Tom Poje

hopefully these are not plans that are top heavy and were using safe harbor match to avoid that. otherwise by having even a minimal profit sharing you blew things.

I don't think its a matter of BRF, but you would have to run some type of nondiscrim test since you are aggregating the plans. you indicated only one plan had a small amount of profit sharing, so since not all received the nonelective contribution I'd say not all are benefitting under the nonelective test.

distribution amounts were calculated and submitted to investment house. find out a month later that instead of cutting checks to the participants the investment house forfeited the money and its sitting in suspense. but it was at least processed within 2 1/2 months. well, I guess its easy enough to fix by taking the amount out of suspense and distributing it properly, but does the 10% penalty tax apply? I guess if I cut a check to the person within 2 1/2 months and the person doesn't cash it until a month later it's ok, but what about something like this? gotta love some of these investment houses.

well, okay, here is a start on another based on Return to Me (Dean Martin) Oh Schedule C Oh I fear to report thee What I lack, what I lack the info, that I lack I abhor Oh Schedule C For my heart, it detests thee Worrisome, worrisome oh these C's, worrisome where to start?....

At the 2010 ASPPA Annual Conference the following was asked (#3 on the Q and A sheet) 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.) Questions: (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? (2) If (1) is Yes, is the 3% minimum calculated for compensation from 1/1/2010-9/15/2010? (3) If (1) is No, is there NO top heavy minimum for the 2010 plan year because the plan terminates before the end of the year (similar to the concept that there is no money purchase plan funding if the plan terminates before the end of the year and there is a last day employment requirement), or does the plan have to wait to see who is employed on 12/31/2010 to determine who is entitled to the TH minimum, even though the plan has terminated before that date? (4) Is the answer to any of the above affected by whether the employer continues in existence through the end of 2010? (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. (2) yes (3) n/a (4) no change

well, perhaps not 'required' but even the IRS Q and A says FAQs - Form 8955-SSA - When the benefits of a deferred vested participant are transferred from one plan to another, how do I report the participant? [while this particular Q and A applies to a transfer, they didn't write a Q and A to handle every question!) In this case, the plan administrators of both the transferor plan and the transferee plan should report information regarding the plan participant. See Form 8955-SSA Instructions, Transfer of a Participant’s Benefit to a New Plan. The plan administrator of the plan transferring the benefits, should report on Part III, Line 9, Code D that the participant’s benefits have been paid out or the participant is no longer entitled to those deferred vested benefits. The administrator of the plan receiving the transfer should report either on Part III, Line 9, Code C (where the participant was previously reported by the transferor plan and the plan administrator of the transferee plan has received all necessary information from the transferor plan) or on Part III, Line 9, Code A (where the participant had not previously been reported or information was not provided). but then when my mom says I 'should do' something I understood what that meant. perhaps its the difference between having 10 Commandments or having 10 Pretty Good Suggestions?????

the copy of the instructions for 2011 that I looked at (and it's said the same in the past: opening page right after What's New Purpose of form: look at bullet point 3 "previously were reported under the plan but have been paid out or are no longer entitled to those deferred vested benefits." I'd hold that says if you they were reported you need to report them again. However, the instructions this year clearly say you do NOT include them in line 6.

on the other hand, from the participnats point of view: and lets say the 415 limit was 10000. and the deferral was going to be 10000. new participant. he defers 10000 and doesn't pay taxes yet so has a 10,000 balance. now instead the company puts in the 10000. participant pays, lets say 20% in taxes so now has 8000 in his pocket. plus he has 10000 in his account. I'd say the participant comes out ahead to the tune of 8000.

the form is up and running on FT William. tried my 'import' from Relius hurray, it still works. and with this plan it was 89 bodies. sure beats typing! according to them you now only indicate the number of 'A' bodies on lines 6a and 6b. well, I guess I will find out when we file the 'batch'.

maybe, maybe not. it depends on what you are really asking. she has probably incurred a break in service, and the ERSIA Outline Book points out that you don't have to quit to have a break in svc. see 2 B2c of the book. (I had nevvver thought about that before until I read that section years ago) but also check document wording. all that being said, it is probably a moot point, because if its a 401k plan, you are probably under the rule of parity, and for someone who is active the break in svc rule never really kicks in, so to speak. if plan is top heavy she would be eligibile for top heavy. if the plan is safe harbor then she has to get the safe harbor because you can't have an hours requirement. but as was pointed out a plan can't have a classification of 'part time' as for an example of going from eligible to non-eligible, suppose the person went from non-union to union. or the plan excludes dinglebats, and mid year the person became a dinglebat. those would be examples of going from eligbile to non eligible. but simply a reduction in hours has no effect.

send them a copy of the 415 regs and ask them to explain the last paragraph on page 47? ********my post number 5000******

interesting. the 2011 instructions now say Do not include any participants on line 6a or 6b who were previously reported on a Form 8955-SSA or a Schedule SSA (Form 5500). hmmm. wonder if electronic filing will accept it that way. for 2009 and 2010 the totals had to match including the 'D' people when you filed electronically. this could be fun. guess I'll have to wait and see how FT William handles things.

so plan has 1 HCE and 2 NHCEs last day rule, must work 1000 hours. profit sharing only. one NHCE worked 600 hours and terminated since NHCE worked over 500 hours can't be excluded from testing. since terminated not eligibile for contribution. the fact that they worked less than 1000 hours is somewhat irrelevant because they terminated. if they were still working they wouldn't be eligible for the contribution, but if they were active they would get the top heavy. so for testing you have 1/2 NHCEs benefiting for a ratio % of 50%, fails testing your comment "but it them goes on to say that this can me modified if certain coverage things are not met " implies the document has fail safe language. if there is fail safe language then you never get to the avg ben test(that is impermissible), you simply bring the person in and provide a contribution. the person has magically met the requirements. lets suppose the plan didn't have fail safe language. this is without checking numbers, so it could be I am incorrect on the following [in your case its a moot point since the plan appears to have fail safe language anyway]: if the active NHCE was 5 years younger than the HCE, then 1.085^5 = 1.5 (the NHCEs benefit in tested on an accrual basis will produce an E-Bar 1.5 times that of the HCE. so with 2 NHCEs that is an average of .75. to pass avg ben PCT test you only need .70 so that would pass. since 50% of the NHCEs benefit that is enough to pass any safe harbor % so arguably you would pass coverage without providing any additional contribution. (Some IRS agent feel that excluding someone from a contribution who works > 500 is not a reasonable classification, and you would still fail, but that is a different matter)

as of 12/31/2010 the only people with balances were the owners, so for plan year 2011 the plan is 100% top heavy. ugly surprise. and I would assume as of 12/31/2011 the key people probably have more than 60% of the assets so the plan would be top heavy for 2012 as well. as noted prior, plan will fail ADP test in 2012. but a QNEC could be made now and it would cover top heavy (double duty) - assuming keys are excluded from top heavy things might not be that bad. lots going on in a brief space of time. tread the waters carefully.

but start planning now. for 2012 the prior year NHCE is 0 if using prior year testing, any QNEC would be due 12/31/2012, whcih of course is generally before you know the numbers. but you know what he HCEs are deferring, and you know what the 2011 comp is for the NHCEs so you could put in a QNEC for the (HCE avg-2) or whatever at this point in time. or amend to current year testing and then wait and see how thing work out. you did not indicate it, but it sounds like the plan will be top heavy, and so you could put the top heavy in the form of a QNEC (assuming only non keys receives the top heavy) and then you would be covered.

yes, then officers 3 and 4 on your list would not be key because when ranked by comp they are #5 and #6 of the officers and you only use the top 4 officers..

insufficient info supplied to answer the question directly, but enough to provide the answer so that it can be determined. 40 employees. max # of officers that can be key is 10%, so the max # of officers is 4. Write down the list in comp order of the 4 highest paid officers. This list would only consist of officers making more than the officer comp limit. now to this group of key employees add anyone who is a 5% owner (or 1% owner making more than 150000) if they are not on the list.

unless one of the people that comes into the plan under the 30 day rule is an HCE you shouldn't have a problem. you should be able to test otherwse excludables separately, and if they are all NHCEs, then that group would pass.

bah. why don't you write them yourselves. you already have By the C, by the C, by the beautiful C, You and I, you and I, oh! how happy we'll be,

then ignoring everything else, assuming the individual is in the plan. and further it must be assumed such person would not receive anything otherwise the question makes no sense. for coverage: 401k portion - includable and benefiting hours don't make a difference. 401m - excludable if worked less than 501 hours and terminated (assuming there is an hours requirement or last day provision. include and not benefiting if worked over 500 hours. includable and benefiting if no hours no last day to receive a match even if didn't defer. nonelctive - excludable if terminated and worked less than 501 hours. includable and not benefiting if worked over 500 hours. if its a controlled group the terminated and 500 hours rule changes because by definition the person must be a 'participant' if you are separately testing plan A from plan B, and person in B quit < 500 hours they are not excludable when looking at plan A because they are not a participant. the term and < 500 hours rule is optional. you can alwasy count those bodies as long as you are consistent. this may be helpful if its an HCE that falls into that category. avg ben pct test - include because they were benefiting under the 401k portion, but for the nondiscrim classification test can exclude if term < 500 and not benefitting for the nonelective portion

if employment status code = R (Retired) instead of T (Terminated) and the allocation requirements screen in plan specs = 0 then no matter how many hours the person worked they should receive a contribution.

I would have leaned the other way and said since it says anyone "who receives an allocation of Non-Elective Contributions and/or QNECs must receive an allocation of Non-Elective Contributions and/or QNECs that is at least equal to the Minimum Allocation Gateway for the Plan Year" In other words, regardless of any other conditions, you "must' bump these people up, because the document says if you receive any nonelective it has to be at least = the gateway. but of course, that is only a guess. The mere fact the language is in the document implies (I'm guessing) that it is the intent of the documnet provider to be proper gateway language. otherwise you are simply including language that is stating a fact that is already known. Could it be clearer? well, of course, otherwise you wouldn't even be discussing the issue. Can you ask the documnet provider if that is the intent?

Employer Liability Under IRC 6672 Internal Revenue Code Section 6672 mandates an employer to withhold federal income taxes and social security taxes from employees’ wages. The employees are given a credit against their tax liability for taxes withheld whether the employer remits the funds to the government or not. The IRS can’t collect this tax from the employee even if the employer does not pay the tax to the government. To protect the government when the employer does not pay this tax, section 6672 of the Internal Revenue Code subjects all “responsible persons” for the withholding and payment of the taxes to a penalty equal to the amount of the taxes due where the employer failed to pay such taxes to the government. Section 6672 imposes the penalty on anyone who is required to collect, administer and pay over the tax and who willfully fails to do so. To be liable under Section 6672, the person must meet two requirements: 1- He/she must be “responsible person” 2- He must “willfully” fail to pay over the taxes due The ERISA Outline Book would note that any penalties are usually not enforced if the taxes are actually are paid actually paid by the individual. for more info: http://www.irs.gov/irm/part8/irm_08-025-001.html

without seeing the exact definition in the gateway, it is unclear. saying that it 'must be given to NHCEs' is unclear, for the regs require it be provided to NHCEs who receive a nonelective, not necessarily all NHCEs. If the definition, for lack of a batter term (without seeing it) 'imples' that the gateway minimum will be satisfied, then there may be an argument for providing the gateway - a number of documents are written vaguely enough in an attempt to cover all bases, but you do have to be careful. All that being said, if the document does indeed have no gateway language, you could always put in a corrective amendment to bump the 2 people up to the level necessary to satisfy the gateway, which accomplishes the same thing, but with an extra step. (and probably makes the HCEs happy because they get more) assuming of course you are within the 9 1/2 months necessary to put in such an amendment. or since the formula is discretionary you could of course limit the HCEs to 9% as well.

in the ERISA Outline Book, Appendix C (Chapter 12) there is a table comparing SIMPLE-IRAs to SARSEPs. on the table on of the comparisons is exclusive plan SIMPLE-IRA it says YES SARSEP it says NO