Lynn Campbell

I think that if you have a safe harbor 401k plan that permits only deferrals and safe harbor contributions, then the Plan is exempt from top heavy rules. Then if your plan document says that the safe harbor 3% contribution is due only for the period from 1/1/04 to 6/30/04, you would not have to make the top heavy 3% for the whole year. But, to be exempt from top heavy you cannot have any other Nonelective contributions to the plan besides the safe harbor contributions.

I agree with Mike - I think the "tainted" MPPP assets would contaminate the PS Plan and better to keep them separate.

Top heavy is for entire year. Safe Harbor - depends on what the Plan says. If you have to put in 3% anyway for top heavy, you have covered both, right?

Mike, for many years almost all of my plans have been prototypes. I guess that is why I am uncomfortable with the concept of an individually designed document. I will have to take a new approach to all these volume submitter plans because they will require more "monitoring" than the prototype plans...

Mike, you indicated that once a Volume Submitter Plan is submitted to IRS and approved, it is treated as an individually designed plan going forward. Is this the case even if the Volume Plan is adopted word for word but submitted just to be on the "safe" side?

What are the : "SERP administrative expenses"? Does the Plan permit payment of expenses from the Plan?

Try fewer words - try just minimum funding. I suspect the MPPP term is nowhere to be found and messed you up. Why don't you also just post your specific question?

Where does it say that the penalty is calculated from the original due date without extension?

Belgarath - I have checked my file and the 3-year premium was just over $1,000. I assumed this was cheaper than the audit for even 1 year. Any input would be interesting. Thanks!

I thought the one person plan (where the participant is the 100% owner) was exempt from the quarterly contribution requirements because it was not covered by ERISA...or maybe this exemption only relates to the ERISA notice to employees about the failure to make quarterly contributions?

Back in 2002 I was able (through Travelers) to get a $1.6 million bond for a Plan with total assets of just over $2 million. The $1.6 million was needed to cover the non-qualifying assets. I have not had recent experience with Travelers for this type of coverage.

Did the client actually change the Plan Year or just decide that the Plan Year had changed? Were there documents amending the Plan accordingly?

I too have had recent experience with clients who were required to file 5500-EZ's but never found out until the GUST restatements. These were clients with brokerage house documents who had always "taken care of their own plan". We submitted all the 5500-EZ's for multiple years, and the clients did get penalty letters. However, the CPA responded with a reasonable cause letter in each case and as far as I know all penalties were waived.

This is a long shot, but can you get the bond dated effective back in mid-2002? I think that would meet the rules??

I am still wondering: what is the compensation for purposes of the 3% non-elective contribution? Thank you.

Did you mean to say the Plan failed to meet the 95% test as of 12/31/2002? I assume so, because I do not think the rules were in effect for 12/31/01 year end. I think they took effect for Plan Years beginning after April (not sure which day), 2001. If you just got the data for 2002, and obtain the bond immediately, I would say you meet the rules for the waiver. I think the intent is to get the bond as soon as administratively feasible after you know it is needed. I am ignoring the fact that this client has no bond whatsoever...I am not sure what effect that would have on your situation.

If a sole proprietor has a safe harbor 401k plan, what is the "compensation" for the sole proprietor for the 3% non-elective contribution? Is it Schedule C reduced by 1/2 SE Tax and reduced by all the 401k contributions except the deferrals? I am confused! (Nothing new.)

I am looking for software that is relatively simple to do proposals for cross tested plans. Any recommendations? I appreciate all input.

There is another recent question on the Defined Benefit Board under "New Business and First Plan Year" that may help you. It seems relevant. Good luck!

Even a safe harbor plan would be subject to top heavy rules if any contributions are made other than safe harbor (like discretionary profit sharing contributions), right?

I must be having a brain freeze, because I was thinking the Plan could not be effective before 7/1/03???

No. You do not combine the SEP and MPPP. So no filing needed until the MPPP assets > $100,000.

If the Plan has the 1000 hour rule and the end of year requirement, one could take the approach that no participants have accrued a benefit until they satisfy both requirements, and that is the justification for making no contribution to the Plan if amended before year-end.

I think the 2002 Summary Annual Report should be given to all participants as of the end of the 2002 year. It does seem pointless, but I think it is technically required. At the end of the 2003 year there are no participants, so I see no reason to send the SAR, and no one to send it to...

If the merger documents specify that a contribution will not be made and the rationale for that decision, wouldn't that help to cover the bases?