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The definition of "plan" in 1.401(k)-6 leads you on a trail to the definition of "plan" in 1.410(b)-7 and 1.401(k)-1(b)(4)(iii)(A) specifically says two permissively aggregated plans are treated as a single plan under section 401(k). The 1.401(k)-6 definition of "eligible employee" is an employee eligible to defer under the plan. An "eligible NHCE" is defined as an eligible employee who is not an HCE. The requirements for the non-elective SH in 1.401(k)-3(b) require that each "eligible NHCE" receive the non-elective SH. Likewise, 1.401(k)-3(c) has a requirement that each eligible NHCE receive the SH Match. When you try to permissively aggregate a 3% SH plan and a SH Match plan, the aggregated plan is not SH because neither SH formula is provided to each eligible NHCE. 1.401(k)-1(b)(4)(iii)(B) says you can't aggregate plans with different testing methods. It specifically mentions that you can't aggregate a prior year testing plan with a current year testing one and that you can't aggregate a SH plan with a non-SH plan. If you read it as allowing plans with different SH formulas to be aggregated, the aggregated plan would not be safe harbor and would be subject to ADP and ACP testing.

Well - I guess we just have to agree to disagree and leave it at that. Hope you all have a great weekend!

Maybe someone could volunteer to write up a plan where the safe harbor match is 221% of deferrals up to 6% of pay for only Group 1 (just happens to be the doctors) and the other group (the rest of the employees) only have a 3% safe harbor non-elective? Submit the document for an IRS determination letter and be sure to point out in the cover letter the dissimilar but aggregated safe harbor formulas. I was about to say "I can't imagine getting a favorable determination letter on that!", but then I actually imagined it before I could type that all out.

The client is an idiot? Unless they are paying the employees in cash, they already have a built in system to handle the payroll deduction repayment on a basically automatic basis. We set up all loans (the few we have) on a payroll deduction payment method and the payments are tied to the dates of the payroll. All the client has to do is send the check in to the plans investments, which they would have to do with the funds received with the coupon also.

Interesting! I don't even know what you are considering rude. There are MANY people who just read these posts, and the answers posted are intended to be educational for all the folks listening in. If folks can learn a better approach to asking questions by reading these comments, we have accomplished much. If you are offended, you might want to keep the above in mind.

Confirmed.

I think it is pretty clear that it is not deductible in 2017 if not deposited by the due date of the return. But I know of a lot of accountants that would not want to be bothered amending a return and would take their chances, and I don't see it as the plan's (or TPA's) problem as far as that goes. If there was a legitimate election to defer that much, then I think you have a legit deferral and legit late deposit issue. Amending the return to remove the deferral (and not making it up) creates a train wreck of amending the 5500 too, and in theory a failure to implement a deferral election, although in the case of a sole prop that issue is somewhat blurred.

If the S-Corp owner's taxable income is >= the W-2 wage limitation phase-in range (MFJ $321,400 - $421,400). Then the qualified business income is limited to 50% of the W-2 wages of all employees. This is far more restrictive of a single employee S-Corp than these circumstances with the owner/spouse and six (6) employees. This is a separate issue than the IRS' increasing focus on reasonable compensation of S-Corp 2% shareholder-employees. I would only expect increased scrutiny when not only does the 2% shareholder-employee save FICA taxes on paying unreasonably low compensation, but they increase their QBI and possible deduction.

There is no EPCRS-like system for traditional and Roth IRA excess contributions. They are subject to 26 code 408, 26 code 4973, reported on Form 5329 and covered in Publication 590-A. While the IRS has statutory authority to grant a waiver of the 50% excise tax penalty for failure to take RMDs and I have seen them do so for extended periods although not eighteen (18) years. The IRS has no such statutory authority to grant a waiver of the 6% excise tax penalty for excess contributions. I have never heard of them granting any such relief. One thing to keep in mind. Just like for Form 5330, there is no statute of limitations (SOL) for unfiled Form 5329s. This is best dealt with before 12/31 or another year's excise tax will be due.

"So you are not providing the facts necessary for us to understand what happened. More details are necessary including the exact name of the Plan." I agree that the necessary details are missing. HOWEVER, the exact name of the plan is not one of them and should not be published under these circumstances on a Discussion forum.