Tom Poje

in fairness to the participant, age 59 1/2 is chosen to avoid the 10% early withdrawal penalty

reg cite is 1.401(a)(9)-5 Q-4 use the employee's age as of the employee's birthday in the relevant distribution year (I believe they use the term 'relevant' because if the person delays things until April 1 you don't use the April 1 year, the relevant year in that case is 'the prior year')

never mind, the masked cape man beat me to the response, if indeed that is what the issue is. The instructions for the SSA only call for penalties for not reporting someone or for not reporting changes in the plan status (e.g. change in address, etc.) you have me curious where they came up with $64.

fair is fair, I never even thought about a SIMPLE IRA.

I don't do SIMPLEs, but the question peeked my interest. Suppose Company A sponsors the SIMPLE for members of Company A and Company B sponsors a 401(k) for company B members only. 1.401(k)-4©(1) says the SIMPLE must be the exclusive plan for each SIMPLE 401(k) plan participant ...under any other qualified plan maintained by the employer so I don't think having a controlled group necessarily negates the ability to have a SIMPLE. In fact, the mere statement saying 'under any other plan maintained by the employer' implies you could have other plans. (it might show a bit of insanity on the company's part, but that is another issue) The coverage rules might cause the plan to fail. Certainly if the controlled group is above 100 employees you can't do it (1.401(k)-4(b)(1) 1.401(k)-4(b)(2) then says you have the 2 year rule to fix the problem.

in Q-9 (A) it says employees who have not completed 6 months of service by the end of the year. so by the end of 2011 the person had only 5 moths of service and would be excluded. but once the person works another month in 2012, I would hold they have met the 'service' requirement. now that tosses you to another possibility © Employees who normally work less than 6 months during any year for example this would be someone who worked 5 months each year for 3 years, so they would have more than 6 months total service, but would appear to be excludable. well that probably doesn't apply - that looks like it's for someone who always works lees than 6 months and happened to work one year at 7 months. then there is, hopefully I have this correct (f) 6 - month rule (gotta love this) (1) it is based on the dreaded facts and circumstances and it adds, if you work one day a month you are deemed to work that month. (2) adds an example of a fisherman who worked 9 months in 1987 and 1988, then 8 months in 1989 then 5 months in 1990. you would still count him. (it considers 1990 an anomaly because the 5 months was due to weather conditions) so, your facts and circumstances is "do you take into consideration the fact he terminated was the reason he had less than 6 months - or put another way, if he hadn't of quit, would he have worked more than 6 months' or at least, that is how I would read it. (I help edit that book, I didn't do that particular section, but I'll see about modifying that section a little. I'm the one who heavily bores you with all the different cross tested calculation examples)

my understanding is the document drives everything, thus it must state whether the plan is safe harbor or not. I think when safe harbors first came out, the document language was iffy to the point of saying "see the notice", but the IRS cracked down on that. now I think basic documents give a definition of safe harbor with the ford "if", but it is also driven by an amendment, not the issuance of a safe harbor notice. At different meetings the IRS has always said if the document says it is safe harbor and you don't issue a notice, you have a failure to follow the terms of the document requiring you to issue a notice. I sort of reversed the question and asked What if you issue a notice but don't amend the document? the response was: Plan is not safe harbor. you might have grievance issues with employees and how you resolve them is a different matter.

1.401(l)-2(d)(5) says to prorate the integration level

as I recall: covered comp yes (but not the % (e.g. 5.7%) hours for vesting are always based on a 12 month period (so in effect, in an existing plan, some hours get counted twice) HCE determination is also based on a 12 month period.

to put it a different way: you are walking along the road and you see the magical land of cross testing there is only one entrance, you have to pass through "the gateway" before even getting there. Mr. Cline: I think, conceivably, you could do component plan testing, based on years of service.

As was indicated above, you won't lose your claim to your safe harbor merely by rolling your balance out of the plan. one possible issue to consider (and I don't see think I have ever seen this brought up before), there is, most likely a distribution fee (we all live with that, it is not large, but it is still a fee). if you roll out the balance, then at a later date receive the safe harbor and then roll that amount out I imagine you will get hit with the distribution fee again. good luck.

doesn't the rule under 1.401(m)-2(a)(5)(iv) matching contributions taken under account under safe harbor provisions apply?

how do you read the IRS notes on vesting service after a break on page 5 of the enclosed? ok, maybe it is even highlighted, and maybe there are some notes to emphasize some stuff. minimum vesting standards.pdf

for example, (from ASPPA Q and A 2010 #3 calendar year DC plan terminates 9/15/10 Q: for 2010, do you treat 9/15 as if it were the last day of the plan year for top heavy purposes? A:Of course if there were no contributions, then no top heavy (this is a DC plan). but if there were contributions, including deferrals, then top heavy is due thru 9/15. Plan must liquidate within a reasonable time (Rev Rule 89-87) or else 9/15 may not be reasonable.

if the plan is a 3% shnec, how is it possible some NHCEs are not getting the safe harbor? if it's a safe harbor match, then I suppose you could say some non key NHCEs are not getting the SH allocation, but they could have if they deferred, so it is not a problem.

unclear from the initial question. the DB plan is passing minimum participation but you are failing coverage?

ok, I played a little with the coverage report. (It is the landscape version) this report could be copied to the folder containing your own custom reports not the Relius report folder. currently coded with the word TEMP. For this report to work instead of the Relius report simply remove the word TEMP. (and then rename when finished or else you need to code every plan's user's fields for the reports you want) in plan specs user fields: (Y or N = Do you want to include this report) Alpha 2 Y or N for 401(k) Alpha 3 Y or N for 401(m) Alpha 10 Y or N for nonelective 401(a) Instead of printing all reports it should only print the ones you select. It is kind of silly. the logic is there for this to work if they added Y or N to the nondiscrim screen. I simply have pointed it to the user fields. (2, 3 and 10 because I'm already using the other fields for other reasons) GND410BL TEMP.rpt

one possibility: if there are employer contributions (e.g. match) and they are subject to vesting, it would make a difference since 100% vesting kicks in at normal retirement.

changing testing methods is a discretionary decision. some would argue, therefore, since 2013 is not completed, it is not to late to amend the plan to current year testing. I don't believe the IRS has stated you can't.

agree. in fact, if you couldn't limit the comp, that would negate example 2 of 1.414(v)-1h which limits hces to 10%. what Jim is referring to is coda_lrm1011 I'd say the note to the reviewers is poorly worded (or at least leads to a mis reading) see the note on page 5 of the pdf file. coda_lrm1011.pdf

that reminds of the story I heard about the lady who went to the Credit Union to get a loan, how much, etc. She was told she already had a loan. looked at the paperwork husband signature was there, and a signature was there under spouse, her name but not her signature. hmmmmmmmmmmmmmm.

recall, if plan has a match feature and never used it, and plan uses prior year testing, it is not permitted to use 3% prior year the first year it actually makes a match. just by that fact, i would say you should include the feature even if not used.

perhaps I will know more later this week and can tell you how this will all play out. supposedly someone else in the office is going to handle things. I'm trying to make sure things are handled properly, but unless you get the ball rolling..

participant in DB and DC decided to take annuity. so they can set something up at the bank. Should that be under the person name, or under a 'trust' at the bank. I think they have to keep things separately. the DB is simply an annuity and must be funded if needed if the lady lives longs enough. the DC was a money purchase, and should simply be an annuity based on whatever was the balance.

as I understand the rules, you calculate the DC to age 55 using the DC assumptions, then use the DB assumptions (interest rate, mortality) out to age 65.