ETA Consulting LLC

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ETA Consulting LLC last won the day on January 12

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  1. Correct. They may end up (in aggregate) not to be Top Heavy. Good Luck!
  2. I misread the question. Didn't realize the Safe Harbor Provision. Good Luck!
  3. Do you have an HCE who is not a Key? If so, then did any Key receive a contribution (or allocation of forfeitures)? If yes, then yes; you would give the TH minimum to the non-key employee. Good Luck!
  4. I agree that it cannot be done, but for a separate 'technical' reason. I don't think 411(d)(6) is applicable because the amendment would be prospective. Anytime (in general) that you want to eliminate the true up during the year, you'd just provide the true up through the effective date of the amendment. But, the idea of actually changing the safe harbor match formula during the year would seem to be the point of contention. I wouldn't dream of trying to do something like this during the year; but just don't think it's (technically) a cutback issue. Good Luck!
  5. I'm assuming you're asking because one of the plans are top heavy and the other is not. In any other case, the TH status wouldn't change. At any rate, I think the rules already cover this. You have: 1) 2016 Plan Year being Tested 2) Required Aggregation of plans assuming each plan has at least 1 Key EE 3) Top Heavy Determination Date of the last day of the preceding plan year (e.g. 12/31/2015) What would be a point of contention to having them aggregated? Good Luck!
  6. You should consider the rules for determining whether an employee "normally works fewer than 20 hours per week". There is an overriding caveat for employees who have worked 1000 hours during a previous year. Good Luck!
  7. The short answer would be that they'll likely set up a new plan to cover the union employees. There are some caveats with the union issue (e.g. employees covered under a collective bargaining agreement between the Employer and the 'Union' representative) that would determine if there is a mandatory disaggregation of the Union employees. Good Luck!
  8. That's just lazy on the payroll provider's part. I've never considered a catchup is anything other than an increase in the deferral limit for those who are age 50 and over. If you are, then your limit is $24,000 (and if you're not, then your limit is $18,000). So, my issue would be that the notion of a separate election being required because they arbitrarily decided to curtail someone's deferrals before they met their statutory limit is unacceptable. At the end of the day, this is a reflection of free market forces at work. If you can do this and retain your clients, then good for you. I won't try it :-) Good Luck!
  9. Typically is a key word; which leaves the option open for a document provider to write something different. At any rate [no pun intended :-)] the language may seem to suggest that there is only a single formula (which is discretionary) that is given to a group of employees (who may be discretionary). I do see a how this can be interpreted to mean a discretionary formula applied to each individual employee, but that would appear to be an interpretation issue. Some document providers write their plans to be intentionally vague while others write theirs to be a flexible as possible without ambiguity. Without reading the actual document, I'll caveat my response. I do appreciate this insight and your background. This is a new one to me and I am happy that I now know that this issue is, again, a point of contention. The IRS has evolved over time with respect to what constitutes a definitely determinable formula and they will likely continue to do so in the future. So, it helps you keep up; and I thank you for keeping me up to speed on this :-) Good Luck!
  10. There is an option to allocate a QNEC and merely have the plan fail by a lesser amount. Also, depending on who the HCE is (perhaps the owner), you may provide the Top Heavy and then analyze the level of contributions that may be allocated to this HCE in a manner that would pass 401(a)(4). At the end of the day, it boils down to ensuring the plan document contains the language to do what it is you want to do. Whatever formula you allocate must be definitely determinable. So, whether or not your document has QNEC language that supports an QNEC given to only the TH minimum group should be considered. You know the TH minimum 3% allocation is definitely determinable as soon as the Key Deferred at 3%. If you have a class allocation method (i.e. everyone in their own group), then you may consider giving the individual an Employer Contribution (perhaps at 9%) and see if this passes 401(a)(4) while excluding everyone else. My main point is that you have to ensure that whatever you do is supported by the language in the plan. Good Luck!
  11. No. "Discretionary" is typically the formula that would apply to everyone eligible to receive the match. It does not mean you may exercise discretion with respect to each participant. Contrast this to the way the Employer Contribution (non-elective) formulas are written. You'll see that you have the ability to define various groups; and have the discretion to allocate a different formula to each group. Without this type of flexibility in the Match, your discretion would be limited to the formula itself while anyone who defers and is eligible for the match would receive it based on that formula. Good Luck!
  12. Anytime an HCE receives less than NHCEs, then there couldn't possibly be a non-discrimination issue; because discrimination (itself) involves favoring HCEs at a rate disproportionately higher than NHCEs. Your major issue would be allocating it pursuant to a definitely determinable formula. Most plans are written to provide a consistent match formula where the only variation is who actually receives it. But, if you have plan language that actually supports the different matching contributions you're trying to provide, then non-discrimination wouldn't be an issue. Good Luck!
  13. At the time it is issued by the court, it is only a DRO (Domestic Relations Order). It is written with the presumption that it will become a QDRO, but it doesn't become qualified until the Plan Administrator qualifies it. With that said, it appears as if this may have never been submitted to the Plan to be qualified. Once this happens, then the plan would separate the benefit and track it (under whatever protocol that plan has for handling QDROs). I guess the question for you to ask is whether or not it was actually submitted to the plan to be qualified. If it did, then there may be some account of what has transpired since then. If it wasn't, then this may be the disconnect. It 'may' be the case that it was submitted and paid out. I'm just throwing out random possibilities, but the series of events from the time the DRO was issued by the court to now seems to have some gaps. Good Luck!
  14. I agree, totally. It seems as if TPAs sometimes get carried away. You shouldn't be looking at any more than an hour of review. Good Luck!
  15. Of course, you're giving the special tax notice. This notice informs them, amount other things, of their rights to roll the distribution over. You do not, however, need to give them a distribution election. Instead, you may simply pay them out the cash (without any withholding) and issue the special tax notice with the distribution. Good Luck!