Tom Poje

I'm in'clined' to think you are way way way off. not even close. well, ok, maybe close. It was under the definition of HCE (not key) that you could have one officer no matter what the comp. my copy of CCH at least lists some of the old rules ...it was IRC 414(q)(5)(B)

as for abbreviations, I recall years ago in a phone book (for those of you too young to know what a phone book is...) ayway, the person was a lawyer, had a middle initial F and the listing in the phone book was Smith, John F atty gotta love that.

I haven't seen that one adressed, though I would assume you would take the number of NHCEs who 'would have been eligible' in Company B and use a 3% average. Then use the weighted method when combing the 2 plans to determine the average.

Looked it up - chapter 11 part I.3c Sal talks about a situation that excludes a number of things for purposes of deferral (e.g. bonuses) but then that the match must satisfy 414s somewhat the opposite of what is described here the example provided in 3.c.1 says as long as plan must pass compensation ratio percent test for the match no matter what the deferral comp def is. You raise a valid point in regard to rate of match, but my understanding of the rate of match issue is that you can't provide a larger match % on 'more' deferral (e.g. 100% on the first 3% and then 150% on more than 3%, which wouldn't happen in this example. that being said, I personally wouldn't write a formula like that Sal has a big write up 11.B.5 in which, at least in my opinion, the Reader's Digest condensed Version would be: "What are you, out of your mind?"

well, the comp definition for deferrals only has to 'reasonable' but the match has to satisfy 414(s), so the plan could exclude bonus/commissions if you pass the comp test. but if you fail then what? you can't test the plan on a defintion that satisfies 414s because there is no test. so from what I read you are now stuck with a corrective amnedment. and if you fail one year, just what do you think will happen in the future.

if it was a safe harbor formula then that is strictly forbidden because the rate of match can't increase as the deferral rate increases. arguably I think you have to test BRF (Benefits Rights Features) is the formula currently available to everyone? yes, everyone 'could' defer at least 6% and therefore get the full match. is the formula effectively available to everyone? (or put another way, in the real world can enough NHCEs take advantage of this? that is debatable. and there is no mathematical test available for testing effective availability. if the only people who are deferring at 6% are HCEs I'd say that is a negative - but that doesn't necessarily make it so. even the govt must have its leanings against something like a match that increase around the 6% level - the basic match in a safe harbor is only up to 5% and not higher. even an enhaned match can't be used if greater than 6% (at least for ACP purposes)

and as an added note, when cross testing you can not impute disparity on the safe harbor. but that only makes sense since you can't have a safe harbor as part of an integration formula.

well, rarely is there an HCE in the otherwise excludable group, so rarely does that group need testing, hence no gateway. On the other hand, generally the youngest people are in that group, so to help testing, the idea of splitting the groups is tossed out the window.

you can keep looking, but you won't find it because it is not in there (at least not 'word - for - word') you are very observant! Here is what happens: (or at least happened in this case) the govt releases proposed regs and asks for comments after considering the comments, the final regs are released. sometimes they get changed, or the govt simply comments on them. In this case, the comments are in the preamble to the final regs. reminder, you have a 'plan' which can consist of 401k, 401m and 401a4 and then you have a 'plan' which can be very specific, in this case, benefitting under the 'plan' meaning just the 401a4 plan. but anyway, see page 7 of the pdf file. dang, will you look at that, someone even went and highlighted part of this file. nondiscrim regs.pdf

The general consensus I've seen views the person as actually having made the deferral and then receiving a distribution, so you have to count it all.(They still count toward the annual addition limit and still count in determining if a top heavy minimum is due) If the amount had been a catch-up, then it would 'vanish'

Kathy is right on the point. At the 2010 ASPPA Conference Q and A #3 DC plan is top heavy and has a plan year ending 12/31. The plan terminates on September 15, 2010. Normally, TH minimums are provided only if the employee is employed on the last day of the plan year. (Assume that there are salary deferrals during the year so that, if a top heavy minimum is required, it needs to be made.) (1) For the 2010 plan year, is 9/15/2010 treated as if it were the last day of the plan year, so that only non-key employees who are employed on that date are entitled to a TH minimum? Answer (1)Of course, if there is no employer contribution, there would not be an obligation to provide top heavy minimum contribution. But, if there were contributions to keys during the year, including elective deferrals, there is a top heavy minimum based on compensation and employment through 9/15/10. Plan must liquidate within a reasonable time under Rev. Rul. 89-87 or else 9/15 date may not be reasonable. There is effectively a short plan year for top heavy purposes. If assets aren't liquidated, then the IRS would view the plan as not being terminated, so then you would have to use comp through the end of the year, if I understand things correctly.

you might read http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=137#.UUiZJhw4tqUhttp://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=137#.UUiZJhw4tqU this goes back to 2000 and refers to APRSC (the old EPCRS terminology) which is today's SCP

the answer is clear as mud. The ERISA Outline Book 5.24 (2012 edition) talks about a comment made by the IRS back in 1997 at a Q and A session the book says ''the plan year, or at least the limitation could be 12 months long" - this was in regards to the comment mad that plan could have an effective date of 1/1 rather than the date yhe company was formed. That seems to say the plan could have an effective date of 7/1, but the limitation year could still be 12 months. and if the limitation year could be 12 months long then there would be no proration of the 415 limit. but the book also says you would want to make things clear in your request for a determination letter. (but then Tom says, by the time you find that out it could well be past any deadline..)

in excel RND() will generate a random number between 0 and 1. so you generate 2 numbers. you square each of them and add together. keep track of how many times this value is less than 1. Multiply by 4 and divide by the number of attempts and the value should approximate pi. (If you think of a number line random #1 = x axis random # 2 = y axis. so by the pythagorean theorom, squaring these 2 numbers will give you the length of the third side. Since you are using a number line, positive values only, you have a quarter of a square. the square of your random points if less than 1 fall with a quarter circle. attached file demonstartes this. because of size constraints what can be attached here the sheet only generates about 8000 possibilities, though you can extend that. plus you can only attach an xls file. gonna have to talk to Dave about saving xlsx files pi random number.xls

well, the annual Happy Pi Day to all!

assuming you run the same testing assumptions as for the age weighted formula (interest rate, mortality table) everyone should end up with the same E-BAR (exceptions would be someone who gets top-heavy, or people past NRA) thus the rate group test should pass on a ratio % test basis, and there is no need for the avg ben pct test, which could conceivably fail. if the plan excluded terminees, or those with less than 1000 hours or whatever, conceivably you could fail (but then you would fail coverage testing as well) you indicated this was not the case, so you should be all set. you are correct, there is no gateway test. in Relius non discrim you would set gateway test to age based alloaction rate.

always humbled by comments from others. I feel like I'm the one learning from others all the time) the Coverage and Nondiscriimination Answer Book also has a number of examples (I worked on that book, but please don't look at that as a plug!) attached are the IRS notes, very basic but free! attached also an article I put together for the ASPPA Journal (Spring 2009) which gives a walk through of where the numbers come from. (As I recall there was one number typo that didn't change anything- it was obvious from the context what was meant.) I actually received a nice e-mail from someone on this article saying he always wanted to be able to calculate an E-BAR by hand and this was the first thing he ever read that helped him understand what was going on in the cross testing calculation.(I avoided such terms as 'normalization' and the like.) non discrim notes from the govt - demo 6.pdf Basics of Cross final version.doc

If you satisfy the comp test, that means you can run your nondiscrim test based on that definition of comp. but you can always run your test based on any definition that satisfies 414(s) (assuming your document isn't more restrictive than that. if the plan is safe harbor, then YES you have to pass 414(s) - basically you don't get a free ride on the ADP/ACP test and be able to have a discriminatory definition of comp

the original preamble to the catch-up regs had an example of a cap of 0% deferral on HCEs. therefore if they deferred it could only be up to the catch up limit. This example was not in the final preamble, but that could have been simply for space reason. some argue if you have a cap of 0% then they can't defer, and therefore can't defer, and so the example was removed for that reason. so let's suppose you put a cap of 1 cent. now they can defer. oooooh. now they have to put in a top heavy based on the fact they received 1 cent. so if their comp is 100,000 then any NHCE making 50,000 must receive 1/2 cent to receive the same rate and satisfy top heavy. (keys excluded from top heavy of course) so if the owners are over age 50 then yes, you can probably have them defer a minimal amount (if you consider $5500 minimal) without a lot of top heavy damage.

my understanding is the answer is no, based on 1.401(k)-1(b)(4)(iii)(B) last sentence says An employer may not aggregate a plan using the ADP safe harbor provision and another plan using the ADP test. and 1.401(a)(4)-9(a) says if 2 plans are aggreagted for coverage they must be aggregated for nondiscrim as well. so you are trapped. in your scenario, Plan A passes ADP because it has HCEs only the problem is coverage (and always has been even if no one has deferred for years because you only have to be able to defer to be treated as benefiting!) when looking at Plan A for coverage (assuming all are at least 5% owners) you would fail because no NHCEs benefit. That is not to say that all makes sense, but it is what they say (unless someone can point to something otherwise)

for top paid group, you can either round up or down. for number of officers to determine key participants you always round up minimum participation always round up nonhighly employee concentration percentage always round down.

perhaps better worded, just to make it clear, you can run the ABPT on a cross tested basis without having the plan be required to provide a gateway.

so you have 67 nhce / 75 total ee = 89.3% or a safe harbor % of 28.25 Plan A is 28.66 which is > 28.25 so if you can increase the avg ben % to 70% you pass. since there is one and only one avg ben pct test including all ess and all contributions (except catch ups), then either plan can increase NHCEs, though since plan B does not fail it might be increasing plan B is not an option. how close/far away is the avg ben pct test?

since the NHCEs received 3% and the HCEs receives 9% that would pass the 1/3 rule. If it makes a difference, when cross testing you have eliminated the option to impute disparity because you can't impute disparity on a SHNEC

　 this is eligibility language from one document. I don't believe this is special language that pertains to the particular document, but rather a nice explanation/description of how things work. chances are you can find one of the situations the individual falls under. (e) Reemployment of an Employee Before a Break In Service and After Eligibility Requirements Are Satisfied. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment prior to the Employee's Entry Date in Section 2.1, the Employee had satisfied the eligibility requirements in Section 2.1 as of the Employee's Termination of Employment, and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee will become a Participant as of the later of (A) the date that the Employee would enter the Plan had he or she not Terminated Employment with the Employer, or (B) the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged. (f) Reemployment of a Participant Before a Break In Service. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment after becoming a Participant and is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the reemployed Employee will reenter the Plan as of the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, as applicable, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged. (g) Reemployment of an Employee After a Break In Service and Before the Entry Date. For any Plan Year in which the eligibility requirements in Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer either prior to or after satisfying the eligibility requirements in Section 2.1 (but before the Employee's Entry Date in Section 2.1) and the Employee is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Years of Service that were completed prior to the Break in Service will be recognized. 　 (h) Reemployment of a Participant After a Break In Service. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee (1) was a Participant in the Plan, (2) Terminates Employment with the Employer, and (3) is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Year(s) of Service that were completed prior to the Break in Service will be recognized. (i) Ignoring Service for Eligibility If Service Requirement for Eligibility Is More Than 1 Year of Service. Notwithstanding anything in the Plan to the contrary, if this Plan (or a component of the Plan) provides at any time that an Employee must complete more than one (1) Year of Service for eligibility purposes, and such Employee will have a 100% Vested Interest in the Participant's Account (or the sub-Account that relates to such component) upon becoming a Participant in the Plan, then with respect to an Employee who incurs a Break in Service before satisfying such eligibility requirement (1) the Employee's Year(s) of Service (and Hours of Service) that were completed prior to the Employee's Break(s) in Service will not be counted for eligibility purposes, and (2) the Employee's Eligibility Computation Period will commence on the Employee's Reemployment Commencement Date and subsequent Eligibility Computation Periods will be based upon the provisions of the definition of Eligibility Computation Period (with the Reemployment Commencement Date substituted for the Employment Commencement Date, if applicable).