austin3515

Definitely needs to pass before and after. If not passing before, you need to shift deferrals for HCEs as well as NHCE's. Perhaps that is what you are referring to.

Thats what I'm doing, HCE's in 403b. But I have to aggregate the match in one ACP test. In order to shift I can shift deferrals from ADP to ACP if I can pass the ADP test before and after the shift. I can shift 100% of the NHCE's deferrals to the ACP test and still pass the ADP test becase no HCE's have 401k. It's really a very interesting question.

HCE's participate in the 403b plan to avoid the ADP test. All employees are eligible for a match and we're failing ACP Testing. Someone in the office asked "can we shift deferrals to the ACP Test". Any Seinfeld fans out there - "You just blew my mind." Because of course the only deferrals in the ADP test for this plan are for NHCEs so I can shift 100% of the deferrals to the ACP test which will basically exempt this plan from ACP testing. Aside from the sheer obnoxiousness of this really cool idea (I might be terrified to do it in practice), what is to stop me?

No calendar year data elections in any plans.

I have a client who sponsors two plans, a calendar year 401(k) plan, and a profit-sharing plan with a November 30 plan year end (the latter is paired with a cash balance plan). Do I determine highly compensated employees for both plans with respect to the look back year that corresponds to their plan year? It just seems odd to have, perhaps, two different groups of highly compensated employees.

Or yo have turnover or growth or both. And also hypotehtically an artificial deadline of March 15th for 75% of your plans... Just some other variables!

yikes, we're doing 401ks and all seems well... Good luck

Client pays for LTD benefits to its employees by paying insurance premiums every month. They are allowed to elect to treat the employer premiums as taxable so that if they were ever disabled their benefit would be tax free (at least I believe that is the arrangement). In any event, the Plan uses W-2 wages and this election increases Box 1 federal wages on W-2. So this election increases their 415 wages, correct? Yes it would be a taxable fringe benefit, but curious if others agree it is part of 415 comp.

According to the Internal Revenue Code I am required to work weekends. This is not a joke it is actually built into the law.

Apparently it was planned maintenance.

Anyone not able to login to Relius ASP this morning (2/11/2023)?

Interesting analogy that it is a standing election to convert every single match to Roth...

Absolutely. It's still an employer contribution. A really interesting question I never thought of is, will the Employer have to pay the employer FICA portion, and Employer unemployment taxes. Has that come up yet?

I knew "you guys" would know!

1099R was issued with a Code 1 for a 2022 distribution but the Participant is claiming they would qualify for the disability exception to the 10% penalty tax. My understanding is that even though the Code 1 was used, which specifically is titled "Early distribution, no known exception.", you could claim eligiblity for the waiver of the penalty tax. i.e., we don't have to issue an amended 1099-R. Is this correct? Can anyone point me to anything explaining how this is done? I assume it is straightforward. This must happen on a fairly regular basis.

FWIW I have the opinion of a very well known pension guru that although you can never guarantee the IRS would agree with it, it should be reasonable to assume that the last day / 1,000 hour rules are reasonable business classifications. They also agreed that if we arbitrarily brought in one of them to pass a rate group (not to pass the ratio percentage test) that that would blow that position up and average benefits for coverage would not be available.

BG is this it, from 2015? 7 Participants in own Allocation Group Question: A plan document provides that, for allocation purposes, each participant in his/her own group. There is one participant who will be receiving $0 contribution. Does this preclude the plan from using the average benefits test to pass sec. 410(b) coverage (we know it doesn't preclude the use of that test for general nondiscrimination testing)? The issue is that excluding someone by name is an unreasonable classification for purposes of the average benefits test (Treas. Reg. sec. 1.401(b)-4(b)). Proposed Answer: It's a facts and circumstances determination. If in a single year a single participant fails to receive a contribution, it is not considered to be an exclusion of the individual by name and, therefore, it is not an unreasonable classification. If, however, a participant receives a zero allocation consistently for a period of years, the plan's allocation procedures may be considered a de-facto exclusion by name, which is an unreasonable classification for purposes of the sec. 410(b) average benefits test. The plan would be forced to satisfy IRC sec. 410(b) by meeting the ratio percentage test. IRS Response: To be discussed from podium

Awesome! What year did you ask the question (if you remember)? I can try and download the Q&A,

This seems really surprising because so many practitioners eliminated allocation conditions to add flexibility. This would seem to me to be a very significant disadvantage for this approach. LeEt's assume my coverage ratio is 50%. And Belgarath, my question assumed bringing in the term was to pass a rate group, not to pass the ratio percentage test.

Damn good question from someone in the office: Plan has no conditions but they exclude people from getting an allocation if they have less than 1,000 hours or term before last day (not top-heavy). But, the plan is now below 70% for coverage. I realize there are Terms with Breaks because last day/1,000 hours is not the "sole" reason they're not benefitting. But can I use the Average Benefits Test based on the conclusion that excluding people who have less than 1,000 hours or are termed is a reasonable business classification? Follow-up: Does the answer change if I bring one of them in to pass a failed rate group test?

My consultation is this proram is a pain in the neck and not worth the time or the effort. Same policy for 15 years on thousands of plans and it hasn;t failed me yet 👍

But do I have RSVP 👍 That;s the question. And telling clients to be better is a dangerous client relationship technique in my experience so I'll probably tread lightly there. But again $750 in fees (at least) for a $150 interest calculation for a 4 day late deposit is just way out of whack in my judgment.

I can't put my fingers on it now, but in the old later the last paragraph made it 100% clear that response was voluntary. "The purpose of this letter is to give you an opportunity to self-correct" was the language I wasn't crazy about.

I have generally found the VFCP experience to be horrible. They nitpick you like crazy. And the clients who have a lot of late deposits are teh same clients where nothing ever ties out. Our fees have to be at least $750 to do the whole thing which is nuts for a deposit that was 4 days late and interest of $150 (or less).

Client got a letter from DOL about late deposits. The old version made it clear that no response was required. This has a little more of the "respond or else we're coming for you" interpreation. Has anyone else gotten this letter? This is the first one we have received. If this is the new version of the old approach it would be tempting to use the same solution (not respond). Curious to know if this is just a new template to get a higher response rate or they are really coming after clients who do not respond.