to use a time-weighted average of these limits as the employer-provided limit. For example, under this alternative method, a plan that provides for an employer-provided limit of 8% for the first 6 months of the plan year and 10% for the second 6 months is permitted to use 9% as the employer-provided limit for the plan year. These final regulations also provide that the plan is permitted to use the definition of compensation used for ADP testing purposes for this weighted-average simplification, and can use this alternative method without regard to whether the employer-provided limit is changed during the plan year

1.414(v)-1(b)(2)(I) eats you alive (I think) If I am reading this correctly, your limit for the first part of the year was 100% (since nothing was in place) (2) Contributions in excess of applicable limit--(i) Plan year limits--(A) General rule. Except as provided in paragraph (b)(2)(ii) of this section, the amount of elective deferrals in excess of an applicable limit is determined as of the end of the plan year by comparing the total elective deferrals for the plan year with the applicable limit for the plan year. In addition, except as provided in paragraph (b)(2)(i)(B) of this section, in the case of a plan that provides for separate employer-provided limits on elective deferrals for separate portions of plan compensation within the plan year, the applicable limit for the plan year is the sum of the dollar amounts of the limits for the separate portions. For example, if a plan sets a deferral percentage limit for each payroll period, the applicable limit for the plan year is the sum of the dollar amounts of the limits for the payroll periods.

taketh thy holy amendment, and raiseth it on high, and prepareth to throw. Thou shalt then count to 3. Thou shalt not count to 4. 5 is right out, (as explained below) Internal Revenue Bulletin 2007-28 5.05 Except as otherwise provided in section 5.06 and 5.07, the deadline for the timely adoption of an amendment with respect to any plan is determined as follows: (1) In the case of an interim amendment, an employer (or a sponsor or a practitioner, if applicable) will be considered to have timely adopted the amendment if the plan amendment is adopted by the end of the remedial amendment period described in section 2.05 (determined without regard to the extension under section 5.03 of this revenue procedure). (2) In the case of a discretionary amendment (i.e., one which is not an interim amendment described in section 5.02), an employer (or a sponsor or a practitioner, if applicable) will be considered to have timely adopted the amendment, if the plan amendment is adopted by the end of the plan year in which the plan amendment is effective. ............ to clarify a point made in another post, catch-ups do count toward determining if a plan is top heavy, however, if the only contributions received by a key employee during the year are catch ups, then, assuming no other key ee has received a contribution, then no top heavy would be required. but you don't get a chance to 'fix' 2013 at this late date.

or maybe just as applicable 1.410(b)-3(a)(2)(iii) certain employees treated as benefiting person satisfies all the requirements for accruing a benefit but fails because of and one of the items is 415 limit. 0 comp means the person did hit his 415 limit....

a few of the reg cites are: 1.401(k)-2(b)(5)(I) if plan does not correct excess contributions within 2 1/2 months....the employer is liable for a 10% excise tax on the amount of excess contributions 1.401(k)-2(b)(2)(iv)(A) is entitled Income allocable to excess contributions so the income is totally separate from the excise tax. 1.401(k)-2(b)(2)(vii)(D) partial distribution...if less than the entire amount was distributed...as a pro rate distribution In addition, if it helps, one way of remembering the rule, recall that any match related to excess contributions must be forfeited 1.401(k)-2(b)(4)(ii) and you never adjust that for gains!

ok, maybe I am the only curious mind, but how did the talk go?

and by testing it is 'coverage' that is being referred to, not nondiscrimination.

at the 2010 ASPPA Conference, the IRS responded this way: Contributions made after the Section 415 timing date of 30 days after the tax return due date are considered to be annual additions for the following year. However, if consider the contribution a self-correction under EPCRS, it is permissible to relate this back to the earlier year. If the contribution is made after 12/31, you are clearly under EPCRS. [One of the exceptions to the 415 timing rule is an erroneous failure to allocate. See Treas. Reg. 1.415©-1(b)(6)(ii)(A). EPCRS clearly treats post-415-period deposits that relate back to a prior plan year as an annual addition for the year to which it is meant to be paid, but EPCRS applies only after the 12/31/09 deadline. Therefore, there is a lack of guidance for the period between 30 days after the tax return due date and the end of the 12-month regulatory correction period.] .............. this is one of those areas which impossible situations result if you follow a strict reading of 415. the example I use is of Fred, who is due a safe harbor contribution for 2013. you can't have allocation conditions for a safe harbor and Fred quit in 2013, so he has no comp in 2014. But the contribution is deposited past Oct 15. sorry, I guess with no comp, his 415 limit is 0 so he can't get a the contribution. I'd hold if it is a required contribution you can't really follow the 415 requirement (or as the IRS says "There is a lack of guidance for the period between 30 days after the tax return due date and the end of the 12 month regulatory correction period."

you didn't indicate what the avg ben % test was. if it is above 70% then the 23.5% is greater than the safe harbor % of 20.75% so plan would pass avg ben test.

the one post referred to (I am guessing) is http://benefitslink.com/boards/index.php?/topic/52220-5500-plan-characteristics/?hl=codes#entry226021 but a thought. suppose the plan turns out to be top heavy. despite the fact you have no profit sharing option, technically you do because you have to have that hard coded into the document.

since the factor '10' is used on everyone, it is only a constant. you could have used 100 or 3.14159 for that matter. without looking, I think Relius uses a similar factor for it's age weighted calculation to determine the number of points - I think for the only reason that you end up with a 'reasonable' value..e.g. points = 345.67 instead of something like 34567.890123 or 3.456789 again, if you don't impute disparity AND everyone is at the same testing age it really doesn't matter what you use as long as you have contribution * 1.0l ^ yrs to retire as part of your formula. Note: if you use age definition nearest then people born in the first half of the plan year have 1 less year to retirement, so that will make a difference everything becomes a constant. it wouldn't matter if you use UP84 which has an APR of 95.3829 or 1983 IAF 115.387 or a mortality table that produced a value of 10 (except that such a 'mortality' doesn't exists and therefore wouldn't be one of the tables permitted to be used under the regs. but again, if everyone has the same testing age it makes no difference.

under Field Assistance Bulletin 2014-01 it says: However, other more expensive approaches may be required when the account balance is large enough to justify an additional plan expense and other efforts have failed. Accordingly, this Bulletin eliminates the requirement in FAB 2004-02 to use the discontinued IRS letter-forwarding service or the SSA letter-forwarding service. In their place, the required search steps have been expanded to include the use of electronic search tools that do not charge a fee. Additional Search Steps If a plan administrator follows the required search steps, but does not find the missing participant or beneficiary, the duties of prudence and loyalty require the fiduciary to consider if additional search steps are appropriate. A plan fiduciary should consider the size of a participant’s account balance and the cost of further search efforts in deciding if any additional search steps are appropriate. As a result, the specific additional steps that a plan fiduciary takes to locate a missing participant may vary depending on the facts and circumstances. Possible additional search steps include the use of Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases and analogous services that may involve charges.

if everyone has the same retirement age and you do not impute disparity choice of mortality makes no difference - everyone would have their e-bar calculated by dividing by the same value. e.g. the basic formula is contribution * 1.0I ^ yrs to retire * 12 / APR but if everyone has ret age 65 then the APR is the same for everyone - it is a constant. the only time mortality table makes a difference is if you have someone past retirement or if you impute disparity. you indicate Relius is using 23 years to retirement, the spreadsheet 22.45 that implies to me on Relius you are using age def last and if you used age def nearest Relius would use 22 years instead of 23 I have never found anything in the regs stating requiring using one method or another, as long as you are consistent amongs everyone.

for example, here is sample language from a document (so unless your document is extremely restrictive...) 1.36 "414(s) Compensation" means Compensation as defined in Section 1.14. However, the Employer may operationally elect to use any other definition of compensation for 414(s) Compensation provided such definition satisfies the nondiscrimination requirements of Code Section 414(s) and the Regulations thereunder. The period for determining 414(s) Compensation must be either the Plan Year or the calendar year ending with or within the Plan Year. An Employer may further limit the period taken into account to that part of the Plan Year or calendar year in which an Employee was a Participant in the component of the Plan being tested. The period used to determine 414(s) Compensation must be applied uniformly to all Participants for the Plan Year.

yes

1.414(q)-1 Q-3(b) Rounding and tie breaking last sentence ....In such cases, the employer may adopt any rounding or tie breaking rules it desires, so long as such rules are reasonable, nondiscriminatory, and uniformly and consistently applied. (I guess dice rolling (unless they are weighted), paper- rock -scissors, or other means could be used)

well, 1.401(a)(4)-8(b)(2)(ii)(B) Normalization says ...A standard interest rate, and a straight life annuity factor that is based on the same or a different standard interest rate and on a standard mortality table must be used.... under the definition of mortality tables found in 1.401(a)(4)-12 there is a list of permissible mortality tables. I don't see 'none' as an option

Hope you bet a pizza on this one. Have your colleague read item (3) (or even act like Bart Simpson and write it on the chalkboard 100 times) Code, section 414(q) (q) Highly compensated employee (1) In general the term “highly compensated employee” means any employee who— (A) was a 5-percent owner at any time during the year or the preceding year, or (B) for the preceding year— (i) had compensation from the employer in excess of $80,000, and (ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year. The Secretary shall adjust the $80,000 amount under subparagraph (B) at the same time and in the same manner as under section 415 (d), except that the base period shall be the calendar quarter ending September 30, 1996. (2) 5-percent owner An employee shall be treated as a 5-percent owner for any year if at any time during such year such employee was a 5-percent owner (as defined in section 416(i)(1)) of the employer. (3) Top-paid group An employee is in the top-paid group of employees for any year if such employee is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during such year.

this is an example from one document. note option (b) would wait until after the final contribution is made. I would add, (and I am guessing on how the asset house handles things) there is generally a fee charged for a distribution. let's say $50. if the participation takes a distribution, and then later receives an additional contribution then there will probably be an additional fee charged. that doesn't seem to be in the participant's best interest. but if option (a) is selected that certainly could happen. On the other hand, if the balance is large enough you can't force the participant out, so perhaps you tell the participant up front. (But then who knows is the investment will be worth as much by the time the final contribution is made) Time of Payment (Other than Death) Distributions after Termination of Employment for reasons other than death shall commence (Section 7.02): a. [ ] Immediate. As soon as administratively feasible with a final payment made consisting of any allocations occurring after such Termination of Employment b. [ ] End of Plan Year. As soon as administratively feasible after all contributions have been allocated relating to the Plan Year in which the Participant's Account balance becomes distributable c. [ ] Normal Retirement Date. d. [ ] Other:

this sounds like a plot by Dr. Evil. where oh where is Austin Powers when we need him?

or roll the $ into IRAs. even the latest Field Bulleting recommends this missing persons bulletin 2014.doc

2011 ASPPA Conference Q and A 21 What is the status of the IRS' position on using forfeitures to fund safe harbor 401(k) contributions? Does the IRS continue to make a distinction between funding safe harbor contributions under 401(k)(12), where the contributions must be 100% vested, and safe harbor contributions under 401(k)(13), where a 2-year vesting period may apply? Does the same analysis apply to QNECs? IRS response. The IRS believes that safe harbor contributions under IRC section 401(k)(12) are required to be nonforfeitable when made to the plan. This is because Treas. Reg. section 1.401(k)-3 refers to safe harbor nonelective contributions as qualified nonelective contributions and to safe harbor matching contributions as qualified matching contributions, and Treas. Reg. section 1.401(k)-6, in defining those terms, requires that such contributions meet the nonforfeitability requirement at the time contributed to the plan. A forfeiture used to fund such a contribution would fail to meet this requirement, because it is attributable to a contribution that was not forfeitable when contributed to the plan. The IRS takes a different position with safe harbor contributions under a qualified automatic contribution arrangement (QACA), pursuant to IRC section 401(k)(13), because such contributions do not have to be nonforfeitable at the time they are contributed

you forgot that the Wolverines used to be dependable on fielding a good team every year. my only point was that it is possible restructuring was not needed or even be referred to. I have had co-workers who look at the test results and since the plan fails avg ben pct test that the plan fails testing. but the tests in question passed ratio % for each HCE.

hope you like the way I threw my voice. by the way, this info was in Rev Ruling 2004-13, such a plan will satisfy safe harbor but not top heavy. In Situation 4, under the plan, newly hired nonhighly compensated employees who make elective contributions will not be eligible to receive any matching contributions until they have completed 1 year of service. Since this will result in a greater rate of matching contributions for highly compensated employees than for nonhighly compensated employees, the matching contributions do not satisfy the requirements of § 401(k)(12) (or § 401(m)(11)). Further, since all eligible nonhighly compensated employees under the plan do not receive safe harbor nonelective contributions or safe harbor matching contributions, the matching contributions made under the plan do not satisfy the requirements of § 401(k)(12). However, certain plans that provide for early participation may satisfy the requirements of § 401(k)(12) with respect to the portion of the plan that covers employees who have completed the minimum age and service requirements of § 410(a)(1), while satis fying the ADP test of § 401(k)(3)(A)(ii) for the eligible employees who have not completed the minimum age and service requirements. Unless a plan (within the meaning of § 414(l)) meets the requirements of § 416(g)(4)(H), no portion of the plan will satisfy § 416(g)(4)(H). (See Notice 2000-3, 2000-1 C.B. 413, Q&A-10.) .... the explanation being: plan provides a greater match for some HCEs than at least some of the NHCEs plan does not provide a safe harbor to all NHCEs both of these items cause the plan to fail safe harbor requirements, but since there is an exception to the safe harbor for early participation you are ok with the safe harbor. however, top heavy rules apply to all participants so...

see page 15 of the pdf file for organizational attribution rules e.g. for B, Joe owns 31.34% plus 'attributed' ownership irs controlled group notes.pdf