A calendar year top heavy 401(k) plan has 3 month eligibility for the 401(k) portion and 1 year for the nonelective portion. The cross-testing is done using compensation from date of plan entry as an acceptable definition under 414(s). Say a participant enters 10/1/02 for the 401(k) and 7/1/03 for the PS. For 2003 testing would you agree that for the determination of the nonelective EBAR, I could use compensation from 7/1/03 - 12/31/03, but for the 401(k) EBAR for average benefits, I would use full 2003 compensation?

If you agree to that, move to this next question. For those participants that just enter the 401(k), but have not met the nonelective eligibility and are thus just receiving a TH minimum, what compensation is acceptable to use? I have no entry date to the nonelective portion.

Thanks for your time and thanks for the vine. (If you know what this means, then I salute you.)

Where is the trick to this question? Yes, you can do it the way your first paragraph asks, but you already knew that.

And you know that a top heavy contribution is a nonelective contribution, right?

What are you trying to get away with?

Yes, the TH is a nonelective contribution, but there could be participants receiving the TH that do not have an entry date into the nonelective portion of the plan. Consider the participant in my example and perhaps a participant who would enter the 401(k) portion 4/1/03 and the PS 1/1/04. You agreed that for testing, I can use compensation from 7/1/03 - 12/31/03 for the former, but what about the latter? It appears I am stuck with 4/1/03 - 12/31/03, because he has no entry date for the nonelective portion. In other words, a participant hired sooner has testing compensation over a longer period of time.

What would you say to amending the plan to provide that those participants who have entered the 401(k) portion of the plan and who are employed on 12/31, should enter the plan on that date. Now they have a date of plan entry to the PS portion and I could conceivably use compensation for testing of 1 day. A full year's TH contribution tested over 1 day of compensation would yield a fantastic EBAR to be sure. I guess this is what I "am trying to get away with". I have never done it before, but am just trying to be creative.

Just one opinion, it's too aggressive for me. I'd fall on 1.401(a)(4)(3)(d)(2)(ii)(A) which says that average annual compensation must be determined in a reasonable manner.

Granted, that is not right on point, but 1.401(a)(4)(12) under plan year compensation, (4) PERIOD OF PLAN PARTICIPATION DURING THE PLAN YEAR, at the end, says, ..."Further, selection of this period must be made on a reasonably consistent basis from plan year to plan year in a manner that does not discriminate in favor of HCEs."

Neither is a direct prohibition, but I would not do what you suggest.

Party pooper. How about a little somtin', you know..., for the effort?

Can't cause you didn't say "rack him". Now, salute.

Very nice, chowd.

we aren't going to have posts from Orenthal now, are we?

Hopefully not, but we may hear from that lady who drove into a "hobo" and left him stuck in her windshield overnight in her garage! What might her username be?

i guess clones are everywhere. how about "meet me in hell".

Post with good comment but inappropriate name deleted.

in case you missed it
"i DON'T brake for hobos"

Nice old school reference, Quinn.