Tom Poje

just for clarification, all Q and As will generally carry the caveat 'does not constitute a formal position of the IRS' that doesn't necessarily validate or invalidate the statement indicated. If, for instance, the plan was audited and questioned, I would point to the Q and A and say I was making a good faith effort. I would further add, as a general rule, such questions (unless they are from the floor) are submitted to the IRS personal weeks in advance, so it is not like a spur of the moment answer in most cases. (this is speaking from experience, as I used to sit on such discussions for a few years)

that would be my understanding ERISA Outline Book 2012 ed would seem to agree ch 8 section V part c.3 .....1.410(b) - 7(e)(1) this is a special aggregation rule and is required, regardless of whether the plans are otherwise permissively aggregated for coverage testing purposes... Because of the aggregation aspect of this test, the ABP calculated for the ABP testing group will apply to all plans included in the ABP testing group. (emphasis mine)

there is. I found a copy and hoped it would help me more, but not for what I do.

these were my notes from a few years ago. I don't think you have to go through VCP, but not 100% sure on that. You can’t ask for the penalty to be waived until you have actually taken the distribution. This is proof you are trying to fix the situation as soon as possible. Fill out form 5329. Write letter begging for mercy, explaining the reason you didn’t receive the minimum distribution was the incompetence of the investment house or something similar. Years ago, it was required to send in the 50% penalty and hope the IRS would have leniency and waive the penalty and return the money. Now simply send in the letter with the Form 5329, and if they don’t accept your lame excuse they will bill you. since no matter what happens you get blamed, the following is applicable: It's not my job to run the train. The whistle I don't blow. It's not my job to say how far, the trains supposed to go. I'm not allowed to pull the brake, or even ring the bell. But let the damn thing leave the track, And see who catches hell!

oddly enough that's where I live. But does your cape really work that well? this all depends on what you are trying to do. I can probably give you a few tips on the basics. I've never 'created' a report, but have only modified existing reports. Depending on what you want I've always tried to make my reports available to any that want them - probably the nicest compliment I had was from Mr. McCutcheon at FT William who said they posted the report I created to pull the data from Relius to use for the SSA import. saves me a ton of time every year. Certainly I'm no expert, but if there is something in particular I might have already created to get you started...

same exact question was on the Q and A at ASPPA this year. IRS response The service requirement is satisfied on 1/1; "coincident with" means the participant enters 1/1, if "next following" language is used, the participant enters the next entry date (4/1)

no fair. you have a better cape than mine.

you said 1 plan fails coverage when testing separately. I assume you mean it fails the ratio % test. It is of course possible the plan might pass the avg ben test and thus pass coverage the avg ben pct test portion would include all contributions and all people and could be run on an accrual basis without triggering the gateway test, as you are only testing for coverage and not nondiscrim.

1.410(a)(3)-3(e)Age and service requirements (1)General rule.— For purposes of applying the rules of this section, plan provisions may be treated as imposing age or service requirements even though the provisions do not specifically refer to age or service. Plan provisions which have the effect of requiring an age or service requirement with the employer or employers maintaining the plan will be treated as if they imposed an age or service requirement. In general, a plan under which an employee cannot participate unless he retires will impose an age and service requirement. However, a plan may provide benefits which supplement benefits provided for employees covered under a pension plan, as defined in section 3(2) of the Employee Retirement Income Security Act of 1974, satisfying the requirements of section 410(a)(1) without violating the age and service rules. the first example in the regs is a situation where one has to work for div 1 for 5 years then they would be eligible for div 2. The regs say the provision has the effect of requiring 5 years of service. While no mention is made of it, I guess that also implies one would have to be 100% vested because it's more than 1 year wait??? The ERISA Outline Book Chapter 2 section IV part F 4.d (2012 edition) in reference to excluding 'part time employees' states satisfying coverage requirements does not excuse impermissible classification exclusion - the IRS actually disqualified such a plan even though it could pass coverage!(and then said since the plan had received a determination letter it would let them off the hook if they amended plan prospectively)

I simply don't recall. I have the vaguest memories of a comment being made that it depends on whether you are looking at the 401k plan or the 403b plan, but I can't find my notes on that. I looked back at 2008 Q and A and the comment not to include the deferrals was ASPPA comment and the IRS did not respond. 2009 was the same question and this time the IRS responded to include the deferrals, so I agree, it is very confusing. If I get a chance I'll try to see if I can find something more.

Ah, I plugged the 117,000 taxable wage base into the Relius software, and the covered comp for 2014 was the same as the spreadsheet. It appears to work correctly!

as close as I've come to seeing an answer is from the ASPPA Q and A 2009 Q and A 20 (and again, such response do not represent an actual position ............. Q: If matching or nonelective contributions to a 403(b) plan are used in the average benefits percentage test to satisfy the IRC §410(b) coverage requirements, are the 403(b) deferrals included in the average benefit percentage calculation as well (even though 403(b) deferrals are not generally subject to nondiscrimination testing)? IRS Response: Yes (The old copy of the 403b Answer Book I have (1996) said to include all contributions, including deferrals from the 401kplan, but it was unclear how to handle the deferrals from the 403b

according to the govt web site http://www.socialsecurity.gov/OACT/COLA/cbbdet.html the taxable wage base will be 117,000 in 2014 if my spreadsheet still works, the covered comp will be as indicated on the enclosed spreadsheet. ............................... based on the CPI-U that was released today the increases (should) be (based on the regulations) 260,000 for compensation 52,000 for 415 limit 210,000 for the DB limit 170,000 for key employee covered comp at 117000.xls

existing plan ran 3 months and then switched to a MEP. 5500 filed filed for the 'short' plan year. does that also create a short plan for testing, or is that still done over a full 12 months?

agreed, you probably want to verify the document language. on the other hand, let's say the plan had 1000 hours requirement. would you give an active person who worked 800 hours a contribution if the plan was top-heavy? I think most gateway language would be written in similar fashion.

this is the spreadsheet I use for calculating limits. currently plugged into the table are the values for June - July - Aug (so June needs to be replaced by Sept when released) the current CPI-U is 233.xxx it is easy enough to plug values into the table but it would appear the numbers (some have increases) are pretty well fixed no matter what happens. (e.g looks like the 415 limit will increase) a major collapse of the CPI factor to 228 (last time it was that low was Feb 2012) or a major increase to 238 would increase the limits even more. (of course there is no guarantee of anything! This spreadsheet is simply based on the current guidelines from the regs) indexed limits.xls

the 3% SHNEC (which of course can't have allocation conditions) is still a nonelective contribution. most documents I have seen have a definition of gateway language (in some way shape or form) which would require anyone who receives a nonelective contribution to be bumped up to the gateway.

It's Friday, and after a mad rush to get things filed by the 15th, it was good that Columbo could stop by the office to break up the routine.

a good question, in fact, I would go so far as to say an excellent question. I don't recall seeing an example like this written up anywhere. You sound like the criminal mastermind on a Columbo mystery, worried, and thinking "I have the perfect crime to avoid top heavy. What am I missing?" I think Dolly Parton was a special guest star.... so Detective Columbo shows up, runny nose, a cough, a sneeze... "I'm thorry, but I have a bit of a code" But the " Code" says (416(g)(2)(A)(ii)) "Required Aggregation - each plan of the employer which enables any plan described in subclause (I) [any plan with a key employee] to meet the requirements of section 401(a)(4) or 410" now looking at the facts, if plan A only has the 2 owners, it has the key employees. But there are NHCEs. so in testing Plan A for coverage, it would fail testing because no NHCEs are benefiting (as opposed to there not being any NHCEs at all). Thus you have to aggregate for coverage to pass 410(b). But once you aggregate for 410, you have to aggregate for top heavy. And of course, Columbo would conclude with "Got you!"

by the way, if you are that close to passing, it is possible that using age definition nearest (if the HCE is born in the first half of the plan year) would help age definition last birthday if the HCE was born in the second half of the plan year. or using interest rates of 8.5% pre and 7.5% post using 1983 IAF as the mortality and impute disparity

the issue hinges on how you interpret the regs Within a specified measurement range, it is permissible to simplify rate group testing by treating all participants as having the midpoint accrual rate—as long as the HCEs do not fall significantly higher than the NHCEs within the range. [Treas. Reg. §§ 1.401(a)(4)-2©(2)(v), 1.401(a)(4)-3(d)(3)(ii)] My understanding of that is illustrated as follows (I pulled this from the book I have worked on, Coverage and Nondiscrimination Answer Book (Chapter 8 Q 8-23) (As best as I can paste in this format) (and much of this from comments from Larry Deutsch as well) Nadia (HCE) 11.2% Orson (NHCE) 11.0% Paul (NHCE) 10.9% At first glance, the plan appears to fail nondiscrimination testing because there are no NHCEs with an EBAR equal to or greater than that of Nadia, the HCE. If the accrual rates are banded, however, the following results will be obtained. With a midpoint of 11.0 percentage points, using the 5 percent rule results in a measurement range of 10.45 (11.0 − 0.55) to 11.55 (11.0 + 0.55). Thus, all participants with EBARs between 10.45 and 11.55 are treated as having an EBAR of 11.0. The plan passes the general test because the testing results are now as follows: was now Nadia 11.2 11.0 Orson 11.0 11.0 Paul 10.9 11.0 The ratio percentage is now 100 percent, because both Orson and Paul are now in Nadia's rate group. Caution. The IRS could interpret the banding described in Example 8-6 as significantly favoring Nadia, the HCE, because her EBAR is being brought down to the EBAR of Orson, who is an NHCE, by a factor larger than the factor used to raise Paul's EBAR. Therefore, such adjustments should be made only for mathematical convenience—and should not be used as a corrective measure to enable the plan to pass a failed rate group test. Example 8-7. The facts are the same as those in Example 8-6. ________________________________________ ________________________________________ ________________________________________ Nadia (HCE) 11.0% 11.0% Orson (NHCE) 11.2% 11.0% Paul (NHCE) 10.9% 11.0% In this example, one NHCE's (Paul's) allocation rate is increased to that of Nadia, while the other NHCE's (Orson's) allocation rate is reduced to that of Nadia. In this case, there is a balance taking place in the grouping of the rates (unlike Example 8-6, in which no NHCE's EBAR is decreased to the HCE's EBAR). ......................... The logic being as follows, the regs say you can use 5%, but then turn around and say you 'can't' if it significantly favors the HCE. well, if the HCE is at the high point and you bring him down to a mid point and bring NHCEs up to a midpoint that would indeed seem to fail the 'significantly' favor the HCE requirement. (as opposed to bringing some NHCEs down to the midpoint as well) how far can you push it? Obviously there is no clear guidance.

well, if you ignore the DOL guidelines..... (any words that stand out are "emphasis" mine http://www.dol.gov/ebsa/faqs/faq-EFAST2.html Q4: How can I submit a delinquent or amended Form 5500 return/report for a Title I plan for years prior to 2009? Delinquent and amended filings of Title I plans must be submitted electronically through EFAST2 and cannot be submitted on paper. To submit a delinquent or amended Form 5500 return/report electronically through EFAST2 for plan years prior to 2009, you must submit the filing using current filing year Form 5500, schedules, and instructions except for the exceptions provided in the following paragraph. The current filing year forms take the place of the Form 5500 pages that would have been included in the prior year's filings. The electronic filing on the current filing year Form 5500, however, must indicate, in the appropriate space at the beginning of the Form 5500, the plan year for which the annual return/report is being filed. Exceptions to requirement to use current filing year schedules and instructions: Filers using EFAST2 must use the following correct-year schedules (that is, the plan year for which the annual return/report relates) completed in accordance with the related correct-year instructions: Schedule B, SB, or MB (Actuarial Information), Schedule E (ESOP Annual Information), Schedule P (Annual Return of Fiduciary of Employee Benefit Trust), Schedule R (Retirement Plan Information), and Schedule T (Qualified Pension Plan Coverage Information). For example, if you are filing a delinquent 2007 Form 5500 return/report for a defined benefit pension plan, you must include the 2007 Schedule B, Schedule R and all required attachments for these schedules. Attach them as pdf images to the current filing year Form 5500 (2012 forms should be used as current filing year forms as of 1/1/2013), tagging them as "other attachments." Also, you have the option of using either the current filing year or the correct-year (2007 in this example) Schedule C. Since the Schedule E would not apply to a defined benefit plan, and the Schedule P and Schedule T did not apply for 2007 plan year filings, all other required schedules and attachments should be completed using current filing year forms and instructions. The entire filing should then be filed electronically in accordance with EFAST2 electronic filing requirements. To obtain correct-year schedules and related instructions, go to the EFAST2 forms page, print the schedules of the form year that corresponds to the plan year for which you are filing and use the instructions for that year. Do not attach any Schedule SSA to any filing with EFAST2. Rather, submit the most current year Form 8955-SSA to the IRS (along with all required attachments). See IRS Retirement Plans Community - Form 5500 Corner for additional information. Do not send any penalty payments associated with a delinquent filing to EFAST2. Penalty payments to the IRS or made under the Department's Delinquent Filer Voluntary Compliance Program (DFVCP) must be submitted separately in accordance with the applicable requirement. The Form 5500 Selection Tool will help you to determine which version of the Form 5500 and which schedules you should use. Q4a: Can filers use the Form 5500-SF to file 2008 or prior year delinquent or amended return/reports? No. You may not file the Form 5500-SF for any 2008 or prior plan year return/report. Filers wishing to file or amend their plan year 2008 or prior Form 5500 must use the current Form 5500 to submit that return/report in accordance with the directions in FAQ 4. Required schedules must be included in accordance with the procedures described in FAQ 4.

The latest CPI-U value was supposed to be released this morning, and that would determine the limits for the new year. I guess since the government is shut down, nothing has been released, so everyone gets to wait.

or file the 5500 sf electronically and check one participant plan

whether you aggregate the plans or not, there is only one avg ben pct test, which includes everyone and all contributions (despite the fact the plan might not be aggregated!)