I have an HCE with a 402(g) excess of $500 for 2021 (he deferred $20,000)

And I have a NHCE with a 402(g) excess of $135 (he deferred $19,635)

Neither catch-up eligible.

I thought you kept the excess in the ADP test for the HCE and removed it for the NHCE.

For some reason Relius is removing it for both.  I just want to make sure I'm understanding the rules  before I start bugging them.

Employer currently offers a 401(k) Plan, no match.

Vendor has recommended QACA for the 1/1/2023 Plan Year.

Question -

When setting up the QACA, I know you can not elect that the Automatic Deferral percentage does not apply to existing participants.

If a participant is currently deferring 0% and there is a affirmative election showing they declined, does this mean the 3% QACA does not apply to this participant?

The employer has about 40 employees currently not deferring, I am trying to figure out if the addition of the QACA means this group is swept up in the Auto Enrollment unless they make an affirmative election not to participate. 

Thanks

The plan has each participant in their own allocation group.

Is it okay to allocate $0.00 to NHCEs and $0.00 to HCEs and test them on an accrual basis, and test the NHCEs and HCEs receiving the same flat dollar amount on a contribution basis providing that the ratio testing passes?

The plan allowed 1 HCE and 2 NHCEs to enter the plan prior to satisfying the eligibility requirements.  My understanding is that the amendment needs to pass 401(a)(4).

My question is ... who do we include in the 401(a)(4) test - eligible employees, or ineligible employees?  Thanks.

Small $ when using Calculator...de minimis..

Good Afternoon,

I have never had this situation before and I need the Forum's expertise:

The situation is  as follows:

There are two Company Plans, a Cash Balance Plan and a  Cross Tested Profit Sharing Plan. Together the plans are Top Heavy. The cash balance allocations must be tested with the Profit Sharing allocations. When non-discriminately testing the Cash Balance Plan with the Profit Sharing Plan, only one Participant, lets call him John, would need to have his PS percentage increased from the 5% MTH allocation (the 5% MTH allocation provided to all NHCEs passes the Gateway test) to 8.35% of compensation.  This provides the minimum increase needed to pass 401a4 testing.

As stated above, the Profit Sharing Plan is X-tested and to receive a Non-Elective PS allocation, the Plan Document has a 1000 hour and last day requirement and even though John was there on the last day of the plan year, he only worked 600 hours during 2021.  Knowing those facts can John receive a NE contribution greater than the 5% of compensation MTH contribution in the PS plan or do I need to increase another Participant’s PS allocation that did work 1000 hours and was there on the last day of 2021 to pass 401a4 testing?

Thank you,

Dawn

I am a TPA with a small employer (5 participants), and they would like to remove the Roth as an option.  There is currently 1 participant making Roth deferrals.  I understand that we can remove the Roth provision, but is there a way to 'grandfather' in the 1 participant who utilizes it so she can keep making Roth deferrals?  I think I know my answer, but want to check with you guys.

BTW (the story behind the question) - there has been a lot of hassle in cashing out a participant who had a total of $1300 in the plan, some of which was Roth.  It has been a pain in the rear-end explaining all the nuances to the accountants (ha!) and investment advisor, as you all know, and even harder on the plan sponsor, so she has asked if we can just discontinue the Roth.  The one lady who is still employed there and makes Roth def's may not be pleased if we remove it so we're trying to allow only her to do it.

Thank you!

Hi

Looking at a combo plan with an existing DC plan.

DC plan effective 2018 had a special entry that let in a part-time employee in 2018. This employee always worked under 500 hours.

Elapsed time method is used for all provisions (I am by no means experienced in using elapsed time)

DC plan has deferrals, non-elective SH and PS. For PS, last day rule is required. In addition, participant must complete period of service under elapsed time - I do not see any provisiosn as to what period is - will be checking with the other TPA.

Adding a CB plan for 2021 (assume all ok for top heavy) which will have 21/1 assumption with 1000 hours for eligibility and accrual. This part-time employee will never be eligible in CB.

Cross-testing both plans. Does the part-timer get gateway? He is in the testing because employed on 12/31 and also has 401k deferral and SH (possibly PS too).

Can he be tested under otherwise exclude (the only one and non-HCE).

Thank you

For a trustee-directed plan, we have historically calculated the RMDs once we've accrued the contribution. The participants ending balance at 12/31/2021 would be equal to the actual investment balance plus their contribution receivable.  The participant wants his RMD in January before we know the accrued contribution amount. Can we modify our methodology and calculate the RMD based on just the value of the investments going forward?  We don't have the accrued contribution amount available in January.

Thank you!

Hi,

A client failed the ACP Test. When calculating the refunds, the system is also calculating match forfeiture refunds as well. All of the people receiving refunds are 100% vested.

Can someone explain to me what is happening? 

I put together a spreadsheet that will calculate single life and 100% J&S APRs. This was inspired by comments from @401king and others in another recent thread.

You must enter the interest rate and age on the Input tab. You can optionally enter an account balance, if you do it will calculate the annuity amounts in addition to the APRs.

Important: you must enter the values from the correct mortality table on the "Mortality" tab. The mortality tables are published by the IRS, for example the 2021 table is here: https://www.irs.gov/pub/irs-drop/n-19-67.pdf Use the values in the column labeled, For distributions subject to 417(e).

If someone wants to enhance this workbook to automatically pull the 417(e) tables, or the 10-year CMT rates, that would be fantastic.

Use this workbook at your own risk. I believe it will generate correct results based on the inputs but I can not be responsible if it fails in some cases. I can not promise that it will not immediately delete all your files and melt your CPU the second you open it, either. Treat it like any other file you would download from an anonymous internet stranger.

APR calculator.xlsx

Solo 401k rolls all money in the 401k into a SEP IRA n 2019.  1099R issued, but 401k administrators does not file a Final Form 5500.  Does anyone know how to correct this now? 

Solo 401k rolls all money in the 401k into a SEP IRA n 2019.  1099R issued, but 401k administrators does not file a Final Form 5500.  Does anyone know how to correct this now? 

Company switched payroll providers. New payroll company has not withheld 401k from the 5 participants for 2 months.

What's the best (and cheapest) way to correct? Can this be self-corrected? Must employer make up lost earnings? Can the DOL calculator be used?

We have a strange situation.  We prepared a 2018 delinquent Form 5500 for a large plan in December 2021 and the auditors assured us the opinion would be finalized and sent by 12/31/21 but they only sent in February 2022.

The issue is the version of F5500.  We had prepared it on the 2020 version which was the latest version available at the time.  Now the 2021 version is available, do we need to reenter data onto the 2021 version and submit or is it fine to file on the 2020 version?  If anyone can share their experience or insight that would be much appreciated.

My brother wasn't careful sending money from his Vanguard "Our deceased dad's name inherited IRA" to a new bank cd that is now titled "Brother's name IRA". He asked for the Vanguard check to be sent to new bank in his personal name. Went directly to them, not thru him. The bank he opened it in doesn't even offer inherited IRAs so he checked off "traditional ira" on application. Money was never comingled with his regular IRA elsewhere.

CD was opened 18 months ago, and Vanguard is indicating they aren't going to help. 

RMDs have been taken based on stretch method (dad died 4 years ago).

If we cant get banks to retitle is there any other recourse? Since IRS will be getting same tax from RMDs either way, would they even notice or care about title on the 1099 R? Thanks.

EDIT I believe there is a code 7 vs code 4 on 1099r indicating it is inherited vs traditional, but would IRS even look at that to compare to previous year, as long as correct rmd taken?

EDIT 2 he just noticed his Form 5498 from bank listed entire cd as IRA contribution for 2020, when the money came from vanguard. I assume my brother never even gave this form to our accountant.

Participant terminated in 2018, in 2021 agreed to a settlement, part of which wage income of $6k monetary consideration for disputed lost wages. The wages were paid as w-2, nothing in the settlement addresses plan contributions.  I am on the fence if this should be considered back pay and allocated an allocation based on 2018, I read 415(c)-2(g)(8) but wondering if the 'disputed lost wage' would have otherwise been included (such as underpaid for hours worked).

I don't have access to the EOB at the moment, I thought this was addressed in there.

Participant terminates December 28, 2020,  but the next pay date is January 5, 2021.

Is she in the 2021 ADP test even though she did NOT perform services for the employer in 2021? 

We filed 2 extensions for 2 plans with plan year ending 4/30/21.  The extensions were sent to Ogden, Utah, return receipt requested on November 3, 2021.  One envelope, two extensions. We typically file extensions one month before the due date.  Today, one of our clients received a denial of the extension request.  Upon closer review of the crumpled, torn-up return receipt from the US Post Office, the stamped date of receipt was December 6, 2021.  While this is after November 30, most assuredly the envelope was mailed in time as the US Post Office could never deliver anything from Florida to Utah in 6 days!    So we notified the other client that they would likely receive a denial as well.  Well, guess what?  They received their letter from IRS today, too!  But theirs WAS APPROVED!

It's a darn shame that we are at the mercy of IRS and the US Post Office.  This is totally unfair to all of us and our clients.  IRS should immediately develop a system to electronically file extensions!  Or do away with the 7 month deadline all together!  It is painfully obvious that they do not have the manpower to conduct their "business".  It took them 2 1/2 months to process a form!  We are basically powerless to do anything other than pay $750 and file under the Delinquent Filing program.  Not worth the aggravation to fight it or risk it for our client.  I guess we need to file these 2 months early to TRY to avoid the problem we had with the 2019 filings.  I don't think they got around to processing those requests until the following year!

Has anyone figured out how IRS is able to have their letters delivered on the date they issue them?  Time travel?