Tom Poje

again, depends on facts and circumstances. if there is a skip (e.g. no match between 2 and 3%), then what other facts are involved. if it's mostly minimum wage people then I'd lean toward saying its discriminatory because most probably couldn't defer more than 3% and skipping that % hurts them.

well, since its facts and circumstances.... (or is it Joe FRIDAY and just the facts....) I suppose you could use 1.410(b)-4©(3) on facts and circumstances as a guideline though if more than 70% are deferring at the top level you'd think you'd be ok.

but even with the Basic Match, its a requirement that the level doesn't increase as the amount of deferral increases. that is not true in this case. The ERISA outline book would indicate tiered formulas must be tested for effective availabilty capter 11 section xii part E3b1

if the plan excludes HCEs, and an HCE defers I'd think that falls under the category of failure to follow the terms of the document (inadvertantly or otherwise) arguably the $ should be refunded to put the plan back into the position it 'should' have been had the error not occurred. in particular, under EPCRS section 5 .01(3) excess amounts (i) an elective deferral that is in excess of the maximum contribution under the plan usually this would be used for a plan that limits deferals to 10% of comp or something similar, in this case if HCEs are ineligible, then it sounds to me like any amount deferred by an hce is an excess. or at least that is my guess. the only other option (usually used with NHCEs) occurs because one was allowed to defer being eligbile and the correction is to amend the plan to allow that person (and only that person) to be eligible via amendment Appendix B Section 2 .07(3)

chc93 what the issue boils down to is the change in law. deferrals no longer count toward deductibility, so the 'guess' amongst some folks, at least as expressed at the ASPPA Conferences is that you only count compensation if someone receives a match or profit sharing (at least the conservative approach)

the only people who receive the gateway are those who actually receive a nonelective in some way shape or form. thus someone who defers and receives nothing else would not receive the gateway. granted with 50 people the plan might not be top heavy, but if its cross tested and top heavy, then once someone receives a top heavy they must receive the gateway, so that would probably be the reason for excluding a class of people from the plan. But then, as you indicate, you now have to pass coverage.

speaking of beating the odds, someone in Jacksonville (and others around the country) stamp $ bills with "Where's George" and invites you to log into the "Where's George" website to see where the dollar has been, how many people have posted, etc. so the other day I received one, entered the 8 digit number (plus the letters) and up pops a message "2 bills exist with this number" => which year do you have. I think one was 2004, the bill I had was 2009. so that means (I am assuming) 2 different people, 5 years apart, stamped dollar bills "Where's George" the website indicated the other bill was in Texas when last reported back in 2005 or whenever.

GMK: you blew it, you should have posted 10 minutes later then it would have been 3/14 at 1:59

Gad, I thought I only wrote bad pension parodies of popular songs. but someone lese did even, well, I leave that up to you. Hey, have a slice of Gooseberry Pie (my favorite)! Ludolph The Mathematician (to the tune of Rudolph The Red-Nosed Reindeer) We know Einstein and Euclid and Sir Isaac Newton Lifelong devotions there ain’t no disputin’ But do you recall… The most tireless one of them all? Ludolph the Mathematician Had a special thing for Pi He made it his life’s mission To help the number specify All of his fellow teachers Never understood his plan To unlock the number’s magic By calculating it by hand! Then in 1599, Ludolph set his goal... I’ll find digit 35 With geometry as my guide! Then how the math world loved him All his hard work helped them see Ludolph the Mathematician You’ll go down in history! (Learn more about Ludolph van Ceulen here.) Oh, Number Pi (to the tune of O, Christmas Tree) 1. Oh, number Pi, Oh, number Pi You're truly transcendental. Oh, number Pi, Oh, number Pi You're physical and mental. You stretch the bounds...of all we know, And tell our circles where to go Oh, number Pi, Oh, number Pi Your digits are so gentle. 2. Oh, number Pi, Oh, number Pi Why can't I learn you faster? Oh, number Pi, Oh, number Pi You're really hard to master. Just when I think...I've got you down I flip a 6 and 5 around Oh, number Pi, Oh, number Pi Numerical disaster! 3. Oh, number Pi, Oh, number Pi Why are you so specific? Oh, number Pi, Oh, number Pi Your digit growth's terrific. Ten years ago, you had a Mill And now you're at a couple Trill Oh, number Pi, Oh, number Pi You stretch to the Pacific! Pi Day Time (to the tune of Silver Bells, starting at "City sidewalks…") Random digits, Endless digits Transcendental in style, In the air there's a feeling of Pi Day. Children laughing, People graphing, Worry-free for a while, And in every math classroom you'll hear… Three one four… One five nine… It's Pi Day Time at (our school!). Three one four… One five nine… Savor those numbers, today! Ring The Bells (to the tune of Jingle Bells) Basking in the glow Of a Math Class holiday. All we need to know Is "Pi will lead the way!" To circles we will sing, The digits we'll recite The ratio gives us everything It's geometry's delight! Oh! Ring the bells, Pi Day spells Fun with 3 - 1 - 4! It's the day to celebrate That number we adore! Oh! Ring the bells, Pi Day spells Fun with 3 - 1 - 4! First we take one slice of Pi And then we ask for more!

if the plans are tested on an allocation basis there is no gateway, but that usually hurts testing plans with different formulas, but otherwise I know of no way to test on an accrual basis and not provide these people with the gateway.

yes, anyone who receives a non electve must receive a gateway (and a 3% safe harbor is a non elctive) doesn't matter how many hours they work or if they terminate. I believe the language says, after all is said and done, if I have someone who has received a nonelective but hasn't received enough for the gateway , I bump then up to the gateway. (again, that would be for people like you describe....received the safe harbor but due to last day didn't receive any additional contribtuion and therefore fell short of the gateway.

for cross testing, the avg ben pct test has to include all contributions of anyone benefiting. if someone could defer they would be included regardless of hours. for rate group, my feeling is you are reading the document incorrectly. the gateway is provided for anyone who received a nonelective contribution. thus, someone who might have received a top heavy minimum or a safe harbor contribution but is not eligibile for the profit sharing (due to hours, last day, or whatever) gets bumped up to the gateway (and not more). I don't think I have ever seen language that said "I can provide a gateway for those people who terminated with more than 500 hours if I want to even though they didn't otherwise receive a nonelective. yes, for purposes of the rate group portion you are allowed to exclude terminees with less than 500 hours

you might want to check out paragraph 5 of http://www.relius.net/News/TechnicalUpdates.aspx?ID=200

well, not sure what results you will get, since there are other check boxes, such as "match excluded from minimum" let suppose the only contribution that was provided was 3% of total comp. I would expect everyone to receive 3% and nothing integrated. rather than perhaps 2% base plue 2% excess if the contribution was increased by $1000 I would expect all of that to go to an integrated piece up to 3%. so you would have 3% base plus x% integrated. (by the way, special kudos for running top heavy. I could never get people to process that every year, or they would forget. so now my plan spec report produces a great big warning message that tells you if you didn't run top heavy.

yes. see 1.416-1 M-12 again, the document determines (M-15)

maybe. you might have a typo?? the 5% is a dc allocation (you said in the DB). it either that or 2% Accrual (not contribution) in the DB plan or prove by comparability that the combo of the DB and DC amounts are equivalent to a 2% accrual in the DB the documents are suppose to specify, so you have to follow the documents.

if you work 1000 hours and were in both plans, you have to get the top heavy because of the DB rules if you work less then 1000 hours but are active and are in both plans you have to get the top heavy because of the DC rules if you managed to only be in the DC plan and are active then you get the 3% because you don't get the aggregate rules.

well, 1.411(a)-7(d)(6)(iii)© says you are permitted, but who pays attention to the regs anyway.

this is summed up best in the regs 1.401(k)-5 Special rules for mergers, acquisitions and similar events [reserved] in other words, there are no regulations yet, but its been that way forever. so all you can do is a good faith effort what you suggest sounds reasonable.

ignorance from a DC idiot. I thought the 1/1/2011 DB val used the 2010 info, so that would apply to 2010 not 2011?

all we know for sure is you are talking about a discretionary amendment - and those must be in place before the end of the plan year. but since the HCE definition depends on the 'prior year' just exactly how is the discretionary amendment rule to apply? I know at some conferences IRS officials voiced an opinion any such amendment really should be in place by the end of the prior year, but there has never been any firm answer I know. about as close as I've seen, from the 2008 conference #37, and it really doesn't apply in your case, but might provide an idea to the IRS reasoning. (This particular case involved 2 plans, one was top paid group, the other was not) "Yes, you need to amend the plans so that they are consistent. You may have to do it before participants accrue benefits or contributions to avoid a 411(d)(6) cutback caused by your amendment. if your amendment made someone an HCE who was not previously, and that person will get a smaller contribution allocation as a result, that would be a cutback."

again, does your document describe how to handle? (edited to add sample language) here are some samples: Hypothetical Entry Date. The term Hypothetical Entry Date means, with respect to a Plan (or a component of a Plan) that provides that Otherwise Excludable Participants are eligible to participate in the Plan (or component of the Plan), the date that an Otherwise Excludable Participant would hypothetically enter the Plan (or component of the Plan) and would no longer be considered an Otherwise Excludable Participant had the Plan (or component of the Plan) used the statutory maximum age and service requirements of Code §410(a)(1)(A) as the eligibility requirements for the Plan (or component of the Plan). The Hypothetical Entry Date for purposes of this Plan is the date that the Employee satisfies the maximum statutory age and service requirements under Code §410(a)(1)(A). Have another from the same document provider which changes entry date to "as specified in section XXX" which says quarterly entry, so that appears to be whatever you checked. Note the difference in language. Hypothetical Entry Date. The term Hypothetical Entry Date means, with respect to a Plan (or a component of a Plan) that provides that Otherwise Excludable Participants are eligible to participate in the Plan (or component of the Plan), the date that an Otherwise Excludable Participant would hypothetically enter the Plan (or component of the Plan) and would no longer be considered an Otherwise Excludable Participant had the Plan (or component of the Plan) used the statutory maximum age and service requirements of Code §410(a)(1)(A) as the eligibility requirements for the Plan (or component of the Plan). The Hypothetical Entry Date for purposes of this Plan is the Employee's entry date under Section 2.1 for the component of the Plan for which the determination relates. another example: (this one seems real flexible! Code Section 410(a) Excludable Employees. The Company may treat, pursuant to applicable Treasury Regulations, Participants who have not met the minimum age and service requirements of Code section 410(a)(1)(A) as comprising a separate plan for purposes of Section 5.02 pursuant to Subsection (1) or (2), provided the disaggregated Plan consisting of such excludable Nonhighly Compensated Employees separately satisfies the requirements of Code section 410(b) and the Plan does not utilize Section 5.03(h). (1) Annual Entry Date. The Plan Administrator may treat Participants who have not met the minimum age and service requirements of Code section 410(a)(1)(A) before the first day of the seventh month of the Plan Year as comprising a separate plan. If the Plan provides safe harbor contributions, Participants not considered in the separate plan must be eligible for safe harbor contributions for the entire Plan Year. (2) Semi-Annual or More Frequent Entry Date. The Plan Administrator may treat Participants who have not met the minimum age and service requirements of Code section 410(a)(1)(A) using one of the entry dates specified in the Plan (not less frequently than semi-annual) before the last day of the Plan Year as comprising a separate plan. Contributions of Participants who have an entry date during the applicable Plan Year shall not be counted in the separate plan.

Haven't seen the internal memorandum. the accudraft document will say use maximum exclusion and uses 'hypothetical entry date' the hypothetical entry date refernces the plan's entry date. my understanding, or at least from IRS comments the plan could be written otherwise.

Different IRS personal have voiced different opinions at various ASPPA conferences. they keep promises we will be provided guidelines but none have ever been produced yet. If you have one of the Q and As that says you can use semi-annual entry date rather than plan entry dates you could show them that and say you are following those guidelines.

regardless, it is still a reminder. 1. If you have a prototype (not a big fan of them) you have to suspend for 6 months. 2. if you don't have a prototype not suspending deferrals (assuming the document permits that) tosses you into non-safe harbor status. would the IRS pursue the matter? don't know. does that mean if you have 6 month suspension when you could have had a non safeharbor hardship you are 'thoughtless'? At that point I would disagree.