BG5150 Posted March 10, 2010 Posted March 10, 2010 We have a plan that failed the ACP test. However, the ER has not deposited the match yet. Therefore, I may not be able to do the refund from the HCEs account (it's the first year he's eligible for the match) by March 15. Is the ER on the hook for the 10% excise tax? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
jkdoll2 Posted March 10, 2010 Posted March 10, 2010 No - the match is not refunded - it should be forfeited for the failure.
austin3515 Posted March 10, 2010 Posted March 10, 2010 Prior post is incorrect - I think there was a similar discussion very very recently if you look back regarding forfeiture/refund. Match is only forfeited to the extent the participant is not vested. My opinion by the way is that there is no excpeiton for the excise tax in this situaiton. I came across the same thing as you before, and looked for an exception and came up with nothing. Austin Powers, CPA, QPA, ERPA
Tom Poje Posted March 10, 2010 Posted March 10, 2010 since its the first year he's eligible for the match, he might not be 100% vested. in that case its entirely possible that some of the match would be forfeited, depending on how you handle things.
BG5150 Posted March 10, 2010 Author Posted March 10, 2010 He's 100% vested. He's part of a company that just adopted a multiple employer plan, and his past 15 years are credited. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
jkdoll2 Posted March 11, 2010 Posted March 11, 2010 If the match is 100% vested then it would be refunded. According to TAG (technical answer group) the 10% penalty does apply if the refund is after the 2 1/2 months after the end of the plan year.
Guest Key Lime Pie Posted July 21, 2010 Posted July 21, 2010 12/31 plan year and company would like now to deposit the match (they have until 10/15). Plan will fail ACP however and require refunds to the 3 HCE's who are all family/owners. Can company simply deposit enough to these 3 so that acp test passes and no refunds are required, thereby also avoiding the 10% penalty, as indicated would apply to the refunds?
Kevin C Posted July 23, 2010 Posted July 23, 2010 Key Lime, No, they have to get the match they are entitled to under the terms of the plan, then you do the ACP testing. If you short their match, you will create a failure to follow the terms of the plan.
rcline46 Posted July 23, 2010 Posted July 23, 2010 This is where you MUST read your document carefully under ACP corrections. SOme documents have language in them that you do not contribute an amount which will make the ACP test fail! Read the entire section.
austin3515 Posted July 23, 2010 Posted July 23, 2010 Can anyone confirm that the Corbel prototype does NOT include this provision? Austin Powers, CPA, QPA, ERPA
rcline46 Posted July 23, 2010 Posted July 23, 2010 I do not see any such limiting language in the prototype basic plan document.
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