Help me figure this out

[Guest JBeck]

Employer has 3 percent safe-harbor plan with 401(k) deferrals. Employer wants to contribute an additional employer contribution 9 percent to doctors and 3 percent to staff. In cross testing each HCE doesn't meet the ratio percentage test. So the average benefits test is done, bringing in the salary deferral contributions. To the extent that the plan passes the average benefits test, does it matter what the ratio percentage of each HCE is?

[Tom Poje]

to pass nondiscrim a plan must pass either

1. ratio percentage test for each HCE

or

2. average benefits test

there are 2 parts to the average benefits test.

1. average benefits percentage test.

2. nondiscrimination classification test

to pass nondiscrimination classification test, the ratio percentage must be greater than the midpoint percentage(based on the NHCE concentration %).

so, yes it does matter what the ratio percenatge of each HCE is, because each of those ratio percentage must be greater than the midpoint %.

If one of those failed(even with a mess of HCEs), then you fail the average benefits test.

you indicated that test passed, so it sounds like there is a misunderstanding about what is involved in testing. especially since you said that deferral were 'brought in'.

so lets go back to the average benefits test

there are 2 parts to the average benefits test.

1. average benefits percentage test. (includes ALL contributions except catch ups and after tax)

2. nondiscrimination classification test (Only includes nonelectives)thsi is the rate group testing. each HCE's ratio % must be greater than the midpoint %

somehow or other I am suppose to condense all this stuff into a 75 minute talk at ASPA in the fall. Ha. It would be easier to explain the theory of relativity in that time frame.

[stephen]

Tom,

With the time remaining at the end of your 75 minutes perhaps you can also discuss ESOPs as there probably won't be any ESOP sessions this year.

[Belgarath]

Tom - I would love a good explanation of the theory of relativity. Having read science fiction since I was a pup, I accept it but still don't understand it! I even bought a book called "Einstein's Universe" to try to solve the mystery, but I always get stuck on the part where someone in a starship at the speed of light doesn't age... simply cannot comprehend how biological and chemical processes of cell ageing can be different for two people just because one is traveling fast.

Besides, I apparently am not subject to the laws of relativity, since I'm getting younger every year.

[MoJo]

Belgarath - either you are operating under the alternate theory of (being a) relative of Dorian Gray, or you are moving backwards. Most days I fall into the latter category.

[jquazza]

Belgarath, the day they add a section on quantum physics on this forum, I will answer your problem, until then, I can only tell you that at the speed of light, it's not that the fast traveler will not age, but rather he will age only a few seconds...

[david rigby]

Correct. The Lorentz contraction.

[Belgarath]

Jquazza - thanks - actually, I "knew" that the faster traveler just ages more slowly - I just don't really understand it. And I tip my hat to all of you who are smart enough to comprehend it!

It's too late. My brain no longer has the capability (not that it ever did) to grapple with these mysteries. I'm now reduced to such simplistic questions as, "If a man speaks in the forest, and his wife isn't there to hear him, is he still wrong?"

At least I can answer that one. And if not, my wife can answer it for me.

[Brian Gallagher]

Remember, at the core of the word Relativity is "relative". The theory of Relativity is based on where the "observer" is. Time flows differently for objects from different vantage points, ie there is a no such thing as a universal frame of reference.

To coin a phase: "It's all relative!"