Tom Poje

if this lady applies for a job watch out http://www.viddler.com/v/800b0af0

Interesting. IRS just released the following a few months ago in regards to Money Purchase plans. Apparently, despite being merged into 401(k) profit sharing plans many continued to code the plan as money purchase because those assets are still subject to the joint and survivor rules! see my underlined notes below. Since there is no code for 'defined contribution' I can only conclude the IRS uses that term interchangeablly with profit sharing (otherwise the IRS comments make no sense - no pun intended) ................... The responses showed that only 1 plan sponsor in the sample had adopted a money purchase pension plan with a 401(k) feature after ERISA by incorrectly adding a 401(k) feature to an already existing money purchase pension plan. Once brought to their attention, the sponsor applied to EPCU to correct their plan error. As opposed to an examination, errors discovered during the compliance check process may still be voluntarily corrected or self corrected through EPCRS because the plan is not considered to be under examination. Instead, mostly all the sponsors had merged a money purchase pension plan into a 401(k) profit sharing plan due to changes in the deductibility rules for defined contribution plans beginning in 2002. These changes allowed a sponsor to contribute and deduct in a single plan what previously could only be contributed and deducted in 2 separate plans. Rather than maintaining both a money purchase pension plan and a 401(k) profit sharing plan, sponsors adopted or continued a 401(k) profit sharing plan, discontinued the separate money purchase pension plan, and transferred it’s assets into the 401(k) profit sharing plan. After the merger, sponsors continued to report they were both a money purchase pension plan and a 401(k) profit sharing plan on their Forms 5500 due to the special quality of the merged assets. For example, joint and survivor rules continue to apply to the money purchase pension assets even when they are merged into a 401(k) profit sharing plan. Some sponsors in the sample indicated that their plans were money purchase pension plans or 401(k) plans, but were not defined contribution plans. Since both money purchase pension plans and 401(k) plans are types of defined contribution plans, there appeared to be some confusion on plan types. A minority of sponsors responded that their plans were only money purchase pension plans and not 401(k) plans, or 401(k) plans and not money purchase pension plans. These types of preventable errors result from sponsors selecting the wrong pension feature codes on their Forms 5500. Finally, a few potentially noncompliant situations which required review of the plan sponsor’s books and records were referred for examination. http://www.irs.gov/Retirement-Plans/Employ...e-Pension-Plans

deferrals count toward the 415 limit but not the DC plan deductible limit

here then would be the covered comp table for next year. (I plug the new TWB into the table and it does the rest) I rolled my test plan in Relius to 2013 and verified the numbers as well. covered_comp_at_113700.xls

Marge- we only use the govt forms at FT Williams (since e-fast2) and run all our plans (DB and DC) on Relius, so I can't speak for their admin system. I should have said the issues we had Friday were not filing issues, but log-in issues into the FT William system. Other than that, no problems with the 5500s in the last 3 years sorry to hear you had so many problems.

none that I'm aware of at FT William, and we filed at least 30 forms yesterday. I was able to track the progress of filings anytime throughout the day (there is a report that shows all your plans and filing status) For a short time on Friday there were some minor log on issues, everyone received the following e-mail from FT William "As you may be aware, we have had some issues with our website today from approximately 12:40 pm to 1:15 pm central time. We believe the issue has been solved. This should not have negatively impacted any of your 5500 data or filings. We apologize for any inconvenience this may have caused. " but that would appear to be unrelated to anything you folks have reported.

assuming my spreadsheet is correct based on the code and regulations (and the CPI-U factor released today) next year's limits should be: deferral 17,500 compensation 255,000 Annual addition 51,000 DB limit 205,000 no change to catch up, key, HCE

Not quite sure if this is what you are asking: Vaguelly recall at one of the ASPPA conferences the answer was as follows: 1.The gateway rules are found under the nondiscrim rules of 1.401(a)(4) 2. there is no gateway rule under 410(b) so you are allowed to test whatever it takes to pass without worrying about the gateway. I would add the following 3. while your testing group has to be the same (e.g. all ees or stautory include/otherwise excludable) your testing methods can be differnt than what you used for coverage. (e.g. you could even component testing - some people on an allovction basis and the remainder on an accrual basis for non discrim testing which would certainly be different than what you used for coverage) oh here it is Q 44 2009 ASPPA conference Based on the facts below, does the profit sharing allocation have to meet the gateway requirements of the final comparability regulations? A profit sharing contribution is allocated to a select group of employees using an integrated points allocation formula that requires a general nondiscrimination test under IRC §401(a)(4). The rates used in the rate group test were calculated using contribution rates, and the ratio percentages of all rate groups met the nondiscriminatory classification percentage. The average benefit percentage test did not pass using contribution rates, but did pass when tested using equivalent benefit accrual rates. Do the gateway requirements apply to this allocation because the average benefit percentage test was done based on equivalent benefit accrual rates? Answer No. There is no gateway requirement for a general tested plan under Treas. Reg. §1.410(b)-5(d)(5), unless cross-testing is used to determine the rate group testing. The gateway rules are in §1.401(a)(4)-8(b)(1)(I).

in your particular case I think you simply ask "How many received a non elective contribution" remember, coverage isn't interested in "how much" but rather "How many received" it sounds like all received a nonelective contribution, so coverage is passed at 100%.

your document (well, of course the quality of document language varies) should read something like this: 410(b) ratio percentage fail-safe provisions. Notwithstanding anything in this Section to the contrary, the provisions of this subsection apply for any Plan Year if, in the non-standardized Adoption Agreement, the Employer elected to apply the 410(b) ratio percentage fail-safe provisions and the Plan fails to satisfy the "ratio percentage test" due to a last day of the Plan Year allocation condition or an Hours of Service (or months of service) allocation condition. in other words, the plus side of fails safe language is that you never need a corrective amendment to fix a coverage problem. the bad news is that tehre is no option "if the plan fails either ratio percentage or avg ben pct test"

maybe not next month but in 2 months 12/12/12 ah, someone once said Olive Oyl was a perfect 36 12-12-12

sort of like the old schedule T did the plan pass coverage? since it didn't, I better check NO

The ERISA Outline book 2.12 3. when a year of service is credited for eligibility purposes.....at the end of the eligibility computation period (emphasis the book, not mine) 3b. Plan may provide for credit sooner 3b1 example the plan document is written so that a year of service is credited at the end of the month in which 1000th hour is credited... a plan should not be administered in this fashion unless the terms of the plan expressly provide for this method of crediting a year of service.(emphasis the book not mine) so if I understand the question in point ee hired for example 5/1/10 did not work 1000 hours from 5/1/10 - 4/30/11. document language is the typical 'shift to the plan year' so now the person works 1000 hours from 1/1/11 - 12/31/11 doesn't matter when they complete the 1000 hours, you have shifted to a new 12 month eligibility computation period, and the credit is provided at the end of the period.(unless there is special document language)

I don't think you even have to go that far. Under the safe harbor provisions arguably you have 1 formula for HCEs and 1 for NHCEs so you fall under the multiple formula rule under 1.401(a)(4)-2(b)(vi)(D)(2) A formula does not fail to be available on the same terms to all employees merely because the formula is not available to any HCE. or 1.401(a)(4)-2(b)(vi)© A formula that is available soley to some or all NHCES is deemed to satisfy... or 1.401(a)(4)-2(b)(v) The allocations provided to the HCEs is less than the allocation that would otherwise be provided but yes, you would pass the ratio test because no HCE benefits. sort of like testing an integrated plan (e.g. 5.7%) on an allocation basis and imputing disparity. yes, an integrated formula is safe harbor, but if you were to test everyoe would have the same allocation rate anyway.

the instructions are pretty specific for code D "Use this code for a particpant previously reported..." [so if the person was never reported, there is no reason for a code D (D = delete from form SSA reporting system) if the person was previously reported then use D to "This includes a person who has begun receiving benefits..." hope that helps.

I'm just reporting what I find. None of those comments are mine.

Again, here are other comments on the issue. ASPPA and Sungard both seem to disagree that you can make other changes to safe harbor plans. http://www.asppa.org/Document-Vault/pdfs/G.../0429-comm.aspx 4/29/2011 ASPPA recommends that Treasury Regulation § 1.401(k)-3 be amended to permit the following mid-year changes: (note especially point 2. instead of ASPPA saying 'yes, you can simply change a non-elective contribution, they asked for clarification, apparently because they feel the issue is unclear.) 1. The addition of hardship provisions to a plan that does not currently contain any such provisions; 2. Adding or changing a nonelective contribution source to a plan (which is separate and distinct from the plan’s safe harbor contributions); 3. Altering the allocation method for nonelective contributions other than the safe harbor contributions (while protecting benefits already accrued); 4. Altering allocation requirements for nonelective contributions other than safe harbor contributions; 5. Adding a participant loan provision; 6. Amending the definition of compensation for allocations of nonelective contributions other than the safe harbor contributions; 7. Changing the eligibility terms of the plan (e.g., adding a new division or group of participants); 8. Amending the vesting schedule for accounts subject to a vesting schedule; 9. Adding an automatic enrollment feature to the plan; 10. Modifying distribution provisions (i.e., timing or form of distributions) with respect to accounts attributable to contributions other than elective deferrals and safe harbor contributions; 11. Modifying investment provisions (e.g., participant directed investment provisions); 12. Liberalizing eligibility provisions for any type of contribution; 13. Adoption of permissive retroactive amendments under Revenue Procedure 2008-50 (SCP or VCP); and 14. Adding a Roth 401(k) in-plan conversion feature after December 31, 2011. .......... Adam Pozek (one of the pension guru of gurus) comments http://www.pozekonpension.com/pozek-on-pen...-401k-plan.html 3/14/2012 When amending safe harbor plans, timing is critical. A few years ago, the IRS published guidance indicating that it is ok to amend a safe harbor plan mid-year to add a Roth feature or to provide for hardship distributions. Some interpreted this as being a partial list and believed that other types of changes were also permitted as long as they made the plan more generous. However, at the 2011 ASPPA Annual Conference IRS Q&A Session, one of the panelists indicated that the guidance on adding Roth and hardships is pretty much an exclusive list, meaning that no other changes are permitted once the year begins. No accelerating eligibility requirements; no increasing the deferral limit or adding catch-up contributions; no changing your safe harbor match from pay period to annual. To those who might be tempted to skip the annual compliance review on a safe harbor plan, I will remind you of the adage that an ounce of prevention is worth a pound of cure. The IRS is coming to a safe harbor plan near you, and fixing any problems on your terms is far preferable to waiting for them to show you that your safe harbor plan isn’t quite as safe as you thought. ............. comments based on a Sungard Seminar http://www.linkedin.com/groups/Safe-harbor...6354.S.53114683 5/6/2011 Safe harbor plan can be amended mid-year only with regard to 4 things For those that attended the SunGard May seminar, it was a good reminder to re-learn that a Safe Harbor plan can be amended mid-year only with regards to 4 things. Announcement 2007-59 provides that a safe harbor plan can be amended mid-year only with regard to the following: 1. Qualified Roth contributions, 2. Hardship withdrawals, 3. Mid-year amendments to become a safe harbor plan using non-elective contributions, and 4. Mid-year amendments to suspend or reduce safe harbor matching contributions. There are no other amendments permitted. So if a Safe Harbor plan wants to add an in-service Profit Sharing withdrawal midyear, they cannot. I read it to say that mid-year plan amendments are not permissible to the extent that the information included in the participant safe harbor notice would be affected. The Safe Harbor Notice references Distributions, but does not reference Eligiblity….so could a plan be amend if it did not affect the contents of the Safe Harbor notice?...would that be an aggressive position? The IRS requested comments as to whether additional guidance is needed with respect to mid-year changes to a 401(k) safe harbor plan, other than changes relating to mid-year amendments to become a safe harbor plan using non-elective contributions and mid-year amendments to suspend or reduce safe harbor matching contributions. It appears that the IRS has not commented or clarified anything beyond the above 4 items listed above. So……if a Safe Harbor plan wants to make a mid-year amendment that is not for one of the 4 items below, the answer is no they cannot. ..........................................

at every ASPPA meeting IRS officials have pretty much stuck to their guns and said you can only amend to add a Roth feature or add (I think) funeral provisions to in-service withdrawals. (And I always had the feeling they were saying their hands were tied, whether they agreed or disagreed) Its only 3 more months if its a calendar year plan...

I would add if the person is not 100% vested {at this time} it is still possible to distribution the entire excess aggregate contribution to the individual see example 7 of 1.401(m)-2(b)(5)

I have never heard that method proposed. Based on what I see in the regs (or at least how I've seen them interpreted) that would not be possible. your suggestion put another way would be: plan fails test initially, create some catch up, now plan passes. so now I can shift. shift some NHCE deferrals. Plan now fails ADP again, so create even more catch up and plan still passes which is what the requirement for shifting requires. The problem with that: Suppose you had a 2nd HCE (not catch up eligible) who had a refund. You never rerun an ADP test after calculating refunds because the top-down method of refund is based on $ deferred not percent, but you are, in a round about way suggesting that. Interesting suggestion though. Though what might work (never tried it) run the ADP test on comp less deferrals, failing the testing even more, creating a larger catch up, and then shift. I wouldn't think that would work, but without seeing actual numbers it might work.

the toolkit appears to be on the money... reg cite is 1.410(b)-7(f) Section 403(b) plans which refers to 403(b)(12)(i)\with respect to contributions NOT made pursuant to a salary reduction agreement... Q and A #10 2008 ASPPA Conference 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? You should exclude salary deferrals from ABT test. See Treas. Reg. §1.403(b)-5.

having submitted the question myself, the intent of the question was if it was possible to shift after corrections were made to pass the ADP test, not could you shift first to get out of a failed ADP test (or create catch ups or whatever). I never took the IRS response to be other than that. 1.401(m)-2(a)(6)(ii) clearly states you can use deferrals in the ACP..only to the extent that the deferral arrangenent would satisfy that test [the ADP test] for the plan year beforehand.

for the sake of the argument I'm going to assume the following - the person hired 7/1/2012 worked less than 1000 hours in 2012. If the plan is processed annually how is Relius to know how many hours the person worked between 1/1/2013 and 7/1/2013 to determine if the person worked 1000 from 7/1/2012 - 6/30/2013?

the instructions for the form 5500 SF (page 9) Example: Merger/Consildation : a final return/report should be filed for the plan year (12 months or less) that ends when all plan assets were legally transferred to the control of another plan.

shhhhhhhhhh. I sort of have this in my presentation on Top Heavy issues for the next ASPPA Conference. A similar type question was asked in 2010. It was in regards to safe harbor, but the (ill-)logic is all the same. An employer had a safe harbor election for the plan year 2008. The plan and company both operate on a calendar year. The plan is a trustee directed, balance forward plan. The required 3% contribution was, say, $15,000. Employer does not go on extension; employer puts the $15,000 into the plan in September of 2009. The contribution is not deductible for 2008 (they'll deduct it in 2009). However, under Section 415, it is not an annual addition for 2008, since it was not contributed within 30 days of the tax deadline. However, it is SUPPOSED to go in for 2008 and be allocated for 2008. Is there a failure to provide the safe harbor contribution for 2008? If so, how to correct? (Note, this could also be an issue anytime a QNEC needed to pass ADP or ACP testing is deposited more than 30 days after the tax return due date but within the 12 month correction period under IRC 401(k).) What if the deposit is not made until after 12/31/09 - that is, more than year after the plan year end to which it applies? 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.] 2010 ASPPA Q and A (sorry they didn't number the questions - it was on page 4) so, in my way of thinking Fred worked in 2011 and quit real early in Jan 2012. He is owed the top heavy for 2011. If the contribution is made during the 'lack of guidance' period then supposedly you have to use 2012 comp to determine 415 limit. But poor Fred quit so early that his comp isn't large enough to cover the 415 limit. therefore under those rules it becomes impossible to make a contribution for him during that period. you have to wait until after the end of the year and fall under EPCRS. Now that makes a lot of sense!