I understand that a SEP may exclude union employees, but may an employer have a SEP plan for non-union employees and another SEP plan for union employees? How about 2 SEP plans for 2 separate union groups with unique collective bargaining agreements?

Can SEP contributions be permissively aggregated for purposes of cross testing? I.e., Average Benefit Percentage Test, Average Benefit Test, and Gateway Minimum? The plan sponsor has both a SEP and a profit sharing plan in 2020 and the SEP is on an approved individually designed document.

Thank you in advance.

This may seem like a dumb question, but I am just wanting to make sure I understand something.

I have a Safe Harbor Non Elective plan (3%) who is not going to provide any Profit Sharing or Match this year, just the 3% contribution.  Will this plan automatically pass 401(a)(4) testing? 

I'm sort of having a brain fart.... I have a PS 401(k) plan that was adopted in Sept 2020, effective 1-1-20 for PS portion.  There was an employee who terminated in August (ie, prior to adoption of plan).  She had over 10 YOS, so she would be in the plan and receive PS, correct?  (They are doing New Comp, so she has to receive something in order to pass testing).

I think the answer is that she IS in the plan.  Thanks for indulging my loss of brain function today.

Hi

Did not have one of these in many years.

Calendar plan. BOY valuation. Amendment to increase benefit adopted before 12/31/2020 but after 1/1/2020.

Do they need to adopt some kind of amendment election?

Thanks

Hi - a colleague of mine (RIA Firm) asked me this question.  I read through some QKA materials but I didn't find anything.

Colleague has a client whose income is from real estate holdings, so all passive income, but wants to start a Solo 401(k).  The client knows they cannot contribute to a 401(k) because they have no W-2 income/earned income.  But they want to start a Solo 401(k) to roll large IRA's into the plan so they can begin doing backdoor Roth's on their personal money and dont have to deal with aggregation rules of the large IRA's.

My initial reaction is they cant start a 401(k) as they never have any intention of making personal or employer contributions to the plan (outside of rollovers), as they will not have any earned income to use.

I'm not sure where that thought comes from or what I read that leads me to believe it, but curious on other peoples thoughts.

Trying to figure out if K1 Income can be used towards a Profit Sharing Contributions?  We have a two partner 401k who pay themselves meager salaries limiting how much PS they can receive.  Question is can we use K1 Income?  Hope it is not an obvious question as I could not seem to find any older threads.  Thanks in advance for any advice

Doing a Profit Sharing.  The only reasonable way the test is passing is using the accrued to date method.  Contribution basis is obviously out, and the regular benefits basis is failing too.

The accrued to date method is passing.

But I want to make sure the compensation used is correct.

Does negative income (a loss) get used as part of the average?  Or do you use zero for those years?

Example:

Year 1: 100,000  Year 2: (50,000)  Year 3:  $100,000

Is my testing comp $50,000 or $66,667?

Woman owns half of an  S-Corp with husband.  Each takes $40,000 W2 income, defers $15,000.

Also owns partnership w/ husband (50-50).  Both have losses of ($150,000).  Each.

Because there is a controlled group, can they make the 401(k) deferral b/c it came from W2 wages?

Or are they out of luck, because the combined income is negative?

I represent a federal 401(a) plan that currently has an individually designed plan. The plan is interested in moving to a pre-approved plan document structure. Does anyone know which vendors have a pre-approved 401(a) plan document that they license for use? Many thanks.

Hello all, thanks in advance for your help! I'm an IRS EP agent but I haven't worked very many DB cases, and I had a question about my dad's situation.

My dad worked for Albemarle Corp for several years.  They sponsored a DB plan through Merrill Lynch.

In 2017, he was filling out his benefit election form. Among several options he was given, he planned to elect 100% joint and contingent with 60 months certain. Payment was supposed to be $347.53 per month.

He never completed the paperwork (he was very disorganized and lost his birth certificate and was having trouble getting it from Vietnam. He passed away in August 2021 without ever filling out the paperwork.

After his death, I contacted Merrill Lynch and let them know my dad passed away, and I requested that they send a new benefit election package for my mom to fill out.

We got the package, and the only option now is a lifetime pension of $218.34 per month. Does that seem right that the monthly payment would be reduced so much? I still have a lot to learn about DB plans, but I thought the payment would be much higher. I know that options are supposed to be actuarially equivalent, but it just seems way off to me. 

Thanks in advance for your help!

Company A and Company B are part of a controlled group.  They each have their own 401(k) plans and TPA firms.  Company A's 401(k) plan can't pass coverage on its own (neither ratio or ABT).  The Plan's have been permissively aggregated for coverage and discrimination testing purposes in prior years.  I anticipate having to permissively aggregate the plans for the 2020 Plan Year as well although I don't have data for Company A as of the current date. 

Company A will have an ownership change in April (although it could be June or July).  Employees will terminate employment with Company A and become employees of Company C.  Company A would like to terminate their plan prior to the ownership change.

Does anyone have any suggestions in regards to the 2021 coverage test?  I anticipate the plan would not be able to pass coverage on its own (for the short plan year). 

Would I be able to use the 410(b) transition rules? Due to the ownership change, do I get a free pass on coverage testing?

Do I tell the client to wait and terminate the plan on 12/31/2021 so I can use permissive aggregation for the 2021 Plan Year?

Any suggestions would be helpful.  Thank you.

We have a Long Term Disability policy where the carrier will make contributions to an employees' 403(b) account in an amount equal to what the company was contributing before they started receiving disability benefits. Does this need to be noted somewhere in the 403(b) plan document? If so, what needs to be reflected?

I  have been contributing to OTRS since 1989. I plan to retire in 2025. I was married from 2006 to 2014. He was awarded half of the marital portion of my retirement.

When you work out the percentage it comes out to 10%. Is this calculated on my final pension amount? Shouldn't it be calculated on a lesser amount since I've gotten several considerable raises since my divorce? 

ADP/ACP tested plan.

Plan allows for in-plan Roth rollovers.

HCEt does the Rollover early January of entire account.

In February, plan fails ADP & ACP tests.

How does the refund get processed?  How are earnings taxed?  Are they?  All the funds are now in the Roth Rollover account.

Because someone who uses the care, skill, and caution that would be used by one who is experienced in managing an individual-account retirement plan would be mindful of privacy and security risks (including cybersecurity risks), there is a growing consensus that a plan’s administrator must oversee prudent procedures for managing those risks.

For many plans, that means getting a recordkeeper’s contract promise that it uses commercially reasonable privacy and security procedures.

But even good procedures might be ineffective if a participant, beneficiary, or alternate payee does not guard carefully her identifying information.

If that’s right, does a plan’s fiduciary have a responsibility to educate participants (and other individuals) about those risks?

If so, what do you think an employer/fiduciary should do?

Plan Sponsor just amended a prior year 5500. The efast2 search now does not show any 5500 for that year - original or amended. Just curious if this is standard, or if something might have gone wrong with filing?

If a plan uses match formula of 100% match on the first 1%, plus 50% match on the next 5%, is that considered a safe harbor match?

Group:

I may be going crazy given this day and age we are living in. 

I thought I read on one of the older benefits link.com messages/posts that the DOL - in some investigations - will not issue a closing letter but still close out their audit. 

Could this occur in a small case DOL Audit for an esop with less than $5k value?

Or did I misunderstand the posting that the DOL Audit will always include some form of closing agreement or determination? 

Thank you in advance. 

For the employers who suspended their discretionary matching contributions (calculated on a payroll period basis) in 2020, is the 401(a)(17) compensation limit required to be prorated under Reg. 1.401(a)(17)-1(b)(3)(iii)?  The plan year was still a 12-month period, but the matching contributions ceased (for example, let's say as of 4/15/2020).  Would that require a compensation limit of 4/12 x $285,000 to be applied to the matching contributions that were made prior to the suspension?  If so, it could require forfeiture of a portion of a participant's matching contributions that were made early in the year (likely due to deferrals made from first quarter bonuses).

I'm aware that the preamble to the final Regs. regarding the suspension of safe harbor contributions provides the following:  "The preamble to the proposed regulations stated that a plan that is amended during the plan year to reduce or suspend safe harbor contributions (whether nonelective contributions or matching contributions) must prorate the otherwise applicable compensation limit under section 401(a)(17) in accordance with the requirements of § 1.401(a)(17)–1(b)(3)(iii)(A). Some commentators asked for clarification as to how these rules apply. Such an explanation of the application of the rules of section 401(a)(17) is beyond the scope of these section 401(k) and (m) regulations."

However, because preambles are not law, and because the Regs. are specific to safe harbor plans, I'm looking for thoughts on whether the proration applies in the case of a discretionary matching contribution formula applied to deferrals made for a payroll period, not in excess of a specified percentage of compensation earned during such payroll period.  It seems wrong to forfeit a match that was permitted when made, but became in violation of a limit when the employer ceased contributions.  Thanks in advance for sharing any thoughts!