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  1. Today
  2. It is anything but black and white. There is a current thread on it over Here
  3. I'm reading that the IRS Rule in the Fed Register on 1/18/2017 allows plans to apply forfeitures towards safe harbor employer contributions. The Rule has many cross references and directly addresses QMAC's and QNEC's as now OK to be funded with forfeitures. Has anyone analyzed? Do you agree that safe harbor contributions can now be funded with forfeitures?
  4. Yesterday
  5. I am trying to figure out the limits of a fixed match in a safe harbor 401k plan. I know I can contribute a fixed match up to 6% of eligible play, but can the match be something like 200% of up to 6% elective deferral (effectively end up being 12%... or even more)? I am also a little confused by the difference between a fixed match and a discretionary match. Our plan is owner/spouse + one part time employee. My understanding is that the part time employee needs to get the same match as the owner/spouse.... is that correct, or is there different flexibility around different matches? Also, attached is a spreadsheet I created for myself to help run through different scenarios. Obviously, not all types of contributions can be used together, but I have been using this to sanity test some numbers. Please let me know if this spreadsheet looks useful, or is completely off base. Any feedback is much appreciated! Thanks a bunch! 401k.xlsx
  6. Would an obligation to continue employment for 2 years after receipt of a tuition reimbursement be considered a "reasonable condition subsequent" under Reg. 1.127-2 so that a repayment obligation upon a termination of employment prior to the end of the 2-year period would not, on its own, cause an educational assistance plan to be discriminatory? The regulation includes the example of a 1-year continued employment requirement, but it is not clear if a longer period could also be considered reasonable.
  7. Just a PLR but the "require that controlled group members exist concurrently" comment might be relevant http://employerbook.hypermart.net/PLR9541041.htm The operation of section 414(b), (c) and (m) and the regulations thereunder necessarily require that controlled group members exist concurrently. Accordingly, with respect to the first ruling, we conclude that the Predecessor Employer and Employer B are not members of a controlled group of corporations or other entities nor members of an affiliated service group for purposes of section 414(b), (c) and (m).
  8. I figured. Jsut wanted to make 100% certain.
  9. FWIW, there's no question in my mind that aggregation is required. Excerpts from Internal Revenue Manual 4.72.6.2.1.1 (08-09-2016) Employer IRC 415: Treat all employees of these entities as employed by a single employer per IRC 414(b),(c) and (m): All corporations which are members of a controlled group of corporations (per IRC 1563(a), as modified by IRC 1563(f)(5) and not considering IRC 1563(a)(4) and (e)(3)(C)). All employees of trades or businesses (whether or not incorporated) which are under common control. All employees of the members of an affiliated service group are treated as employed by a single employer. See Treas. Reg. 1.415(a)-1(f)(1) and (2). When applying IRC 414(b) and (c), replace the phrase "at least 80 percent" with "more than 50 percent" in IRC 1563(a)(1), except to determine whether two or more organizations are a brother-sister group of trades or businesses under common control (IRC 415(h) and Treas. Reg. 1.415(a)-1(f)(1)). 4.72.6.2.1.2 (08-09-2016) Plan A DB plan is any plan which is not a DC plan (IRC 414(j)). Under a DB plan, participants accrue a benefit each year under a formula that must be explicitly stated in the plan. See Treas. Reg. 1.401-1(b)(1)(i) and Treas. Reg. 1.401(a)-1(b)(1)(i) and (iii). When you apply IRC 415(b) limits, treat all DB plans (whether or not terminated) ever maintained by an employer (or a predecessor employer) as one DB plan (IRC 415(f) and Treas. Reg. 1.415(f)-1(a)(1)).
  10. It would be nice if the IRS had crystal clear rules on this. I'm not sure they do but I suspect they would take the position of "walking back" the controlled group rules for purposes of 415 and extending it under the predecessor plan rules. That is to say I would tend to agree with mphs in his analysis above.
  11. Sorry for the confusion on the "suspension of allocation"..... It refers to the fail/safe language in the document. Our plan doc allows you to Apply or Does not Apply the suspension of allocation conditions.
  12. I agree with RBG. The rule really isn't a "late deposit" rule - it's a "late segregation" from employer assets rule. Not allocating (and then investing it) is more a general fiduciary problem rather than a PT.
  13. I don't think you have to give him a TH allocation. He is not employed at EOY. He is getting some PS, so is therefore benefiting. And what is "suspension of allocation"? That's a new one to me.
  14. The employee met eligibility requirements and became a participant 7/1/2016. I am bringing him in via plan document fail safe language.
  15. are you bringing him via plan document fail safe language or are you bringing him in because plan fails testing so corrective amendment? If it is corrective amendment you probably have to make any such contribution 100% vested (you indicated he came in 7/1/2016. A corrective amendment requires 'substance'. providing a contribution to pass testing to a 0% vested employee wouldn't meet this requirement., I was unclear what you meant by not using ABT due to 'suspension'.
  16. Just thinking out loud here... I don't think it is a "late deposit" because it did become a plan asset within the time limit. The fact that it was not allocated to the EEs is a different problem,. but it isn't a late deferral. How hard is it to see what it would have earned had it been allocated correctly?
  17. I need help to see if my logic is correct... Small plan. 3 NHCE and 2 HCE. Discretionary match and profit sharing. Allocation suspension applies. Last Day and 1000 hours for match and profit sharing ( 2-tiered). Top Heavy Plan. Participating Comp. Semi-Entry. One of the three NHCE terminates in 2016. So 410b fails (m) and (a) at 66.67%. Can't use ABT because of suspension. So the terminated employee must benefit to pass 410b. For Match: the terminated employee does not defer so does not get match. No allocation condition is going to get him a match. I yes-override employee in Relius to get a passing (M) test. In essence I have removed the last day allocation provision and because employee is able to defer, the employee benefits for match..... at least that is my thoughts. Profit Sharing: the terminated employee shares in the profit sharing after "removing" the last day allocation provision. Employee came in 7/1/2016 so use compensation from 7/1/2016 to day of term. I would guess if Top-Heavy allocation would be greater than profit sharing, I would put in the TH contribution amount. Profit sharing is greater in this case. Am I missing anything in this scenario? Of course, I tell the bosses and sales team to ask about number of employees and design plan accordingly.....
  18. Pay Date 3/15/16. $450.00 in deferrals for a few people. Deposited at record keeper's unallocated account on 3/21. So, the funds hit the trust within the safe harbor time limit. However, the money is STILL in the unallocated account. Do I have a "late deposit"? If not, is there any sort of correction other than allocating it, plus earnings to the proper accounts? What if there was a loss in the account?
  19. Thank you both for the good help. From footnote 58 of the Labor department's explanation of the rule: "According to 2013 Form 5500 filings, 12,446 plans had assets of $50 million or more." If one adjusts for the possibility that some employers might have more than one plan (or manage other assets), perhaps a little more than 2% could have an "institutional" fiduciary without using an adviser.
  20. I agree with what Tom said above. An additional quirk that was brought up in a somewhat recent discussion on this is to make sure that you are 100% clear what your document provides when you change eligibility. Some documents might say that current participants stay in unless expressly excluded. Depending on your type of document you would probably have to dig around in your basic plan document to find it, and then structure your amendment to get the result you want.
  21. The SEP document must be a prototype if the employer is currently maintaining a qualified plan. There can be no exclusion of a controlled group member under a SEP arrangement. All employees (including owners) must participate in the SEP.
  22. well, maybe yes maybe no you can certainly change eligibility and even someone who was previously eligible could become ineligible. I suppose in the adoption agreement Special Participation Date a. [ ] Allow immediate participation for all Eligible Employees employed on a specific date. All Eligible Employees employed on shall become eligible to participate in the Plan as of _________ ............. so lets say you only wanted this prospectively, a date of 3/1/2016 could have been filled in, and thus have the effect of a 1 month wait up until 4/1/2016. on the other hand, some document language simply says something like "Anyone who was a participant prior to the effective continues to be a participant, bleh, bleh, bleh"
  23. I forgot to mention that the employer must correct the late/missing deferral issues before the DOL/EBSA to avoid criminal penalties. Other defects can (and should) be fixed before the IRS. Self-correction does not appear to be an option.
  24. Nice summary. Any complaint to the IRS or EBSA would remain anonymous; although he employer will probably suspect your wife is the cause of their many problems. I would be inclined to contact both agencies. The employer appears to have violated its fiduciary responsibility (think prohibited transactions,15% tax, and penalties) and this also has civil and criminal aspects attached to it. Each years prohibited transaction (generally the lost interest amount) is stacked onto the following year. There may also be state law issues that need to be explored before any statute of limitations would apply. SIMPLEs can be very unforgiving. The IRS is likely to impose sanctions; and I expect that they would be very costly (even more so, if it were "discovered upon audit). Also, missing deferrals and matching contributions would have to be restored to the plan along with earnings. There would also be interest on the underpayment of taxes, late filing and late payment penalties. There is also a penalty for making nondeductible contributions. Preparing the spreadsheets to calculate the various components can be costly, not to mention the cost of preparing an application to correct the deficiencies. See Section 6.11 of the linked revenue procedure and search for words "egregious" and "sanctions." EPCRS - Rev. Proc. 2016-51 I doubt there would be any adverse tax consequences to your wife, other than paying taxes on any distributions from the SIMPLE account. The interest would be computed on each and every late/missed payment until your wife is made whole (see section 6.11 mentioned above.). State legal action aside, the correction must be deposited into the plan account. Hope this helps (and your wife and the employer get what's coming to them).
  25. Agreed! I'll be very interested in FTW's communication and [likely] amendment for this. I don't always agree with the person responding to my question through customer support and have to seek out assistance elsewhere within FTW.
  26. I am preparing a determination letter request for a defined benefit plan restatement under the third (and last round) of Cycle A. The IRS website on Employee Plans states that such plans that have risk transfer language need to disclose such language, the location of the language in the Plan document and certain other information. In this case, the client adopted a lump sum window in 2016 for term vesteds only, so that the Notice 2015-49 restriction and arguably the need to make a specific disclosure in the dl submission would not be required. I am still inclined to do the disclosure only in hopes of getting a favorable caveat on the point in the ultimate determination letter. What are other folks doing for these types of windows?
  27. If you can mine the <$50MM, you can mine the total #. That 638k was from June 2013.
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