Jill Posted November 23, 2020 Share Posted November 23, 2020 Owner only 401(k) plan with a match formula of 100% on the first 3% contributed. The owner hires an employee who becomes eligible for the plan 1/1/19 but doesn't offer him participation in the plan. The owner corrects for the lost deferral opportunity through 10/31/20 and the employee chooses to defer 5% effective 11/1/20. Normally, the ADP test is done by disregarding the improperly excluded employees so 2019 ADP Testing should be all set. Why type of ADP Test should be done for 2020? Link to comment Share on other sites More sharing options...
mphs77 Posted November 24, 2020 Share Posted November 24, 2020 What does the Plan document say, prior year testing or current year testing? Link to comment Share on other sites More sharing options...
Bill Presson Posted November 25, 2020 Share Posted November 25, 2020 On 11/23/2020 at 8:54 AM, Jill said: Owner only 401(k) plan with a match formula of 100% on the first 3% contributed. The owner hires an employee who becomes eligible for the plan 1/1/19 but doesn't offer him participation in the plan. The owner corrects for the lost deferral opportunity through 10/31/20 and the employee chooses to defer 5% effective 11/1/20. Normally, the ADP test is done by disregarding the improperly excluded employees so 2019 ADP Testing should be all set. Why type of ADP Test should be done for 2020? Can't he elect safe harbor nonelective for the year and forget the testing? William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070 Link to comment Share on other sites More sharing options...
BG5150 Posted November 25, 2020 Share Posted November 25, 2020 1 hour ago, Bill Presson said: Can't he elect safe harbor nonelective for the year and forget the testing? Too late for 2020... QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Bill Presson Posted November 25, 2020 Share Posted November 25, 2020 26 minutes ago, BG5150 said: Too late for 2020... Why? William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070 Link to comment Share on other sites More sharing options...
BG5150 Posted November 25, 2020 Share Posted November 25, 2020 50 minutes ago, Bill Presson said: Why? Seems like deferrals are already effective in the plan. I thought for plans like that, SH had to be for the entire year. And for plans with no deferrals yet, you can add a SH, but it has to be for at least 3 months. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Bill Presson Posted November 25, 2020 Share Posted November 25, 2020 22 minutes ago, BG5150 said: Seems like deferrals are already effective in the plan. I thought for plans like that, SH had to be for the entire year. And for plans with no deferrals yet, you can add a SH, but it has to be for at least 3 months. SECURE Act allows you to make existing 401(k) plans SHNEC retroactively. He's got until 11/30/20 to do it and use 3% and until 12/31/21 to do it and use 4%. William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070 Link to comment Share on other sites More sharing options...
Jill Posted November 30, 2020 Author Share Posted November 30, 2020 Thanks! I thought it was too late to add the SHNE retroactively for 2020. I will check it out. Bill Presson 1 Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now