MBCarey

I neglected to report on 5500 that the EIN and plan Sponsor had changed from previous year. Could someone give me advice on how to go about making this correction? I called the IRS and the current year filing has not been recorded as of yet. They said to give it a couple of months and check back. Just wondering what some of you would do. Thanks

When an EIN no. changes for a plan how should this be reflected on the 5500. Or is it?

From 1/1 to 7/31/2003, I had two employers who were part of the same plan. Employer A sold Employer B and as of 7/31/2003 considered all the employees (participants) of B as terminated. Employer B then set up its own plan. I tested Employer A and included the salaries & deferrals of Employer B thru 7/31/2003 in the year end testing. I then tested Employer B using the salary and deferrals from 8/1 thru 12/31. Is this methodology correct? If so, what should I use in testing ADP , Prior or current year. Plan A used prior year percentages and passed. In tryng to use current year percentages Plan B does not pass for the short plan year. Hope I haven't confused too much

Tom, To say it simply. I can do a Non elective Safe Harbor 401(k) contribution of 3% which will go to all eligible employees whether they defer or not and whether they are employed at the end of the year. Then I can allocate a profit sharing using integeration and have the last day rule apply. I can use permitted disparity to pass the ABT on the PS piece. Is this right. Thanks

My boss and I were just discussing this same thing. So it is possible to have a Safe Harbor 401(k) plan with a 3% Non elective contribution and then spread the remaining profit sharing contribution using integration? I know the Safe Harbor cannot have last day, but can the last day be imposed on the profit sharing piece?

We have a plan that is debating about going to either a 401(k) Safe Harbor Plan or a New Comparability Plan. The eligibility for the current profit haring plan is entry on Jan. 1 after 18 months of service. Can we maintain this eligibility or do we have to reduce to 1 year of service for either Safe Harbor or New Comp.

Can an owner who is over the age of 50 make the catch-up contribution if he is not going to make the minimum Top Heavy contribution for the year?

Tom, If we run just a straight 401(k) with the profit sharing contribution run as New comparability, can we have the 18 month eligibility and last day apply? Marybeth

I am sure this has been answered so excuse me for asking again. We currently have a 401(k) plan with an integrated profit sharing piece. Currently eligibility for this plan is 18 months, vesting is immediate. Their normal contribution rate is always around 7-8%. We are trying to get to change to a Safe Harbor 401(k) Plan with the profit sharing piece allocated as new Comparability. The scenario that I am trying to work out would be to give the NHCE's a little over 5% total and the remaing amount allocated to the HC's. THis appears to pass the Gateway and allow the HC's to defer w/o ADP Testing. My questions are: Am I correct is stating that for the 401(k) SH piece, I can only use 1 year as the eligibility? Can the profit sharing piece which still maintain the 18 Month entry Date. Also, does the scenario above sound ok to you guys.

No, it doesn't say either of these two things.

If a participant retires and leaves his account balance in the plan and also has a whole life insurance policy. Is it okay to leave the policy in the plan as well and deduct premiums from his account balance? Or should the policy be turned over to him in which case he would be subject to the taxes. Also, would he have to be given a 1099 for the PS 58 costs each year?

When a 403(b) plan has an employer contribution added, does the pension codes in Section 8 need to be changed. I have always used 2L, but this plan has never had Employer contributions until now.

I am filing 5500's under the DFVC program for a 403(b) plan for the last two years. An employer contribution had been made for those two years. Do I indicate in Section 8 of the 5500 Under Pension codes along with Code 2L a code to indicate the employer contribution? And if so, what code?

Ok guys, not sure what "sussed" really means, but I think my original question was regarding 2005, but then as I read your post, I gathered that if I changed the testing from prior to current 22 for 2004, I would not have to look back at the NHCE's that deferred prior to their being sold in 2003 and limit my HC's. Can I amend the plan now to use current year instead of prior year for 2004? I really am not trying to confuse you all. Marybeth

Can we amend the plan now to use current year testing in 2004? There were deferrals by the NHCE's in 2003 so even though there are none in 2004, using prior year will limit the HC's deferral amount.

I'm real confused. I recently attended a Corbel Seminar on Cross Tested plans, and I was sure that I heard that in a New Comparability Plan with a 3% Safe Harbor Contribution you could not have a last day requirement. Is this true.

One of my plans sold one of their divisions this year. Now the only people left in the plan are all highly compensated. We have always use prior year testing for the ADP test and plan to do so in 2004, but after that there will be no NHCE's to look back at. How does this affect testing? Will the plan still be subject to ADP? The plan is top heavy so I know that the employer will always have to give the 3% to all non-key employees in order to defer, but I am not sure what I need to do as far as telling them what their max. deferral amt/percentage would be. Sorry to ask what is probably a goofy questions. Marybeth

No Blinky, I am not sure what component plans means and am not sure I want to go there. The document does include all HC's in one group so that will need to be changed. Just out of curiosity, the plan has a young NHCE who will be eligible in 2004, I know she will need to get the 3% Safe Harbor, but will her coming into the plan change this scenario drastically? I am not sure how to speculate what effect that she will have and since I am doing these "what ifs" based on last years info. and will not be able to change the plan until 2004 anyway? Any insight? Thanks

I am sure this has been discussed, but please clarify for me. Can the 3% non-elective safe harbor contribution be used to satisfy the gateway. i.e., if I am giving 3% to NHCE's so the HC's can maximize their deferral and 2% profit sharing to the NHCE's for a total of 5% so the HC's can max out on the ps too. Is this okay. Also, what is your opinion about allowing an HC's to defer the max. in this situation, but not giving him a PS contribution. I have two owners and one very young son. Any profit sharing contribution I give to the son makes me fail the General Test. Corbel says it is okay to exclude him from the PS piece? Your thoughts?

Sorry 21% was wrong, I think the percentage is 16.47%.

By giving the 3% SHNEC to the NHCE's only, can all three HC's defer the max of 12,000. The can I post $28,000 each the two owners (21%) nothing to the son as a PS contribution and 7% to the NHCE's. This seems to pass all the tests, but if I try to give a contribution to the son, then the plan fails. What am I missing here? A brain maybe? Don't answer that

Tom, thanks for replying. Seems like no matter what amount I give to the son, the tests still fail. Can I give him zero and only let him make the deferral. Is this allowed? Can I do a safe harbor Qnec and still cross test the profit sharing piece. I am real confused. It seems like the only way to get the plan to pass is to leave him out of the profit sharing contribution altogether.

I am trying to run a couple of scenarios on a plan that has 3 HC's (two owners and the son of one of the owners) and 6 NHCE's. The two owners want to defer the max and then receive enough in the PS piece to get them to $40,000. Prior to this the plan was run as a standard 401(k) plan with a integrated profits sharing contribution amount that maxed the HC's (usually was over 17%) They want to see two scenarios" 1. 401(k) safe Harbor plan with a 3% non-elective contribution allowing all three to get to 12,000 and then making a profit sharing contribution to get them to the max. When I try to do this and include the son for a share of the profit sharing, I start failing 410b and the Average Benefits Tests. Am I still subject to these tests? Do I have to include the son in on the ps piece or can I just leave him with the deferral amount. (he is only 26 and makes less than $50,000) 2. The other scenario they want to see is what will happen in a cross tested plan. Can they still defer and be subject to the ADP test and then spread the profit sharig on a cross tested basis? Am I still subject to Average Benefits test and 410b? Sorry if I am confusing everyone.

Thanks Katherine, Can you tell me if the requirements for the 5500 change? Do I need to do a regular 5500 rather than a a limited reporting that has usually be done. Marybeth

What are the requirements for a TSA if there are employer and employee contributions. i.e, Testing, 5500 filing, etc. Thanks