cdavis25

Austin, this was from the VS document. That other paragraph I posted is a couple paragraphs later in the document...i.e. it came after the language I originally posted. That clarified the top heavy to the keys for me in the doucment. I did send a q/a to ASPPA for the next conference in the IRS q/a. It appears to me that a document could be written to give top heavy to keys and use deferrals to count towards that minimum for them.

I think this trumped it in the document language further down the page...my bad in reading too fast. For any Top-Heavy Plan Year, the minimum required allocation set forth above shall be allocated to the Nonelective Contribution Account of all Employees who are Participants and who are employed by the Employer on the last day of the Plan Year regardless of the Employee's level of Compensation, including Employees who have (1) failed to complete a Year of Service; and (2) declined to make mandatory contributions (if required) or, in the case of a cash or deferred arrangement, Elective Deferrals to the Plan. I am still curious if you are allowed to count the deferrals for keys assuming the document language allowed it; although, I will admit it has minimal impact.

Corbel came back and said I am not reading the document correctly. The language is saying that a key employee's deferrals can trigger the need to provide non-keys with a minimum 3% (or, if less, one-third the highest HCEs rate of allocation, including the key's deferrals). The plan language reflecting your adoption agreement selection to provide the minimum top-heavy contribution to both keys and non-keys is not affected. So, for example, if a key employee receives less than required top heavy minimum (which for a key employeee would otherwise always be $0), they would be entitled to the additional nonelective contribution, which would be in addition to their own deferrals, if any. Although, we are using the VS and not the adoption agreement. I did tell them that. I am still wondering if you could count the deferrals, if the document was written that way, for the key employees. I sent a Q/A to ASPPA for the next conference. Maybe I will be selected. Lou can you site where you see that "elective deferral are NEVER used to satisfy the top-heavy minimum contribution requirements". We all agree that is true for non-keys and it was cited above.

It is the VS. I am still waiting to hear back, but will let you know.

Tks Austin. I found that reference this morning too and came back here to post. I will let you know what Corbel says. I reached out yesterday. I was in the same boat as you and BG. It never came up before for me and really only applies if they want to avoid giving anything to keys that defer over the TH min. I guess you could have an issue under those circumstances though. Image giving the TH min only. You think that is 3% to all (since the document says to all) employed on the last day. The PS allocation requirement is 1,000 hours and last day. If a key did not work 1,000 hours and deferred 3%, then they are not due anything for top heavy according to the Plan. So, you can't just say I gave a 3% PS contribution. If the key received 3%, then it would be incorrect.

BG5150 are you sure about that? There is no requirement for the key to get a top heavy minimum by law. It would only be required by the Plan. I agree with Kevin that the Plan would define that. They use a Corbel document. The Plan does say the top heavy goes to all; however, it also states... Notwithstanding the foregoing, for any Top-Heavy Plan Year, the sum of the Employer contributions allocated to the Account of each Employee shall be equal to at least three percent (3%) of such Employee's 415 Compensation (reduced by contributions and forfeitures, if any, allocated to each Employee in any defined contribution plan included with this Plan in a required aggregation group). However, if (1) the sum of the Employer contributions allocated to the Participant's Account of each Key Employee for such Top-Heavy Plan Year is less than three percent (3%) of each Key Employee's 415 Compensation and (2) this Plan is not required to be included in an aggregation group to enable a defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410, then the sum of the Employer contributions allocated to the Participant's Account of each Employee shall be equal to the largest percentage allocated to the Account of any Key Employee. However, in determining whether a Non-Key Employee has received the minimum required allocation, such Non-Key Employee's Elective Deferrals shall not be taken into account. The minimum allocation required (to the extent required to be nonforfeitable under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D). For purposes of the minimum required allocation set forth above, the percentage allocated to the Account of any Key Employee who is a Participant shall be equal to the ratio of the sum of the Employer contributions (excluding any Catch-Up Contributions) allocated on behalf of such Key Employee for the Plan Year divided by the 415 Compensation for such Key Employee for the Plan Year. Elective deferrals are technically Employer contribution. I would think they would count towards that minimum for the keys.

I believe this is correct, but?? A Plan says the top heavy minimum goes to all participant employed on the last day. For the sake of simplicity, say there is one key employee that deferred 5% and the Plan is top heavy. The non-keys employed on the last day are all getting a 3% non-elective. The one key does not have to get anything, since they deferred over 5% correct. i.e. Their deferrals are allowed to count towards their 3% top heavy min. I believe the "deferrals are not counted in the top heavy min" rule only applies to non-keys.

The Plan document says you may exclude the receivable. They did not exclude it in the 2013 RMD calc, so I am guessing they need to do it the same way here.

A participant retired in 2013. He was over 70.5. He took his 2013 RMD and rolled over the balance to an IRA. He is now getting a contribution for 2013 in March of 2014, i.e. the 2013 receivable. Does he have an RMD for 2014 to take first before rolling this amount over? If they ignore the receivable for 2013, then his account balance was zero on 12/31/13.

I don't think this is a threat to the TPA or qualified Plan world. I don't see the advantage of myRA vs a Roth IRA, besides a no penalty withdrawal, which defeats the purpose of savings. Stupid is stupid does right Forest? The return on your IRA will be better than the myRA (since they are limiting your investments) and you would have more (on avg) in the IRA vs the myRA in a couple of years. My concern is there is no such thing as a free lunch. Who is paying the cost to recordkeep and oversee the myRA? It just seems like you are adding another vehicle to the parking lot, which will confuse people even more.

We have a new prospect that was part of a big PEO's Plan. The PEO is a public company. The PEO files one 5500 for everyone or at least they did in 2012. It appears to us that anyone that is part of the PEO can be in the Plan. There is no link such as control group, ASG, affliated employer, union, etc... Since the DOL said open MEPs need to file a 5500 for each employer, we are wondering how they get away with it? Is there something that a PEO is using to link the companies??

Tks.

I believe they are all custodial accounts at one vendor.

I believe this is ok, but wanted to see if I am missing anything. Company A has a 403(b). A new company B is formed and started a new 403(b) Plan. That new plan is identical to company A's Plan. About 100 people are leaving company A to work for company B. There are no other employees. The two companies are not a control group. Can they transfer the assets for the affected participants from A to B?

Tks.

A participant took a hardship distribution from Roth money. The hardship was just the basis for the Roth deferrals. The participant is not 59.5, so it is a nonqualified distribution. When doing the 1099R, do you still prorate the distribution to find the taxable and nontaxable amount or is the whole amount nontaxable, since it was a hardship and only the basis was taken?

What makes a company a successor employer? It is a 100% stock purchase or a change in entity only? A prospect has a partnership that will dissolved on 1/31. The have a SARSEP. One of the partners is retiring. The other partner wants to form a new company on 2/1. They will have the same employees, line of work, and client's. I was not told that this would be a stock or asset sale. Would the new company be considerred a successor employer and able to adopt the SARSEP? I am thinking no, but maybe I am missing something.

I know QDROphile, but the milk is already spilled. I will have them try the SS forwarding. They did the search in November of this year for him. Are there any suggestions if he is not found or does not respond? I don't like the 100% withholding, since I have heard that is not acceptable by the IRS. Plus you still have the 1099R issue.

The participant is lost. The client has tried to find them using a locator service and the internet. His vested balance is under 5k. The client does allow forceouts to an IRA. This is a new Plan to us in 2013. His RMD should have started in 2011. Nothing has been processed, since he is lost. Any suggestions?

Tks Bird. I told the client that the participant should get an opinion from their CPA as to whether they are able to deduct it or not. If the CPA says they will be deducting it, then they can authorize the hardship.

A 401(k) Plan uses the Safe Harbor definition for hardships. A participant has an issue with their water supply into their house. The water has become contaiminated. He wants to take a hardship under the casualty deduction under code section 165. The insurance does not cover the issue. Will this qualify?

I would confirm with Corbel, but believe the answer is no. 1.30(a) says affiliated employers have to adopt the Plan. I think 1.30© is to catch something like the companies merge into one company to give you the exception for the grace period.

That seems to be a gray area and opens the door to some risk. I don't think the IRS would say that is a hardship. Who is to say they would be out of a job? That is an assumption not based on fact. What happens when another participant wants to do something similar? Who makes that call? Why not just termiate the other Plan? That seems like the conservative approach.

One other note, be careful you don't have any lost participants. You will need to try and locate them before forcing them out.

A prospect wants us to terminate their Plan in 2014. They are on a pre-approved Plan for the 6 year cycle. They are up-to-date on all required amendments. Would they need to restate in the upcoming 2014 cycle? I have heard they do not have to restate, but the conservative approach is to do it.