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As I understand it his comp is "earned" on 12/31 and his "payroll period" for lack of a better term is the plan year, so his "per payroll" match would be the same as and annual match and not technically a true up..

It seems like you are circling back to the original question - if someone has $0 comp are they in the test at all? As far as I'm concerned, owners (that is, a sole proprietor or a partner) are also employees...but with $0 comp I would not include them in testing. An owner's spouse who is not a partner would have to either get a W-2 income or get nothing, and if they get nothing then I can't see how you would include them in the test. As far as software, I think it would short out if they divided 0 by 0, so they program it to = 0. That doesn't mean it is correct.

The story suggests someone used your work without the business courtesy of engaging your services or explaining why they weren’t. If you’re willing to speak with the certified public accountant, what else could you say beyond suggesting the CPA maintain her malpractice insurance, might want her own advice about whether to disassociate from further tax returns and other professional-conduct points, and might consider suggesting that the employer lawyer-up. Or if you are willing to offer services to support corrections, suggest that the employer’s lawyer engage you, to maximize evidence-law privileges for confidential communications. And you’d require a much-more-than-you-estimate advance retainer. Among other cautions, don’t you want to test whether the employer is serious about corrections?

It's important to make sure that they really are Leased Employees as defined in 414(n) - not every person who works for one company but gets a paycheck from another is a true 414(n) leased employee. Who's the Employer has a good chapter on the issues that need to be considered. If they really are 414(n) leased employees, then the correction (that doesn't involve retroactively letting them into the plan) would be to move the money out of their accounts and reallocate under the formula in the plan document for the year(s) in question. You would have to go back and re-do the testing for those years too; 414(n) leased employees are non-excludable so now you have to watch your coverage test.

As long as the forfeiture amount in question was a current amount, meaning it had been generated during the 2022 Plan year, go ahead. If it is monies that have been hanging around and should have been used in a prior year, I would allocate it to B participants in conjunction with the merger's preservation of benefits.

In Relius, if someone is eligible (or at least the program determines them to be eligible), the show up the the ADP test with zero comp, zero deferrals and an ADP of 0.00%. One of the reasons I run my tests sorted in compensation order first. So I can see all the zero comps at the bottom.

Thank you both. I think I agree with both of you. He can do it, but I don't really like it either.

Thanks. It turns out I was provided with a whole lot of incorrect information - after receiving the correct information, all of the above is negated. But, thanks for the reminder about the pre-approved language!

I would assume so as well, but you know what they say when you assume...so I would read the document on the definition of compensation for top-heavy but I would be surprised if that wasn't the result.

Gateway is 7.5% and includes profit sharing at applicable percent and the equivalent normal allocation rate (or NHCE average thereof) of the cash balance (which is usually significantly less than the CB credit %). The SHM does not count toward gateway but does count toward your 6% DC employer limit if you want to avoid the combined plan deduction limits as people have noted. Therefore, to enable large CB deduction skewed toward owner(s), you often must limit the owner(s) profit sharing to leave enough room for NHCE gateway. Usually a combo design is much better with a SHNE in the DC as it counts for testing and gateway, but that is a prospective conversation to have with the client.

I agree with Bri - I think you are calculating your rate groups wrong. The percentage of NHCEs (or HCEs for that matter) benefiting in each component is the number of NHCEs (or HCEs) who are in that rate group (they have an EBAR greater than or equal to the minimum EBAR for the rate group, and they are a member of the selected component) divided by the number of non-excludable employees of the employer. Taking NHCEs out of a component doesn't reduce the denominator, so it won't improve your test.

Wait, even though they're in a different component, they're still going to be measured for the rate groups as non-benefiters.

1. No, but I can't see how it would help to have a component with only NHCEs; since each employee has to be assigned to exactly one component, it will just reduce the number of NHCEs in one or more other components which do cover HCEs and make it harder for those components to pass coverage. Maybe I am missing something. 2. If each rate group in each component is over 70%, then ABPT is not necessary.

John Hancock and American Funds Recordkeeper Direct both allow you to allocate future or to reallocate your entire account. 99% of the time, participants want to reallocate the entire account but I have had a few that only wanted their future contributions to go to a new fund.

Our plan at Empower offers three options to move money currently invested: (1) Transfer existing investments (move money from selected investments to other investments) aka "Direct Transfers", (2) Reallocate your holdings (change holdings percentages for your investments aka "Update Holdings", (3) Rebalance to current investment allocations (adjust your holdings to match your investment allocations) aka "Rebalance Account". Then, there is an investment allocation choice for new money which may or may not match what you requested when you transferred your existing investments.