Tom Poje

I believe what you are thinking of is the 415 deadline 1.415©-1(b)(6)(i)(B) which is 30 days after the deduction deadline. In other words, for a calendar year plan ending 2011, if the contribution is made, lets say 9/30/2012 it is deductible in 2012, but can be applied toward the 2011 plan year, and count aginst the 415 limit for 2011 and not 2012.

The only requirement for the enhanced match is that it be at least as good as the basic match (1.401(k)-3©(3) the 4%/6% are limits placed on satisfying ACP test. anything above the limits is tested

most important is to follow the section of the document. it really shouldn't be a pick or choose. prior to the amendment requirement you had a little more leeway. this is generally found in the "Amendment for the final 415 language" (not sure where it shows up in a new document) all plans had to be amended for this, so it has to exist. below is sample language from one such amendment. the default is to include in the year of W-2. ............................ Administrative delay ("the first few weeks") rule. 415 Compensation for a limitation year shall not include, unless otherwise elected in Section 2.2 of this Amendment, amounts earned but not paid during the limitation year solely because of the timing of pay periods and pay dates. However, if elected in Section 2.2 of this Amendment, 415 Compensation for a limitation year shall include amounts earned but not paid during the limitation year solely because of the timing of pay periods and pay dates, provided the amounts are paid during the first few weeks of the next limitation year, the amounts are included on a uniform and consistent basis with respect to all similarly situated participants, and no compensation is included in more than one limitation year.

I realize the ERISA Outline Book speaks of shifting QMACs to the ADP test, but I have never thought of them that way. It was my understanding a QMAC is used in either ADP or ACP. (or both assuming seperate contributions) It is not made to the ACP and then 'shifted'. (That doesn't seem any different than a QNEC which is made either to the ADP ot ACP, and not to the ADP and then 'shifted' to the ACP test.) And since you can't 'double' up on Qcontribution (use the same contribution twice) I'm not sure if you can shift such a contribution. (but my opinion only)

if you were to allocate a profit sharing contribution on comp less deferrals would you follow the same logic? If the HCEs are the only ones who make Roth they would come out ahead, and I don't think that would be the intent of the law. while I haven't ever seen the issue addressed. I don't believe the 414s regs were ever modified since Roth contributions were permitted, but that may be more of an oversight) but I would think excluding deferrals of only those who make pre tax deferrals would fail a consistency requirement.

perhaps I am reading more into this than what is intended. You said the plan is a start up plan, which to me implies it is the first year of the plan. therefore the plan either uses prior year testing (in which case, since there were no contributions in the prior year it would use 3%) or current year testing, in which case the currect year QMAC is used in either the ADP or ACP test. I don't see how you can combine a 'current year QMAC' with a prior year 3%.

in other words, suppose the person was hired 12/30/2011, and works 1000 hours as of anniversary date. they complete 1 year on 12/30/2012. if plan switches to plan year then they complete a 2nd year on 12/31/2012 becauee the period runs from 1/1/2012 - 12/31/2012. so they complete the 2 year wait and worked only a little over 1 year.

you indicated you have 2 groups. 1 group is HCEs, and I imagine the formula is comp to comp within the groups. so if I give 1 HCE 7%, I'm pretty well stuck giving the other one 7%, so if they have different comps, I don't see how you could take away 6000 from each of them. they would end up with a different % of pay.

I think there are 65 words in that sentence, but I fell asleep trying to count them.

perhaps the answer is found in the preamble (p49) or the actual cite (page 98/99) of course, this may require a translator. preamble: A number of commenters on the interim final rule requested that the Department better align this timing requirement with existing reporting and disclosure standards. For example, service providers currently must furnish information necessary to complete the Form 5500 Annual Report no later than 120 days after the end of the plan year. The Department is persuaded that the timing requirement for this reporting and disclosure information should be based on the reporting or disclosure requirements in question, rather than on the time that a responsible plan fiduciary chooses to request the information. Accordingly, paragraph ©(1)(vi)(B) now requires that such information be furnished reasonably in advance of the date upon which such responsible plan fiduciary or covered plan administrator states that it must comply with the applicable reporting or disclosure requirement, unless such disclosure is precluded due to extraordinary circumstances beyond the covered service provider's control, in which case the information must be disclosed as soon as practicable. The Department believes that this modification will address commenters’ concerns.

The preamble to the final nondiscrim regs is probably easier to understand than the regs. The whole thing can be found here: http://benefitslink.com/src/taxregs/1.401a4-8-final.html I included the applicable portion below: One commentator suggested that the regulatory provision that permits a plan to satisfy the gateway requirement by providing an allocation of at least 5% of compensation within the meaning of section 415©(3) not require that the allocation be based on a full year's compensation in the case of an employee who participates in the plan for only a portion of the plan year. The final regulations modify this requirement as suggested. The final regulations allow a plan to satisfy the gateway by providing an allocation of at least 5% of compensation within the meaning of section 415©(3), limited to a period otherwise permissible under the timing rules applicable under the definition of plan year compensation, in the same manner as the general rules under the section 401(a)(4) regulations. The definition of plan year compensation permits use of amounts paid only during the period of participation within the plan year. ............ I personally know one of the authors of the Coverage and Nondiscrimination Answer Book. Out of his mind. Plain and simple. He is a nut case. But even a blind pig can find an acorn once and awhile. (Every time I look in the mirror and see myself I am even more convinced of that. ) So I think you can trust the book in this case.

assuming no dramatic changes in the next 2 months, based on the CPI-U value released today (229.104) the comp limit will be 255,000 and the 415 limit would be 51,000 in 2013. Too close to call if the deferral limit will increase to 17,500. Since they are predicting higher food prices because of the drought I'd guess the consumer price index would only increase, but someone once told me all bets were off in an election year, certain 'unexplained things' happen.

same here. we only send a copy to the client to sign and keep for their own records. (client prints and saves a copy of the 5500 for their records at filing time so its not that much different a concept) we did not bother with obtaining a TCC code, but rather (for a small fee) file all forms in a batch through FT William (one batch before extention deadline, and then the rest in a batch 10 days or so before the extension deadline)

well 1.414(q)-1T Q-3 2 (ii)(b) says (the last sentence) the employer may adopt any rounding or tie-breaking rules it desires, as long as such rules are reasonable, nondiscriminatory, and uniformly and consistently applied. you can't have both as far as I can tell.

I think you have it correct, just to be sure there is no confusion. there is one avg ben pct test. then, depending on how you aggregate or don't aggregate plans there could be a number of avg ben tests or 1 avg ben test. It is too bad the terms are so similar. sort of like saying a plan is safe harbor. it could mean a safe harbor 410k or it could simply mean the plan's profit sharing formula is safe harbor (e.g. integrated at the proper level, or comp to comp)

There should be only 1 avg ben pct test for any and all plans involved (unless you carve out otherwise excludables and test them separately) It doesn't matter whether you permissively aggregate plans or not, still only one avg ben pct test. The only exception would be if you have a QSLOB. see 1.410(b)-7(e) This cite also includes some examples if there is a QSLOB

A similar question was asked at the ASPPA Conference/ (And again, in addition, there are other possible issues such as, what if plan has a last day rule: now what happens if a person quits) #33 2009 Conference A plan provides for a discretionary match which is computed on an annual basis. All participants share in the match. To avoid a large contribution at the end of the year, the employer contributes (for example) a 100% match on deferrals not exceeding 4% of compensation on a payroll basis throughout the year. Is there a violation of the timing of contribution regulations if the employer computes and funds the match this way, and then deposits any possible match true-up at plan year-end? Under the final 401(m) regulations, you cannot prefund matches before they are earned. Therefore, we will assume for purposes of this question that no requirements apply in regard matching contributions. On that basis, we are concerned that the allocation violates the terms of the plan, which provides for an annual allocation. With regard to the true-up, if a true-up is available to anyone who contributes at an irregular rate during the year (i.e., who contributes in excess of the 4% that is eligible for matching contributions for some part of the year and contributes below the 4% for the other portion of the year), but only HCEs qualify, there is no discrimination problem. However, if NHCEs qualify for this true-up under the plan and are denied the additional matching contribution, you will have both discriminated in favor of the HCEs and violated plan terms

if you have already imported/loaded the census data and need to change plan year end, you could utilities/change system ids/ identifier type = plan year end but I can't tell exactly from your question if that is what you are doing. it implies you have already run a short plan year, which should mean you should have changed the dates already???? (I myself would make a duplicate of the plan before doing anything just to be safe) I don't work with DB plans. If you haven't created the new plan yet, then when creating a new plan year just enter the proper dates. Might have to change the dates under the employer screen as well.

the famous "What does your document say" or in particular, what does your Post-EGTRRA Amendment say here is a sample (d) _______ Compensation Earned in Limitation Year but Paid in Next Limitation Year. Section 2.5©(2)(E) of the Amendment defines Code §415©(3) Compensation for a Limitation Year to include any amounts earned during that Limitation Year but not paid until the next Limitation Year. Every document I have ever seen always required you to check the item if you wanted to include it in the 'prior' year. If it was checked then it would be included in year earned not paid. in other wrods, you have to treat everyone the same, following the terms. Usually it is year check was paid. e.g. if the person deferred the last week of Dec and quit Dec 27 2011, and never worked again in 2012, for personal income tax purposes he would still show with compensation to be taxed and a deferral.

and as I recall, you can't even use the otherwise excludable option.

unlike coverage (which has its own special transition rules -410(b)-6© and 1.410(b)-2(f) as close as you come is 1.401(k)-5 and 1.401(m)-4 which simply says "reserved" for acquistions and similar events. the fact that the special rule applying to coeverage does not apply to nondiscrim was seen as recently as rev ruling 2004-11 in particular (I have included the complete rev ruling, this portion in bold face, though I don't think it adds much more, but maybe you will find it useful. Therefore, the special rule for certain acquisitions or dispositions in § 410(b)(6)© and § 1.410(b)-2(f) does not apply for purposes of satisfying the ADP test or the ACP test and thus provides no relief from satisfying these tests using the averages of the actual deferral ratios and actual contribution ratios, respectively, of the eligible employees under the plan. Accordingly, the cash or deferred arrangement and the matching contributions under the profit-sharing plan must satisfy the ADP test and the ACP test following the sale of S to Y using these ratios.

I thought the new plan rule was it had to be at least 3 months long.

have the people been paid out? without looking it up, I thought there is a succesor plan rule (e.g. if they were only paid out < 1 year ago then I believe the answer is no) As I recall it's based on pay out date not term date.

for all practical purposes, in a controlled group situation you have 1 employer and a mess (technical term) of employees if the plan are not aggregated for coverage and you are looking at nondiscrim only those employees in the actual plan you are looking at will have a benefit (and from that plan alone) and everyone else will show up as a 0. Lets suppose I had 2 plans 1 HCE and 5 NHCEs in each plan. If I run coverage separately on each plan I have 5/10 NHCE and 1/2 HCE and pass at 100%. Lets suppose 1 plan had a 10% profit sharing and the other only 5%. If I look at the 10% plan AND test on an allocation basis then I will have 5 NHCEs in the HCE group. (I will also have 5 NHCEs not in the group and 1 hve not in the group) so ultimately the results are the same as coverage. Same thing will happen for the 5% plan. or another way of looking at it, if you have a plan with a safe harbor formula (e.g. everyone receives the same %) then when testing on an allocation basis, the results will be the same as for coverage. It doesn't matter that you treat the people as 0. But treat them as 0 you must, despite passing coverage (which, by the way, you treated them as 0 as well)

Failure to follow the terms is not correctable under EPCRS. you have to use VCP (Very Careful Planning)