Tom Poje

rumor has it that it has never been paid out. imagine that.

which left be totally baffled. Married Couples (not limited to newlyweds, though perhaps an emphasis placed on them) would be given a flitch if the lived in harmony for a year and a day. A flitch is a side of bacon, hence the expression "taking home the bacon" which according to one site rarely happened. hmmmm. on the other hand, if you couldn't prove you deserved a flitch, then you were given gammon. gee whiz, now I had to look that up. Basically gammon is a raw piece of meat. If it was cooked it is known as ham. more useless info for you.

the SSA instructions say to use the code that describes the type of annuity [i would use the term 'distribution'] that normally accrues. so if the normal form is an annuity G makes sense. if the normal form is lump sum then the answer is A. so the famous "What does the document say is the normal form"

415 is the only plan limit that is end of the year, all others are beginning of the year. well, then, of course, deferrals are a calendar year limit and have nothing to do with plan year. by the way, based on the current CPI-Uvalue released yesterday the deferral limit for next year (nrounded) would be 17,510, which is just enough to increase the limit to 17,500. we have 3 months to go, in an election year. hmmm. I think prices usually come down a bit under those conditions, simply by coincidence of course, so the figure will probably drop under the 17,500.

only cuz I have to talk about top heavy at the next Annual Conference, so I have the notes handy. Otherwise I'm not a nice enough guy to look it up. ......................................... 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? 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. (2) If (1) is Yes, is the 3% minimum calculated for compensation from 1/1/2010-9/15/2010? YES (3) Is the answer to any of the above affected by whether the employer continues in existence through the end of 2010? No change. 2010 ASPPA Conference Q and A #3

well, it is somewhat informal. it is not informal in the sense a question is asked from the audience and they respond on the spur of the moment. questions are submitted beforehand so the IRS agents have a chance to review them. then they meet with the ASPPA folks to discuss what their reoinse will be, etc. I lean toward thinking they generally can be relied upon. in this case, it makes sense (at least to me) for if the document says its safe harbor its safe harbor.

at the 2009 ASPPA Conference Q and A, the IRS response was #62 The final QACA regulations require a QACA to use a safe harbor definition of compensation for deferrals and employer contributions as of plan years beginning on or after 1/1/2010. Does this also apply to SBJPA (i.e., 401(k)(12)) safe harbor plans? If a plan uses unsafe definition of compensation and then fails the 414(s)compensation test, what is the remedy? Answer Under Treas. Reg. §1.401(k)-3(b), the safe harbor contribution under the "old style" (i.e., 401(k)(12)) safe harbor must be based on "safe harbor" compensation, which requires a definition of compensation that meets IRC §414(s) (with some limitations). If the compensation used for the employer contributions does not meet these rules, the safe harbor contributions are likely insufficient and the CODA (and likely the plan) won't meet qualification requirements. The correction would be to make up the difference in contributions using a §414(s) definition of compensation plus earnings for all affected years. By the way, the compensation eligible for deferral in a 401(k)(12) safe harbor plan does not need to be nondiscriminatory under §414(s), but only reasonable. On the other hand, deferrable compensation for QACA purposes must meet the §414(s) definition. See Treas. Reg. §1.401(k)-3(j)(1)(i), last sentence. (And you might want to change the definition of deferrable compensation in the future.) (A reminder that IRS response does not necessarily represent an actual Treasury position.

lets suppose I have a profit sharing plan. no exclusions, but someone elects out. the basic logic in the eyes of the IRS (as far as I know is as follows) since the plan had no exclusions, if the person is permitted to participate in any other plan, then, in effect, the person has made a 'deferral election' in the original plan where no such option was available. as I recall, based on the example in the regs the initial plan was one that was a 5% contribution coming from your paycheck. all people. end discussion. every year. but you could elect out at, but it was not considered choosing to defer 0 because the plan was not a 401k plan.

so let's see what happens if you send the SAR before the 5500. The SAR indicates that you can request copies of the 5500, but he 5500 hasn't even been filed hmmm the DOL website apparently hasn't been updated for this cahne either for it says the SAR is due Within 9 months after the end of the plan year or 2 months after the annual report filing deadline. so the SAR is due no more than 2 months after the 5500, but is suppose to be given out before the 5500 is filed. This sounds like a time warp somewhere in the pension world. cool. it would be like the DOL and IRS to expect us to meet those requirements.

answer is unclear from the data provided limitation year = plan year, generally implying a 12 month period so no proration. per terms of the document, what compensation is being used? is it for the full 12 month period even though the effective date is from 1/1? if it's the full 12 months then no proration. ERISA Outline Book point this out (3B.16 in the latest version) (Not sure I would even know that if I didn't read it)

pre-2002 it was a prohibited transaction for an owner to take a loan, but EGTRRA eliminated that rule. I think all you have is improper (nonreporting) of a defaulted loan. (but maybe someone knows more than I do in regards to this issue.) section 6.07 of EPCRs says .07 Rules relating to reporting plan loan failures. (1) General rule for loans. Unless correction is made in accordance with this section 6.07(2) or (3), a deemed distribution under § 72(p)(1) in connection with a failure relating to a loan to a participant made from a plan must be reported on Form 1099-R with respect to the affected participant and any applicable income tax withholding amount that was required to be paid in connection with the failure (see § 1.72(p)-1, Q&A-15) must be paid by the employer. As part of VCP, the deemed distribution may be reported on Form 1099-R with respect to the affected participant for the year of correction (instead of the year of the failure. The relief from reporting the participant’s loan as a deemed distribution on Form 1099-R in the year of correction, as described in the preceding sentence, applies only if the Plan Sponsor specifically requests such relief. it is possible since the loan is from an owner the IRS may say no to 1099R in the year of correction instaed of year of failure.

you certainly wouldn't want to use cross tested and describe your scenario "That the younger ee doesn't want his 25% in the plan" while possibly tough to prove, if you described it that way to the IRS they'd jump down your throat. they frown upon such practice. The latest LRM state In the case of self-employed individuals (i.e., sole proprietorships or partnerships), the requirements of §1.401(k)-1(a)(6) continue to apply, and the allocation method, including the determination of participant allocation groups, should not be such that a cash or deferred election is created for a self-employed individual as a result of application of the allocation method. a few years ago at the ASPPA Conference their response was "We would know abuse when we see it" in other words, if you go cross tested, you would have to have a better description of why the young partner 'received' nothiong.

that would be my understanding though check wording in document which might use 'rounded years' in which case he would have 4 years. you also have the possibility of excluding certain years (e.g. before ee turned age..., before plan began, etc see also 1.410(a)(7) which covers the elapsed time rules

if you follow the guidelines for stopping safe harbor contributions, the proposed regs read In addition, a plan that is amended during the plan year to reduce or suspend safe harbor contributions (whether nonelective contributions or matching contributions) must prorate the otherwise applicable compensation limit under section 401(a)(17) in accordance with the requirements of § 1.401(a)(17)–1(b)(3)(iii)(A). on the other hand if you wait until the end of the year to 'true-up' the NHCEs then I think you fail BRF because you have given the HCE an 'investment advantage' - they were provided a chance to invest through JUne and the NHCEs have to wait until the end of the year.

while it is true you could change the eligiibility requirements for all employees, there is no reason that such a change only apply to newly hired employees, thus permitting the 5 'part time' employees to continue to defer if they so desire.

or possibly number of participants was left blank instead of zero. I forget what the reason was, but I had a similar message - but that was before submitting, running an edit check on FT William. and then it was a matter of figuring which item it was that wasn't checked. good luck, my guess it is probably something "obvious" that was missed, at least my response was more like "Well Duh. That sure was dumb of me!"

see also bullet point 3 http://www.relius.net/News/TechnicalUpdates.aspx?ID=433

1.401(k)-5 Special Rules for mergers, acquisitions and similar events oh, it's blank. there are no guidelines. if you weren't merging the plans you can't aggregate them because of 1.401(k)-1(b)(4)(iii)(B) plans with inconsistent testsing methods... may not aggregate a plan using the safe harbor provision and another plan that is using the ADP test, (or a plan that uses current year testing with a plan that uses prior year testing) I think, perhaps (???) you follow 1.401(k)-3(e)(3) Change of plan year and create a short plan year for both plans(?) e.g. 1/1 - 7/30 and then another short year 8/1-12/31 this seems to be possible under (3)(ii) which seems to say you could have 2 short plans year back to bak. it says you satisfy things for the immediate following plan year (or for the immediately following 12 months if the immediately following plan year is less than 12 months)

1.401(k)-1(b)(4)(iii)(B) plans with inconsistent testsing methods... may not aggregate a plan using the safe harbor provision and another plan that is using the ADP test, (or a plan that uses current year testing with a plan that uses prior year testing) so it would be impossible to aggregate paln D with anything. This is in regards to the ADP testing (both coverage and nondiscrim) applying the same logic to the ACP test, I don't see how A and C could be aggregated since one is current and the other prior year testing. (1.401(m)-1(b)(4)(iii)(B) but my understanding is that you could aggregate the ADP test one way and the ACP test another way

my understanding I have a document for Plan B with fail safe language. Therefore, it says if I fail coverage I bring in the next person on the list and keep bringing in people until I pass. I don't think there is anything is such language that says "But if the plan is part of a controlled group I can use the avg ben test to pass coverage." ......... my understanding if you are not aggregating plans then yes, you could test one plan on an otherwise excludable basis, while you don't do so for the other plans.

even at one of the ASPPA Conferences the IRS admited it's unclear about the 415. Not sure what number this one was. 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 under EPCRS if you are 1 year late, then its a corrective contribution and the 415 rule doesn't apply as a 'current year' sort of like saying, well you missed the deadline, plus the 30 days afterwards, now you are better to wait a few more months an be 1 year late. that makes no sense. plus, what if you have an employee who terminated, and thus has no comp in the 'current' year but is owed the safe harbor. how does the 415 limit rule apply? are you forced to wait until the 1 year passes on this person alone and then put the contribution in?

years ago I attempted to create a covered comp calculator It actually appears to work. you simply have to enter the new taxable wage base each year (and copy down through all future years) this one goes back to 2005. I suppose you could use it to generate prior years by 'eliminating' a prior taxable wage base. As I recall, I pasted the govt values into the table to compare with what I generated and they did indeed match there are 2 values that are generated that will never exist which are the years when SSRA switches from 65 to 66 and 67 but its the best I can do. of course no guarantees.

agree, person is still included because they are not terminated. next year, well, that depends. if its a non-401k plan, it is possible the plan uses the one -year break in svc rule. and therefore, despite the fact he didn't terminate, he did have a break in svc, and he would have to re-establish eligibility by working 1000 hours, otherwise he is not an active participant.

2 points 1. you can only exclude terminees who work less than 500 and receive nothing, so in this case that rule would not apply. 2. if the person had actually terminated, it is an option to include or exclude, as long as you teat all people the same.

I don't believe there is any rule 'the max would have been able to defer' if my shrinking brain remembers correctly many moons ago (pre 1997) the basic definition of comp excluded deferrals and no adjustments was ever made to take that into consideration (e.g. that the 415 limit would increase if you refunded some of the deferrals.