Can EBARs be calculated based on participant pay in top heavy year?

[Guest Dash02]

Plan is top heavy. Therefore, minimum allocations equal to 3% of FULL year comp are required.

The plan document generally disregards comp paid prior to becoming a participant.

For purposes of computing the EBAR of a participant who entered the plan during the plan year, can I use participant comp, or am I required to use FULL plan year comp?

Thanks for the help.

[Tom Poje]

definitions are found in 1.401(A)(4)-12

plan year comp (1) .....[use] one of the periods described in paragraphs 2 - 4...

(4) period of plan participation

from this most people I know would hold you are allowed to use comp from date of entry even though top heavy is based on full year. in other words, testing comp is different than allocation comp.

of course if your document is specific on its definition of 414(s) comp you are stuck.

also watch out for gateway minimum on such folks.

[AndyH]

Tom, what do you mean by reference to the the doc's comp definition? Any 414(s) comp definition can be used for testing regardless of what is used for allocations, as you mentioned, right?

[Tom Poje]

hopefully that is what your document says for 414s comp.

I vaguelly recall some of the old Corbel documents specifically defined testing. now they say something like 'any definition of compensation that satisfies 414s may be used'

hey Andy, looks like I get to give a nondiscrim talk at the ASPPA confernece in July in Vegas this year. is that a step back from the big one in Washington?

[AndyH]

Aha, has someone discovered a vice of yours, since we know it isn't Gansett beer or coffee?

Oh, I forgot, those pictures you keep posting ...... Elvis next?

[Tom Poje]

sorry Andy, I will probably bored there just as well

not into gambling, and I am offended by immodest dress.

as for Elvis, well that picture made it into a powerpoint presentation a few years ago (in fact the only reason I still have a picture is after a hardware crash I still had the presenation on disk. doubt anyone else wants to see that one.

[Guest Dash02]

Thanks Tom.

With respect to the gateway minimum, will this be satisfied by providing 5% of participant pay, or does the plan's safe harbor status somehow bind me to providing 5% of FULL year pay? The gateway regs (example 5) seem to only require allocs. of 5% of comp w/in the meaning of 415©(3), measured over the period of time permitted under the definition of plan year comp.

I take this to mean that if the plan definition of comp disregards pre-participant pay, then the gateway is satisfied by providing 5% of participant comp ... and, I assume this is not affected bhy the plan's top heavy status.

Do you agree?

[AndyH]

We need to see that picture: Tom in Vegas doing an ASPA session dressed as Elvis. But who would be the moderator, Wayne Newton?

Dash, you have it right but for the wrong reason. Read Explanation Section B , where the fourth paragraph clearly states that the period of participation is ok. That was a change from the proposed regs.

[Guest RJF]

Tom, remember - What happens in Vegas, stays in Vegas!

[Tom Poje]

"What happens in Vegas, stays in Vegas"

I hope not. I hope to be able to impart some worthwile knowledge people will able to use somewhere else.

and as for anything else, well, I still have to answer to the Big Guy upstairs, so I guess that won't stay in Vegas either.

[AndyH]

What color is your parachute?

[Tom Poje]

I don't know. does a parachute beat a paradox? if not, is it worth bluffing?