Leaderboard

Well the "best way" to handle it is to get the carrier to issue corrected 1099-Rs in the name of the participant instead of the company.

And make sure it does not happen again!

Not sure what you meant by an annuity option, so here what I have seen. Participant elects lump sum, but you pay only what you can (i.e. annual benefit) and bring the remaining lump sum amount up 1 year with interest. At any time you can pass 110% test, you pay the remaining lump sum. And just a reminder, 110% is measured after the distribution. Liability is calculated without this person. Asset is calculated subtracting the payment to this person.

If the individual was able to make elective deferrals from his / her post-severance compensation (if the deferral percentage was not 0%), then the individual was an eligible employee and should be included in the ADP test.

We've done this often. You have to have some cash. Estimate the amounts, transfer in-kind, and even things out with cash after you know the actual values transferred.

I would review the amendment carefully, because this is not necessarily true. Depending on how the amendment was written, someone who was previously eligible but has never actually completed a year of service may need to complete that year of service before they are considered eligible again. Does the amendment explicitly addresses this in any way? Does it say, for example, that anyone who was a participant on any date prior to the effective date of the amendment will continue to be a participant after the effective date? If this person actually did re-enter the plan immediately upon re-hire then you lose the top heavy exemption on the entire plan. All non-key participants who are actively employed at the end of the year will need to receive a contribution of 3% of their full year compensation.

The EZ does not reconcile assets; it only asks for contributions. You can include other docs related to the plan or you can include your 3rd grade report card; same effect.

we know if you have a controlled group, you have to include all employees for coverage purposes. if you aggregate for coverage, then you have to aggregate for nondiscrim (ADP testing) as well. but you can't do that unless both plans use the same testing method - but there is no requirement that all members be safe harbor. Otherwise the regulation (1.401(k)-1(b)(4)(iii)(B)) that says you may not aggregate a plan using ADP safe harbor provisions with another plan that is using the ADP test makes no sense. (This particular section of the regs will refer you to 1.410(b)-7(d) which are the rules for permissive aggregation (refers you to the 'employer' choosing how to treat 2 or more plans, including QSLOBs, etc) Under what other circumstances would you have the situation arise where you would have a non safe harbor 401(k) and a safe harbor 401(k)? you can't (Tom corrected his typo) aggregate a plan with a non-related company. I suppose you could have an odd company that sponsors both a 401(k) plan and a safe harbor 401(k) plan... possibly what you might have read or are thinking of, is that even if both plans are safe harbor, they have to have the same formula as well.

its cleverly hidden in 1.401(k)-1(b)(4)(iii)(B) the very last sentence.

assuming you have 2 separate plans, and each company can pass coverage on its own, you are correct. regardless since you can not aggregate a safe harbor with a non safeharbor that had better be the case