Can anyone tell me a reason for choosing ADP Safe Harbor only in the Adoption Agreement?  Why wouldn't you always choose ADP and ACP Safe Harbor?

Participant takes loan on his vested account balance, terminates several months later, having only repaid 2 quarterly installments.

Pardon a senior moment, but I believe the total account balance is the investment fund balance plus the outstanding loan balance.

Participant wants to take his money, default on the loan.  Loan default would be outstanding balance as of the date of last payment plus interest through the term of the loan.

He is eligible to rollover the investment portion of his account and the loan balance plus accrued interest is taxable.

Two 1099Rs, one for the rollover, one for the loan default.

Participant over 59 ½.

Is the loan default subject to 20% withholding?

New plan to be effective 1/1/2018. Participant count will apparently be 101, so audit would be required.

What if the 2 owners are excluded? Are excluded employees who have otherwise satisfied eligibility considered "participants" for BOY count purposes? The 5500 instructions don't seem crystal clear on this.

If they don't have to be included, we could exclude the owners, then amend the plan, say, February 1 to bring them in.

Seems a little too cute, and the consequences of not filing with audit if required are, of course, draconian. The phrase "earning or retaining credited service" in the 5500 instructions makes me nervous...

P.S. - FWIW, it seems to me that under 2510.3-3(d)(1)(ii)(A)(2) you are still a participant, even if in an excluded class.

OK, I know I know this, but just not today.  Like it says on the tin: if a rollover comes from a SIMPLE IRA to a 401(k) of the same employer, does that count as a related rollover?  Thanks.

I know a sole proprietor and/or partner has until the due date of their tax return to make the contribution, including deferrals.

I do not believe this applies to a shareholder of an S Corp, maintaining a SHNE 401K with common law employees.

I believe the employee contribution would have had to have been made by 12/31 and the employer contribution would have to be made 9/15 on extension.

Company matches 6% of contributions. There is Pre-tax  and after tax Basic, Supplement, Roth. I don't know whats the best choice. Do you split, confused?

I have a takeover plan (from a payroll company!) that never corrected the 2016 failed ADP Test and the Plan Sponsor was never told the Plan was top heavy. If correcting the 2016 Plan Year, under SCP, can the QNEC also be used to correct the top heavy minimum allocations (same as the current year use of QNEC to satisfy TH minimums)?

Good afternoon to all,

A plan of ours has a 3 doctors plus staff.  While all docs are HCEs, only one is also Key - the 100% owner.  The other 2 doctors have signed irrevocable waivers of participation and are not part of the plan.

They are in the census in our software program, classified as being in an ineligible class of employees.  When we run the Top Heavy calculation, we get error messages saying that we have failed to meet the TH requirements because these two doctors are not getting a TH minimum contribution.

If they have signed the irrevocable waiver, it is our understanding that they are not eligible for any portion of the plan at any time, including the TH minimum.  Are we correct on this?

Yes we have read the plan document and yes we have a call in to the software provider to see if we are coding things incorrectly.  But in the meantime we wanted to ask the experts if these two doctors are supposed to be counted for any purposes in anything in the plan, Top Heavy or anything else?

Thanks for any advice and don't shoot the messenger.  Per usual I am being asked to resolve something on a plan that is not mine.

I don't work with these plans. Say a business has 500 employees, of which (pick a number - let's say 90) are highly compensated - say a giant medical practice, or a corrupt political campaign organization... Are these plans limited to a "select group of management or highly compensated employees" similar to a 457 plan, or are there no limits on who/how many can be covered?

Please don't waste any time on this, as it is a quick general question. If it requires any research, PLEASE don't bother!! Thanks.

Hi All.

I have a client who performed an In-Plan Roth Conversion (IPRC) a few years ago.  He was in a segregated account and even "carved out" that portion and opened a separate segregregated acct just for that newly-roth money (which is still inside the plan, keep in mind).

Fast forward to now, and client is changing investment custodians.  The new custodian is saying they won't accept this Roth segregated plan account because it's Roth conversion money.  

Is this something you've heard of?  What can we do, besides finding a new custodian?  My client has always been a little nervous about the IPRC, and now his fear is being proven.  He is worried that when he finally rolls all his money out of the plan, he will be taxed again on that part which has already been taxed!

Thanks all!

Is a top-heavy contribution required to the non-owner HCE based on the following?

• 401(k) plan.
• 3% non-elective safe harbor contribution with excludes key employees and HCEs.
• Non-owner HCEs are making deferrals but excluded from all employer contributions in plan document..
• Plan is top-heavy.

Company A is selling Sub X.  

Executive works for Sub X.  As part of the deal, Company A is going to provide nonqualified deferred compensation to Executive.  However, after the transaction, Executive will not be an employee or independent contractor to Company A.  

First question:  Are there any problems with Company A providing a nonqualified deferred compensation arrangement to Executive, considering Executive is not a service provider to Company A?

Second question:  What is the governing law here?  Code Section 409A is all about service recipients providing nonqualified deferred compensation to service providers.  We don't have that relationship here.  Or, do we, since Executive was a service provider to Company A's Sub X, and it is that relationship that lead to this situation?

Any advice would be helpful!

I have a situation where Company A started  401(k), contributed, took loans, and then Company A went bankrupt. Although the business is closed the 401(k) maintained active status to avoid loan default and classification as taxable income. 6 months later the same owner started another business, of the same industry type, and 3 of the same employees. A new 401(k) was opened and the owner requested to transfer the loans into the new 401(k). Because this is a same owner with a request to transfer assets, is this a successor plan or new plan with rollover? Thank you for any input. 

Hello! I have a plan who did not included bonuses in their compensation for the last 2 years. There are 5 owners and 1 non-owner.  Too late to do anything about it now?  Their allocation is comp-to-comp. Can I make up the difference in what they got and what they should have gotten, so they can claim on their taxes this year as long as that, and their 8/31/2018 contribution, don't exceed the limit? Thank you in advance!

If a plan sponsor wants to amend the floor-offset provision out of their calendar year CB plan, would that be a straightforward as using the 12/31/18 year end hypothetical account balance with offset as the 1/1/19 beginning balance and going forward without the offset?   

We terminated a profit sharing plan in 2016, submitted an LOI to the brokerage firm.  One of the participants could not be located, and we asked the firm to have the check payable to an eligible rollover institution that handles lost participant accounts.

The investment firm followed all instructions but the one that was to be payable to the firm that would open a rollover for the lost participant.  

They wrote the check out to the client, and the client deposited the check into his corporate checking out and had totally forgotten about it; we have told him more than once to get the check reversed, but he has done nothing.

The accountant recently advised the client a final 5500 can now be filed as there is $0 in the plan.

This would be nice, but does not pass my smell test.

One my plans is under CPA Audit and the auditor doesn't like that they don't automatically re-start 401k after 6 months after a hardship distribution.

Is an employer required to automatically re-start 401k for a participant after 6 months? Can they require that the participant fill out new election paperwork?

• Situation where 3 employers in a controlled group all have their own safe harbor match plan. 
• The formula is the same for all 3 plans.
• Definition of compensation will be different for one of them (not safe harbor definition - 414(s) comp ratio testing needed ... I'm going to refer to this as Plan 1), while Plans 2 and 3 just use 415 compensation.
• It's possible participants will be in multiple plans in any given year.

I've read/researched too much about it today and would like some input at this point as I might start overthinking everything. When it comes to 414(s) testing, a couple questions come to mind-

1) When running 414(s) testing for Plan 1, if there are any participants that were with one of the Plan 2 or 3 during the year, would those participants ratios be calculated using: Plan 1 eligible comp/All compensation earned from any employer in the group?

2) Would 414(s) testing be required for Plans 2 or 3 if there are any participants in either that also participated in Plan 1 (assuming their compensation from Plan 1 employer is not eligible in Plans 2/3)?  If all plans had the same definition of compensation, would this change anything?

3) Does being able to pass coverage separately (not requiring aggregation) change anything regarding 414(s) testing?  

Thanks for your help!

Any thoughts on whether the IRS considers the average rate of return for the plan as a whole a reasonable rate to use to adjust earnings on corrective contributions for missed deferrals?  The plan participants had made investment elections, but employer wishes to avoid that level of complexity.  Most participants are NHCEs. 

It seems that many service providers advise clients to use this approach. Any thoughts?

Say you have a PS plan with each participant in his/her own group for allocation purposes and you want to run average benefits testing.

I'm aware of the apparent IRS position that every participant in their own group is not a reasonable classification because it may have the effect of excluding an employee by name. I understand that position if the employer is allocating completely individual rates, including some zeros, with no consistent objective basis (e.g., we like Ann so she gets 5%, but we don't like Ben, who does the same job, so he gets 0%). 

However, if the actual allocation itself is still made on a reasonable, objective, business-criteria basis (and the group is nondiscriminatory) can you use ABT? 

For example, an employer has two locations and every participant works at one or the other, say Florida and California. The plan says every participant is in a separate group for allocation purposes. The employer makes the "official" allocations individually, but everyone who works in Florida gets the same percentage allocation, and everyone who works in California gets the same percentage allocation. 

Is this still a reasonable classification for ABT purposes despite the plan document saying everyone is in their own group for allocation purposes? 

In other words, do the "reasonable classifications" for ABT testing need to be explicitly stated in the plan document, or are the "reasonable classifications" based on actual practice?