MBCarey

Thanks, I must have been dreaming when I thought the rules had changed or else I've been at this too long.

I have a client with a M/P plan and a 401(k) plan. Do I still need to combine the contributions to do the 415 testing?

Could someone please tell me where I can pull a copy of Revenue Code Section 72(m)7? Everywhere I've looked I cannot find it. Thanks

I too am working with a plan similar to this which is also a top heavy new comparability plan design. The plan does give the minimum gateway contribution of 3% to eligible employees based on only the comp from the time the ee became eligible. The plan passes the 1/3 gateway test. However, wouldn't top heavy minimums have to be calculated on the total year compensation and not just compensation from the time the employee became eligible to satisfy top heavy minimums?

Response from Corbel: If the number you are referring to is at the bottom of the Gateway Test report, and it is stated "NHCE's with Ben % < x.xxx 186", then this is an incorrect number. We have found that this report is incorrectly doubling the number. With the new Gateway regs, the plan must satisfy this test by all benefitting NHCE's receiving the lesser of 1/3 or 5% of the highest HCE %. What this report is saying is that there are 93 (186/2) NHCE's who need to be bumped up to the minimum percent which is given in order to pass the Gateway Test. The plan will run both scenarios the 1/3 and 5%, if the 1/3 test passes than you should have a message at the bottom of the report that says the plan passed the Gateway Test. Guess I will check the numbers..

Tom, all my other reports reflect 159 participants which is the actual number of participants. I just didn't think of questioning where the 186 came from. Not sure what is being counted. I guess I will call Corbel.

I just ran my first gateway testing on Relius. Can someone verify for me exactly what the results are telling me. My report says reflectsthe following Highest HCe Ben 6.50% 1/3 of Highese HC Ben % 2.167 NHCE with Ben % < 2.167 Failed the NHCE Ben % - 0 Test Passed NHCE Ben % Failing part pof Gateway Test REquired Min NHCE Ben % - 5.00 NHCE with Ben % < 5.00 - 186 Test Failed Must pass Min. Allocation Gateway Test or Safe Harbor Minimum Allocation Gateway Tst or both to pass Gateway Test. Last Line says - PASSED Gateway Test Requirments. Can someone tell me Did I or Did I Not Pass? Thanks

We are trying to do a checklist for a non-prototype 401(k) profit sharing new comparability plan. Where Corbel's document refers to New Comparability formula. It asks for the disignation of groups: i.e, Group A, Group B, and so on. Does anyone know what it is that Corbel wants on the Line beside each Group? I am assuming it is the percentage that each group would receive, but not sure if that is right. Thanks Marybeth

I know this has been discussed before and I have read the posts, but I am still not clear. I have a plan with a plan year beginning 10/1/2001 and ending 9/30/2002. Would catch-up contributions of 1,000 be allowed for the period 1/1/02-9/30/02 or would the contributions be for plan year 10/01/02-9/30/03. And if they are allowed for 1/1/02 to 9/30/02. When would the plan have needed to be amended.

Please bear with me while I continue to understand these pieces. Wouldn't the auditors still have to go thru the individual's brokerage statements to determine income/loss? Is this something they would normally do with outside brokerage accounts? This particular plan has never had an audit.

Katherine, thanks for your post. This is the first 5500 I have done for a large plan in over 8 years so I guess I am fuzzy. After reading your post, I do remember working with the auditor to put together the financial information prior to the 5500 being done. Also, I did not realize that the income could be aggregated on Line 2c of the Schedule H. This plan has never had to be audited in the past because the participant count was not over 100. However, in 2001, this plan was merged with another plan which brought the participant count over 100 so in 2002, the plan will need a Schedule H and an audit. I am not sure how the auditors will deal with the brokerage accounts, but I am sure going to find out. Thanks for all your suggestions. Any other advice is appreciated.

There are over 160 employees. The majority of the assets are held at ING and then there are these brokerage accounts that about 10-12 of the shareholders have their money in. "Ugh" is a good word. How would the auditors provide this number, since I am not sure they would even see the plan until the 5500 is complete and even if they did, I don't think they would track the g/l on the individual accounts.

I am reporting on one line, but I am trying to find an easier way to come up with that number then going thru each participants acccount. There does not seem to be any statement from these brokers that give the totals.

Can anyone give me any ideas as to how to calculate unrealized and unrealized gains and losses on individual brokerage accounts other than going thru each account and analyzing the buying & selling activity. I have about 10 participant directed o/s brokerage accounts in a plan and in order to calculate Line Item b(4)(A) and (B) and Item b(5)B, I have been going thru each set of statements and preparing a spread sheet with beg. bal, sales, purchases, ending balance to come up with this number. Is there an easier way?

If I am using the prior year NHCE average percentage to limit my HCE's can I reduce his percentage to that amount and make the remaining amount catch up. i.e, the group as a whole is limited to 4.66%. If I test this one participant and include the extra $1,000, the test will fail.

Can someone tell me if it is acceptable to reduce a catch-up eligible participant's deferral amount before running the ADP Test. i.e, I have an HC who is eligible to make a catch up contribution, but is limited by the prior year ADP Test. He is only deferring a total of $11,000, but this amount would make the group fail the ADP. Can I reduce the $11,000 to $10,000 and then test in which case it passes ADP or must I wait and see what the correction and then recharacterize.

Fred, Thanks for your answer. My thoughts agree with yours, but my trustee seems to think that since the additional contribution would be put into the shareholders account as a profit sharing contribution rather than a "deferral" would not come under the ADP? I disagree and I think from what you said so do you.

We are submitting a Volume Submitter plan for a small profit sharing plan with a 401(k) feature. The profit sharing piece is always a straight percentage across the board. We have always used and passed the Ratio Percentage Test? Am I correct in stating that I do not have to submit the Demos?

Could someone clarify for me the Exemption from User Fee for Determination letters. I have an individually designed age weighted p/s plan that was initially effective 7/1/1982, but was restated as an age weighted plan effective 1/1/91 at which time a submission for Determination was filed and a approval letter was issued. This plan has less than 10 employees, 8 of which are NCHE.

Thanks, thats what I thought. There are days when some questions freeze the brain. Thanks again.

Hopefully this is not to dumb a questions. Is an Age Weighted Profit Sharing Plan subject to ACP testing? I have never run the ACP test on this plan before, but in amending the document that is one of the questions. Thanks mb

Could someone just verify that my theory is correct in calculating this. My client just uncovered that they withheld deferrals for one participant in July 2001 of $1,000 and failed to send them to the investment company and that again in Oct. 2001 they withheld $400 and failed to remit. They have sent a check for the $1400, but I am now trying to figure the Gains and Excise amounts. Should I calculate the excise tax (10%) on the 1,000 for 6 months and on the $400 for 3 months and then on the whole $1400 at 15% for the 9 months in 2002 which was when the error was uncovered and sent in? Also, since there were so many losses to the funds in the plan last year, what should I use to calculate gains? mbc

Wanted to let you know that I think I understand what the Corbel checklist is asking. Plan Year Switch - I believe that eligibility initially is based on date of hire and then switches to 1000 per plan year. mb

Thanks, they are post tax contributions so I would need to test both employee and employer together. Any help with the following. Also Corbels checklist rfers "Plan Year Switch" for Eligibility Service. mb

In this plan, there is a mandatory employee contribution in order to be eligible for the match. Do I have to run ADP/ACT? The plan is classified as a Money Purchase Pension Plan