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EBP Guy

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  1. Hello, just a quick question: The Basic Plan Document has pretty much all iterations of things regarding a plan (in reference: Non-Standardized, Pre-Approved), but the Adoption Agreement is obviously the document that the Plan Sponsor adopts their elected provisions. We came across a nuanced issue today that wasn't outlined in the adoption agreement, but had reference/justification in the Basic Plan Document. Is said-issue able to be permitted by being outlined in the Basic Plan Document, but not the Adoption Agreement? Or does the Adoption Agreement have to explicitly permit every action the Plan Sponsor makes because the Basic Plan Document is "all encompassing"? Thanks!
  2. For conversation's sake, we've been correcting it under the incorrect compensation definition - IRS Fix-It Guide #3 - as the bonus was incorrectly excluded from the eligible compensation. It all ends up as a QNEC contribution in the end anyhow, but the IRS website provides a pretty specific correction for this. https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-you-didnt-use-the-plan-definition-of-compensation-correctly-for-all-deferrals-and-allocations "If you've determined that an employee made deferrals that were less than what should have been made had the correct compensation amount been used, then a corrective contribution needs to be made to the employee's account within the plan. The employee would receive a corrective qualified non-elective contribution (which is an employer contribution in which the employee is fully vested) equal to 50% of the missed deferral (i.e., the difference between the amount that should have been deferred based on the use of correct compensation and what was deferred). In addition, the employee would receive a corrective employer matching contribution, if applicable, equal to the difference between what the employee would have received if the correct elective deferral was made and the actual matching contribution. Finally, the employee would receive a corrective employer contribution to the extent that he or she received a profit sharing allocation that was less than what he or she would have been entitled to had the correct compensation been used. All corrective contributions must be adjusted for earnings."
  3. Hello! Just recently found this forum and there are some good thinkers floating around. We have a plan where the ER match was incorrectly being applied to both Pre-Tax Employee Contributions and Roth Contributions. Essentially, they match 50% up to 6% of employee compensation, but an additional 1.5% was being additionally (and incorrectly) applied to the Roth contributions above the 6% mark. What are the proposed fixes for this for purposes of the audit? We were initially thinking potential corrective distributions or some kind of reversal of the match by offsetting future ER contributions. Are there any other thoughts on how to apply a fix to this? Thanks!
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