Gilmore

We had a somewhat similar situation in which a client's payroll company rep told him he was paying outrageous fees for his 401(k) plan and pointed to line 8h on his SF form. Needless to say the majority of that number was due to employee distributions, which the rep forgot to mention. We are a tiny little firm and have great clients that, like this one, would reach out to us before reacting, but it made me wonder how easy it would be to lose a client due to something like this and never know why. So I would say this is not hilarious.

If the participant's balance can support the combined amount of the new loan created by the refinance, plus the balance of the loan being refinanced, you can start a new 5 year term for the new loan. Here is a good article: http://employeebenefitplanaudit.belfint.com/participant-loan-refinancing/

Unless it's a deemed default. $5k for some purposes and still $10k for other purposes. I hate deemed defaults.

On erisapedia.com/webcasts/ there is a recorded webcast called, "Pass the Catch-Up". I believe it is free for anyone to watch. Derrin Watson goes through a really detailed example of an off-calendar plan year dealing with 402(g), 401(a)(30), catch-up, ADP refunds... If I remember, that example is towards the end of the presentation if you wanted to skip through.

Ilene Ferenczy has a nice piece on her firm's website ("solutions-in-a-flash") on this topic. It was prepared in August of last year. It was one of the first pieces that I read that confirmed that if a participant terminated before the correction is made the traditional QNEC correction must be provided to that participant.

Lisa.Q, thanks for your post. I had contacted FT a while ago regarding restructuring (pre June 2021) and prior to the enhancement using excluded classes was the recommendation. I missed that June 2021 update.

In FT we use the "Other" class option to exclude one component group from benefitting while testing the other component. You can set up separate grids to save time when switching between component groups. It is a pain because you need to print out separate reports for each testing group.

If you have access to ERISAPedia I believe Derrin Watson answered similar questions in the "Ask" section. If you do not let me know and I'll see if I can find one.

Penchecks is who we use too.

Is the noninvolvement rule an election, or does it automatically apply if all the criteria apply? I'm just curious what will happen if 2.0 passes and now spouses that have been treated as a controlled group in common law states, for example, are now no long a controlled group.

I heard that too. In this case both businesses were started after marriage. "Noninvolvement" is usually the term that I see when reading on this topic.

Got it, that makes sense. Thank you CB.

A husband and wife in a common law state (so a controlled group) have separate businesses and separate calendar year profit sharing only plans. The husband has no employees, the wife has one employee that is eligible for her plan effective January 1, 2022. The wife's plan requires 1000 hours and last day to be eligible for a profit sharing allocation. The husband's plan requires last day or 500 hours of service to be eligible for a profit sharing allocation. The wife's employee terminates in 2022 with less than 500 hours. Am I correct that we can exclude the employee from coverage since they did not earn more than 500 hours of service, and thus not have to provide a profit sharing allocation? Thanks very much.

I think ESOP is on the right track. If the compensation is determined to be post severance compensation that must be considered as plan compensation then the participant should be taken into consideration for 2021 testing, counts, etc. What if this were a 401(k) plan and the participant had a deferral election. Wouldn't the compensation be subject to the deferral election (unless the document specifically excluded ALL post severance compensation)? In that case wouldn't you need to include the compensation and deferrals in the 2021 ADP test?

Would he be excluded from coverage if he terminated in January 2021 with an allocation and less than 500 hours?

My apologies Lou, you are correct. I see in the 1099 R instructions that excess deferrals are not subject to withholding. I will need to go back and reread that EOB section and see where I got confused. Thank you very much.

Hmm Lou, I was looking in the EOB and it seems to lump 402g excess in with other corrective distributions that are subject to the 10% non-periodic withholding rules. I didn't see any where in the section that said withholding wasn't required if under a certain amount as there is with distributions eligible for rollover (under $200 I believe), and even though the $12 is a small amount, I'm pretty sure the penalty for not providing a withholding election went to $100 or something like that, so I wanted to be certain it was necessary before making the plan sponsor go through the process of getting an election.

Is there a minimum 402g excess that does not require the Plan Administrator to provide a notice to the participant regarding making a withholding election? We have a 402g excess of $12. Thank you.

Appreciate the confirmation that the notice is not accurate any longer, at least with respect to the type of Form that must be filed. Thank you.

One of our clients just received an IRS Notice CP214, which describes the circumstances under which a one-participant plan must file a Form 5500-EZ. The last line of the notice states, "Alternatively, you may be able to file Form 5500-SF online using EFAST2's web-based filing system or through an EFAST2 approved vendor." The 2021 Form 5500-EZ specifically state that a one-participant plan cannot file a Form 5500 or Form 5500-SF. Am I misinterpreting the CP214? Thanks.

A doctor has their own S-Corp that was part of an affiliated service group through 12/20/2021. The ASG sponsored a 401(k) safe harbor match plan. The doctor did not participate in the plan in 2021 and will not be receiving any employer contributions. Question... Is the doctor able to set up a SEP plan for their S-Corp for the portion of the year that they are no longer part of the ASG, and fund based on compensation earned for the short period of time they are not part of the ASG? Thanks.

If NHCEs are receiving a safe harbor match, and HCEs are receiving a non-safe harbor match, does that negate the deemed to be not top heavy status if the plan is top heavy?

Wouldn't you be able to amend them out even if there were Union, NRA, or Leased ees currently participating? Leased ees might cause a coverage issue if excluded depending on how many there are.

When we are asked to take over an existing plan among the things we ask for are the 5500s. The more that the plan sponsor is able to provide on their own the better an idea of the type of client that we are taking on.

You can amend the 2021 plan year to elect the top paid group for the 2021 plan year as long as the 2021 plan year has not ended, but the determination still uses the 2020 look back compensation for the determination for 2021. That's probably what you were intending but the topic heading is a little confusing.