Are the 2021 SH amounts included in 2022 testing?

[Jakyasar]

Hi

Looking at a run for someone.

I think the TPA who shall not be named here somehow left it all to the client to run the 2021 numbers. Very bad communication with the client.

401k+SH+PS are the 3 provisions. SH is non elective 3%

Was just told that they will make the 2021 SH deposits prior to 12/31/2022. I never worked with this before as I always make sure all deposits are made timely i.e. by the due of corporate tax return, in this case, 9/15/2022.

When performing 410b+401a4 testing for 2022 projections, do I need to include the 2021 figures? There is plenty of room for deduction, so it is not an issue.

Thank you

[Bri]

Safe harbor is required by statute within 12 months of the plan year end.  So 2021 SH amounts may be deposited currently.

Tax deductible deposits are due by the extended corporate tax deadline.  So a contribution now for the 2021 SH can't be deducted on the 2021 return.

Annual additions for the prior year are due within 30 days of the extended tax deadline.  So if these SH amounts are going in now, they can't be 2021 annual additions, either.  But hey, maybe having 2 years' worth of SH amounts in your annual additions helps this year.  (And good luck if it was meant to be there as 2021 annual additions for that year's testing.)

And I punt on the issue of someone not having any 2022 415 comp but needing a 2021 SH amount to post as a 2022 annual addition.  Punting works better than a schoolyard lateral play.

[Jakyasar]

Hi Bri

Thank you for your comments.

Luckily for them, no HCE's get SH, only non-HCE's.

415(c) limit can easily be controlled with PS contributions for the owners.

A bonus question, can they still make PS allocation for 2021, assuming no testing failures (10/15/2022 deadline came and went). Again assume no deduction and 415 issues. Just curious on this.

[Lou S.]

You are past the time to make a 2021 PS allocation.

[CuseFan]

On 12/19/2022 at 2:05 PM, Bri said:

works better than a schoolyard lateral play

As the Patriots found out on Sunday!