Guest JimD Posted April 21, 2004 Posted April 21, 2004 Any comments would be appreciated. Partnership (12 partners) considering establishing cross tested 401(k) plan. Classes by ownership or age include more than one partner. I don't think this raises a deemed coda issue. However, a couple of partners would like even more flexibility in contributing. Naming them individually in a class I think rasies the deemed coda issue. Identifying them based on ownership and/or age where it is essentially identifying only one partner seems to raise the deemed coda issue as if the plan was specifically naming them. Agree? Disagree? Any suggestions regarding describing classes?
Blinky the 3-eyed Fish Posted April 21, 2004 Posted April 21, 2004 If the effect of the amendment is that everyone is in their own class versus just putting everyone in their own class, then I would say there is no difference as it relates to the deemed CODA issue. I think the IRS agent would not be dense enough to see through the veil. But on the deemed CODA issue, the IRS has blessed documents with everyone in their own group, so they may not even consider it an issue. I say put them all in their own group and be done with it. What are the chances of the IRS raising a retroactive issue with the arrangement? "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
jquazza Posted May 13, 2004 Posted May 13, 2004 Blinky, it's true, I have seen a lot of plans lately, that have received a FDL from the IRS, and they had each partner, identified by name, in its own class. Did the IRS pull a switcharoo? What happened? How will that affect your reasonable classification test? Also, in previous post, it was mentioned that if an eligible class gets a 0 contribution rate (and others are getting something), the plan was restricted from using the ABT. Is the IRS taking names and these plans will be the first ones to be audited? I mean, how good can a new comp be if you can't use ABT? /JPQ
Blinky the 3-eyed Fish Posted May 13, 2004 Posted May 13, 2004 Reasonable classification is not an issue when performing the general testing. Repeat thoroughly. The issue you raise is with coverage. For example, if you had everyone in their own rate group and chose to benefit all the HCE's and 1/2 of the NHCE's that could easily be deemed to be a classification issue for coverage. If the 1/2 that didn't benefit couldn't be grouped as some objective business criteria, then you would have to pass the ratio percentage test. Repeat the first sentence again. There have been many discussions on these boards regarding this. BTW, is that your real name or are you a new EA? I don't see you on the directory. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
Blinky the 3-eyed Fish Posted May 13, 2004 Posted May 13, 2004 My world has blinders on like the debater in that beer commercial. No peripheral vision! "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
AndyH Posted May 14, 2004 Posted May 14, 2004 If you weren't so well versed in 401(k) plans and former major league pitchers I might buy that. I'm thinking that you and Mike P must teach a course called "401(k)'s for EAs" out there at Western Pension U. Nice flow to that.
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