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As far as I know there is no exception for owners and their families. The law doesn't seem to be there to protect participants, but to dissuade companies from using what should be plan assets for its own use.

That's more of a sentence than a penance.

Understood. Maybe your penance is answering the original request for a tutorial on all things discrimination? 😁

Not a thing.

If I didn't know better I'd say you two were related. Presson, Preston. Coincidence? Its a conspiracy! The merging of a new plan seems like a possibility. Is there anything regarding the IRS's permanency guidelines, in relation to the retroactive establishment of a plan only to merge it into the current plan, that would make you hesitate?

Each plan that issues a refund for excess deferrals between 1/1/20xx+1 and 4/15/20xx+1 would issue a 1099-R in January of 20xx+2 for year 20xx+1 with code P indicating that the refund was taxable in year 20xx. No correction to the W-2 is required.

Indeed.

Now that's funny!!

It is my understanding that this was later modified such that the hces received nothing.

But the Plan Doc references an employee who incurs a Separation of Service prior to satisfying the eligibiliity requirements. This employee did not.

I would think they enter right away. They have 1 YOS? Check. They turned 21? Check. Entry date has come and gone? Check. Participant on rehire.

Obligatory: What does the document say?

If group C is more than 30% of the NHCE and they get nothing, and they otherwise satisfy the conditions to receive a PS, then you fail coverage. Note: remember these groups are artificial constructions. Everyone is considered separately, you so can give everyone a different rate as long as you are passing the testing. And don't forget you still have to pass nondisrimination testing. If the owner is a lot younger than a bunch of the staff, it'll be difficult to pass the test with palatable contributions to the NHCE.

Maybe the employer wants to help the rank and file out, but doesn't want to have ADP dragged down and also wants to avoid complexity of testing the excludable group separately if they are unlikely to contribute anything?

without looking at anything, i'm pretty sure that's not kosher. But they could still adopt a PS plan for 2020 and merge it into the 401(k) plan in 2021.

For small plans (under 100 lives) the DOL has a safe harbor of 7 business days after the pay date. Anything longer than that you are into facts and circumstances to justify why it takes that long.

Somehow he ran payroll on time. Should be able to do the same for 401k, traveling or not.

Not a legal one.

The program you describe is legal and unusual. One question -- are the profit sharing contributions made in each payroll, or is there a one time contribution after the year ends?

Plan document should specify if loan is treated as general asset of the trust (allocate interest to all, do not reduce participant balance for loan) or as directed investment (reduce balance, allocate principal and interest to just him).

Point of order, your honor. The phrase "cross test on a contribution basis" is, at best, a Norm Crosby delight (malaprop) and, at worst, a description that should be discouraged with a random number of lashes. Try "test for non-discrimination on a contributions basis" instead. You'll like it. And I won't hear fingernails on a chalkboard in my head as I read.

Well continued Best Wishes in retirement AtA, but at least I've been an actuary for a few years myself now. Not that I would ever fill your shoes!

Good to hear from you, Andy!