Jump to content


  • Posts

  • Joined

  • Last visited

  • Days Won


austin3515 last won the day on January 6

austin3515 had the most liked content!

Contact Methods

  • Website URL

Recent Profile Visitors

4,350 profile views
  1. All super valid points. Well I couldn't have made my point any better than you have for me. Whether a plan needs an audit or not should not be based on how a TPA happens to interpret the 5500 instructions. Thanks for making my point! By the way the alternative of hirng a $500 an hour ERISA attorney to answer this question for my clients is likely not going to impress than much either.
  2. Ordinarily I would agree but the fact that there is debate about something so stupid is a perposterous waste of time. Do tbey need an audit or not? Should be simple. I have enough complexity to deal with 👍. now that being said I am convinced that the text is clear an unambiguous. Does anyone even see a gray area in that text? I see no ambiguity. Do I wish they used the words “count people with receivables only?” Yes I do. But I really think that’s only interpretation of the words they did choose
  3. Ahh, I see this now (I didn;t see yours at first). The key thing is "or for whom a contribution has been made to the Plan for this plan year or any prior plan year." It does not say when that contribution has been funded. So I do think counting receivable only people is a clear and direct interpretation of what they said...
  4. Seems to me there should be one standard that we're all using to decide if our clients have to spend $20,000 on an audit. Man I hope someone clarifies this... I feel like ARA or ASPPA needs to get an opinion. Without clarity I take the very reasonable position of whatever is best for my client. Shameful the the DOL did not realize that this was an obvious question to be answered.
  5. 110 people have account balances at 12/31/2023. 100 people get a profit sharing contribution after year-end, including 20 who do not have accounts presently so if I could the receivable only participants, there are 130 participants. Has the DOL gone to trouble of defining what they mean by "account balance" and whether or not it includes receivables? Obviously it's the difference between an audit and no audit.
  6. Definitely add plan terminations to this list.
  7. 60% of $50,000 is $30,000. Not every plan has $100MM. Personally I don't see how this could possibly be considered an Excess Deferral. The contributions never should have happened in the first place because they were not eligible. EPCRS says the plan should be put in the position they would have been in had the failure never occurred. I find it extremely hard to believe that when a plan that uses the Key Employee exclusion as you describe in a pre-approved plan, and then has a failure where a key contributes through some oversight (like a new hired family member contributing), that the response is to give the top-heavy minimum. I would implore anyone who has a preapproved document that excludes keys to pose this precise question to their document provider. If the response is "the top-heavy minimum is due" then there is essentially no point to that checkbox. That checkbox is just a nondynamic way of doing the same thing I am proposing, inoculating against top-heavy. I'd say the plan is worse off having made the election, because not only do you have to do the top-heavy minimum but you also have to refund all the contributions. What would be the point? You could have just told the keys not to contribute (again you're talking about just the sole owner typically).
  8. This is all not correct in my opinion. In a plan that requires this language we would monitor in the same way we monitor that plan already. Calendar reminders, etc. Annual mentions on phone calls. This can be done and we are already doing it for plans on the brink of top-heavy (say 50%+). Implementing this provision is no different than what HR already has to do to prevent the top-heavy minimum in the first place, and believe me we are making a big deal about this on those plans (as everyone should) because we know the radioactivity is off the charts. In anticipation of your next question, the need for the exclusion is because despite our best efforts it is still humans who are in charge of execution and sometimes humans make mistakes. Not to mention if their kid/spouse works over the summer and sees fit to do 401k. So in case you thought the purpose of this Innoculation was to avoid of sound administration, I would like to correct the record. And as far as operational failures go I do not need to tell you I'm sure that EPCRS has guidelines for correcting contributions to ineligible to participants. You're suggesting the only correction for non-compliance is to do the top-heavy minimum and that is not the case. EPCRS tells me how to correct. And as a reminder, it is Austin Powers International Man of Mystery. Not Don Quixote 🤣
  9. Our opinions of what makes sense for how clients should spend their money often coincides but not always. I doubt it will come as a surprise to you that we ran all sorts of projections, SHMAC, SHNEC excluding HCE's. It just didn't fly. SHMAC without HCE's was barely $25K. Let's face it as a small business owner, a $25K expense is a Big Frigging Deal. Nope, they didn't want to do it. And absent the top-heavy rules, that would be a perfectly fine plan design and in fact Congress had no problem with a 401k only plan design for them for the first 6 years of the Plan. The only thing that's changed is some turnover among the staff but NOT the owners. Again the injustice is that if you happen to have 300 employees and 3 keys a plan can have this plan design no problem. The sole difference is one is big and one is small. If you can find me another difference between the two I'm all ears.
  10. The nature of these plans is such that we are excluding either 100% of the HCE's or something similar, and maybe there will be one Key NHCE. So sure passing coverage is never a given but this should be as close as you can get to deemed passing. Now, hopefully anyone who is designing plans will be paying attention to whether or not the design will pass coverage.
  11. Well those are not viable options for the clients I am talking about. Not one of them. So again because they are closely held and in business for a while, they are severely limited in their options (and therefore so too are their employees). Anyway I am a big fan of the Top Heavy Innoculation clause. Curious if any last thoughts on whether or not other people think it works. Thanks you @C. B. Zeller!
  12. OK I must be the only person in the industry who thinks these rules are unfair (except I'm not). One thing I can promise you is my client who just found out they have to drop $60,000 for a THM is not a big fan (takeover plan for us). I'll speak on their behalf 👍.
  13. I do know that contributions every year are tested for nondiscrimination. And I do know that the reason that plans become top-heavy has a lot more to do with a) how many relatives work for you; and b) how long they have been in business (owners balances go up, and employee balances stay consistent due to turnover). And if you think there is an injustice plaguing the employees of small plans that needs to be remedied when the higher ups accumulate too much money, then those concerns could be easily addressed in larger companies as well. How about a rule that says if the average account of the C Suite Execs exceeds a million then that plan is top-heavy? Just because they're bigger, is your concern about this unfairness alleviated? And that's precisely what some have to do in response to these insane rules. Tell me how that serves the American People, a worse plan with lower limits and no match of any kind. All to avoid the top-heavy nonsense. Austin Powers For President - 2024. Yeah Baby!!
  14. I'll just mention too that my position is the same even if they wanted to have say a 25% on the first 4% match.
  • Create New...