legort69 Posted December 9, 2020 Share Posted December 9, 2020 During 2019 there were 2 employees and one earned > HCE limit. If we elect the TPG in 2020 , then there should be no HCEs in 2020 since we round down (2 x 20%) Just want to confirm that there is no issue here since we are consistent with our rounding policy and that there is no rule we are not considering. Link to comment Share on other sites More sharing options...
Belgarath Posted December 9, 2020 Share Posted December 9, 2020 While I recognize that 1.414(q)-1T, A-3(b) allows any "reasonable" method, IMHO you are playing with fire by taking your interpretation. Good luck convincing an auditor that this is permissible. It isn't reasonable to abuse this discretion to blatantly ignore common sense coverage and nondiscrimination testing rules. I'd strongly recommend that you reconsider this. Good luck! Catch22PGM, Lou S. and Bird 3 Link to comment Share on other sites More sharing options...
BG5150 Posted December 9, 2020 Share Posted December 9, 2020 No owners? 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...
legort69 Posted December 9, 2020 Author Share Posted December 9, 2020 no owners is correct. Link to comment Share on other sites More sharing options...
Lou S. Posted December 9, 2020 Share Posted December 9, 2020 I like Belgarath, I don't see a situation where the IRS would view rounding down to "Zero" as a reasonable method, even if you do it consistently. Link to comment Share on other sites More sharing options...
legort69 Posted December 10, 2020 Author Share Posted December 10, 2020 Would your responses be different if we elected TPG mid year as a strategy to shift 10 of 15 HCEs to NHCE thus passing the test? Link to comment Share on other sites More sharing options...
Belgarath Posted December 10, 2020 Share Posted December 10, 2020 In the context of the original question, if your rounding method gets you to 1 or more, then at least theoretically ok. However, there are potential document and timing issues with the timing of the "election" and whether you can simply "elect" it or must amend plan, possible anti-cutback provisions (although I would say that's generally unlikely) - facts and circumstances issues to be determined for each plan. legort69 and Bird 1 1 Link to comment Share on other sites More sharing options...
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