Guest_Question

A small Non-profit entity has a 401k Profit Sharing Plan with Safe Harbor Non-elective contributions. The Discretionary contribution is set up as each participant is in their own allocation group. There are no highly compensated employees. All eligible received a 3% Safe Harbor Non Elective. They want to give one particular employee a Discretionary contribution to reach the 415 Limit. This exceeds 25% of that participants W-2 income. Are they in violation of Section 404 since that employee is the only one benefitting from the Discretionary and should be limited to 25% of Benefiting Employee compensation? Since the other employees received the 3% Non-Elective are all compensations considered for purpose of determining Plan compensation for Section 404? Because this is a non-profit does Section 404 even matter?

There is a small professional DB Plan not subject to PBGC in closedown. All benefits have been paid except the 2 principals and the principals' child. The principals' child is in the middle of separation from spouse. There is no QDRO in place and the separation is being drawn out. Future ex-spouse won't sign the spousal consent so that the money can be distributed. The company is being acquired with one condition being that this plan has been fully closed and distributed by end of the year. Participant is on the younger side with Lump Sum in the few hundred thousand $ range. Is there any ground to be able to waive the spousal consent because of plan closedown? What is the best course of action? 1) Give the money to PBGC? (not ideal for anyone) 2) set up a generic IRA as if the participant was being forced out/couldn't be located? 3) Waive the spousal consent and distribute to the participants IRA? 4) Distribute it out under participant election and correct under EPCRS once consent can be obtained? I appreciate any help.

Plan was setup as a Safe Harbor Match. Unknown if notices were handed out to the employees or not but the client was advised it needed to be done and were supplied. Now the Trustee refuses to make the actual Safe Harbor Match. There are employees that defer and the plan fails discrimination testing. First year filing, besides informing the client we will no longer handle their plan since they won't follow the rules are there any other options? Chances are since they never filed they will continue to operate this way and the chances of being discovered are probably fairly low. Do we just cut them loose and hope that it is discovered one day? Of course documenting everything thoroughly to protect myself.