We have an ESOP and we would like to have certain employees outside the US participate in the Plan (the ESOP currently only covers US employees).  Normally, this wouldn't even be a consideration because ESOPs normally allocate based on US income.  We don't have that issue, because we allocate based on job classification.  

But we still have the remaining issue that allocations cannot exceed 415 compensation.  Do we have any options here?

Is there a way that non-US compensation can be classified as 415 compensation?

If not, is there a way we can pay foreign employees so that the compensation somehow qualifies as US compensation?

To the extent it is helpful, some of the foreign employees are in Ukraine, but we have others in other countries who we would also like to add as participants.

As we know the deadline for signing Cycle 3 Adoption Agreements has passed.  What if a plan sponsor has not signed the now separate Trust Agreement timely - by July 31?  The Trustees are the same before and after Cycle 3.

Recently filed 2021 Form 5500-SF for a plan and about a week after filing the Employer contacted us to let us know they realized after the fact that the filing had their old address. Address changed a couple years ago but didn't get noticed on the filing until now. Do we need to file an amended return?    

I am looking for thoughts on merging 2 457(b) top hat plans when the plans have a different plan year end - for example one plan has a plan year end of 12/31 and the other plan has a plan year end of 9/30. In the qualified plan world, you cannot merge 2 plans if they have different plan years. I feel this is not really an issue in the non-qualified 457 plan context where there is no Form 5500 filing or testing requirements. Does anyone have any comments? Thank you!

If a participant wants to take a distribution (either in-service or termination), is it an IRS requirement to get spousal consent or is it at the Plan's discretion?

When calculating the Contribution & Benefits Utilization standard and Key Employee 25% Concentration Test you are supposed to calculate the aggregate qualified benefits.

Are qualified benefits equal to payroll deductions for cafeteria plan items plus employer HSA contributions <or> do they include all employer contributions - including amounts paid by employers to pay for health, vision, and dental premiums?

Deleted - inadvertent duplicate

Another TPA has asserted that this is possible. I think this is dead wrong, and I can find no support for such a position. However, I'm always willing to question myself. Does anyone believe this is possible?

Most of you probably get the BenefitsLink Bulletins, but if not, see the following. I expect a huge sigh of relief from many places...

https://www.irs.gov/pub/irs-drop/n-22-33.pdf

If a person defers the full 402(g) basic limit with full catch-up, when do the catch-ups occur? If deferrals were pro-rata during the year, do they occur with each payroll period? Or do the catch-ups only occur in months after the basic 402(g) limit has been reached?

I understand that an amount is not a catch-up until the basic limit is deferred.

However, assuming the basic limit is met, what is the crediting date for the catch-ups? For fiscal year plans with 415 concerns, the timing of catch-ups is important, because catch-ups are not additions. My position has been that catch-ups are the last dollars contributed in a calendar year and are not pro-rated for tax purposes, regardless of how the TPA characterizes the timing. 

Imagine this situation: A government employee makes elective salary-reduction contributions under a § 457(b) plan. The plan receives only salary-reduction contributions. Later, the employee is found to have stolen from his employer. In the criminal case’s plea agreement (for a reduced sentence), the defendant agrees to pay restitution to his former employer.

Trying to get money for himself with no setoff or pay-over to his former employer, the participant asserts that the § 457(b) plan must not deny him his distribution because to do so would be contrary to the plan’s exclusive-benefit provision. (Assume the plan’s provision is no more than § 457(g)(1) requires for the plan to § 457(b)-eligible.)

Has anyone worked on or observed a situation like this?

How do you think the exclusive-benefit issue should sort out?

We have a new client who wants to establish a Profit Sharing Plan for 2021.  The client (12/31 FYE)  tells us that they already filed their 2021 taxes (and did not put their return on extension.)

My gut response is 'it is no late' since filing deadline as passed.

Now what is the client filed an extension (deadline now 10/15), but still has already filed their corporate return  last week.  Does this change my response?  I am thinking so, since the corporate return was extended.  Do you agree?

If anyone can provide documentation to support or refute my answers, please provide.  Thanks.

We have a SHNE no PS.  Client (with "help" from broker) decided to add voluntary contributions up to the 415 limit.

Three owners, two are doing the max up to $62K between elective, SH and voluntary. 

To play it safe, ran both ADP and ACP tests, apparently plan passes both on the basis that the unused portion of the employee deferrals were moved over to pass ACP.

Does this make any sense?

Hi

Approached by a hedge fund manager/partner.

They want to set up a 401k plan and invest in their own hedge fund.

Any comments on if can be done?

Thank you

We have a client who needs to correct a missed deferral opportunity.  The error occurred last year over the course of three payrolls.  The plan has auto-enrollment and therefore qualifies for the safe harbor correction method.  This issue is that the participant is terminated and will not receive compensation any longer.  Because the regulations state that:

The plan will correct the deferrals by the first payment of compensation on or after the earlier of:

• 9 ½ months after end of Plan Year when failure first occurred
• Last day of month following employee notification of error

Can the plan use the safe harbor method and not make the QNEC even though the participant will not receive compensation?

Hi, in January of 2022, a participant distribution was processed form funds in a pooled account.  The participant received his net amount, and the employer received a check for the federal tax withholdings.  Now, 6 months late, he is asking us what to do with the check.

My understanding is that it needs to be remitted to the IRS either through EFTPS, or by sending by mail with Form 945 and 945-V.

The client does not want to send electronically.  The only 945 form I can find is the 2021 form, but this is a 2022 payment.

What does one do in this instance when there is not an applicable for for the current year?

Thank you all!

I have a potential client who is having issues with 2021/2022 contributions.  It appears that the prior TPA allowed ineligible participants to defer into the Plan.  What is the normal procedure in this case?

If the money is returned, does the employer have to make the employees whole if the investments are down?

I am the owner of Company X

Company X sponsors 401k/SH/PS plan

As owner, I am eligible to defer, excluded from SH (as HCE) and do not want any PS (no top heavy issues)

Is my salary included for determining deduction limit?

How about, if I only get SH (assume non-elective 3%)

Thank you

Employee Leasing company wants to sponsor a 401(k) for their inhouse employees only. Can they exclude employees leased to other organizations? Are there limitations or testing requirements to consider?

Ever filed a 5558 extension for a one-person plan, and it was then determined that for one reason or another (assets<$250k, or no contribution made by 12/31), that 5500 not needed to be filed. Does the 5558 create an audit problem?

This has to do with an unresponsive new plan sponsor.  We are thinking, if there is indeed an accrued contribution to ultimately file 5500ez on an accrued basis, even though under $250k. However if they ultimately do not make a contribution, there is nothing to file, but a 5558 would have been filed.