austin3515

Fixed typo and Griswold's suggestion. Thanks guys!! Reattached in the original post! People in the office seemed to like it too. I hope this gets some use out there!

Also, it is just not in dispute that if I never actually made the QNEc's in the first place that (a)(4) would be passing. I'm not following why that is not a reasonable interpretation of "excluding QNEC's".

Help me out though. Is it a little but of which came first, the chicken or the egg? The question is, does the gateway requirement apply to a participant who is receiving the QNEC in the "without QNECs scenario"? I get it that your position is "yes" because even though they are testing without QNECs they still have a nonelective contribution so the y really need 10% total to make this work. If you could explain why it doesnt make any sense it would be helpful. I won't repeat my logic again but I can't see where it fails.

yes and when I am running the testing as though QNECS DID exist, I am providing the gateway. If run as though they do NOT exist, then no gateway required. When the reg says "excluding QNECs" it seems to me one possible interpretation of that is "no seriously, I meant exclude them 100%", Language from the reg: The amount of nonelective contributions, excluding those qualified nonelective contributions taken into account under this paragraph (a)(6)... satisfies the requirements of section 401(a)(4).

And a follow up question: I want to allocate exactly 5% as a QNEC to two participants, even though 4% of a QNEC would pass the test. But again if I do a 1% PS to give the GWM then I need to give a 5% PS contribution because i need to disregard the QNEC's. My document (Corbel) says I may give a QNEC "Sufficient to pass testing." Well, 5% is sufficient. IT doesnt say "not exceed what it is sufficient" it only says an amount that is sufficient. So that means to me an amount that is at least sufficient.

Plan allocates 5% profit sharing to all eligibles, but everyone is in a separate allocation group. Plan is not a safe harbor 401k. Plan is failiing ADP but if I do a bottom up QNEC of 5% to both of the lowest paid employees my ADP testing is passed. If I run a(4) testing with QNEC's I can get it to pass because with QNECs they pass the GWM. If I run without QNEC's, they are not getting ANY nonelective and thus require no gateway minimum. Is my logic here correct? The plan passes rate group testing with the two bottom people treated as not benefitting.

https://www.docusign.com/products/identify I was researching about esignatures, which for some reason I incredibly interested in??, and came across this method of identifying that an individual is who they say they are. This sounds an awful lot like something that is very important, especially when some termiated employee comes back 10 years later for their money having moved 3 times, etc. Anyone ever used something like this (or this for that matter)?

Precisely a repeat! Whoops! Obviously there was some reconfiguring/ordering going on. Thanks for looking at it! I revised the attachment in the first post.

see the attached. I'm very happy with this. Every time rule of parity would come up I would research for an hour. I finally wrote this down. Let me know what you think! I would incorporate suggestions and reshare. [Edited to add revised pdf, 1/24/2021 in the early am][Edited to reattach the revised PDF per suggestions/corrections]. Rehires And Rule of Parity.pdf

Another thing to watch out for if you're using that method is to make sure that you look for any duplicates of plan # or EIN, which is common when doing final 5500s for example. Things can get messy very very quickly. It actually took me hours to fix it, so now I know going forward.

We use the sponsors ein for everything and always have. If anyone else is reading the better method of doing this is using the "EIN and Plan Number" method of matching up, as opposed to just the TIN. The latter it's too hard to line everything up.

--> Error: Another payee has the same TIN and Distribution Codes. It comes up when the plan has a 401k distribution and a cash balance plan distribution.

That special rule for missed deferral opportunity in an auto enrollment plan was set to expire 12/31/2020. Does anyone know if the IRS extended it somewhere along the way?

That's exactly what it says. But by the transitive property, wouldn't the same logic suggest that if someone had $300 extra deposited to their account there is no need for me to take out $320 (assuming NHCE)? Sure would be nice to be nice to the employee... Oh and by the way save a lot of time!

When a participant has a small voer-deposit, and there have been gains, in lieu of calculating the applicable gains can we just withdraw the principal? I looked it up in the EOB so I think the answer is no, but the terminology is throwing me a little because I'm referring to a "corrective distribution" just an overdeposit. I assume there is no distinction, but asking anyway because we do spend a lot of time making sure we take as much money as possible from an NHCE which seems silly. 6.j.(1) Losses. If the Earnings are negative, a corrective contribution or allocation does not have to reflect a net loss incurred under a defined contribution plan. See section 6.02(4)(a) of the EPCRS Procedure. Note that this exception to reflecting a loss applies only to a corrective contribution or allocation. A corrective distribution is required to reflect net losses.6.j.(1) Losses. If the Earnings are negative, a corrective contribution or allocation does not have to reflect a net loss incurred under a defined contribution plan. See section 6.02(4)(a) of the EPCRS Procedure. Note that this exception to reflecting a loss applies only to a corrective contribution or allocation. A corrective distribution is required to reflect net losses.

B(iii) at best implies it cannot be done. And D.4 is just regarding the match. Like I said I agree compeltely that it would reduce the safe harbor. I'm just a little floored that they don't say "(including an amendment to the definition of compensation that reduces the amount of compensation that would receive the Safe Harbor)" or something like that. I don;t think it's SO obvious that it's not even worth stating anywhere. Why leave it just implied instead of outright saying it?

Can I amend a 3% Safe Harbor Plan to exclude different items of compensation prospectively mid-year? I cant find anything on point but it feels like a back door reduction in the SHNEC, the consequence of which of course is to blow my safe harbor for the year. Has this been addressed anywhere? I'm just surprised that no one ever wrote in one of these articles "Be careful! If you amend to reduce eligible comp that is a de facto reduction the contribution formula!"

Eligible employer means - (A) A State, but only with respect to an employee of the State performing services for a public school; (B) A section 501(c)(3) organization with respect to any employee of the section 501(c)(3) organization; So no then, because the employees here are not employed by the 501(c)(3) org. Sounds like everyone agrees?

The sub is NOT a wholly owned LLC. It's a for-profit corporation. What are the rules concerning whether or not they can adopt a 403(b) Plan sponsored by the parent?

I think I get the concern. Merely having a discretionary profit sharing provision available does NOT trigger a top-heavy minimum contribution--only utilizing that feature would require the top-heavy minimum. As Bill says it is moot, with the exception of comp as a participant (the top-heavy minimum being due on full year pay). It would be a much more relevant concern (again to Bill's point) if the plan was a safe harbor match plan, because if the employee chose not to participate, they would not already be getting their 3%, so preserving the exemption would have been more important. Also, note that if you have immediate eligibility for 401k and a 1 year wait for the safe harbor, the exemption is blown. Not sure if that is relevant here or not, but it is such an important landmine that I wanted to mention it.

Non-profit is in blackout and ADP refunds are due. This is a non-profit that has definutey be impacted by COVID and the refunds are significant as is the amount of the excise tax. Now, we can write an amazing "sob story" because this entity is definitely COVID front-line. So for example, the budget is really taking a heavy COVID hit for PPE and testing, etc. If one was going to ask the IRS to abate the penalty how would one go about doing it? We were thinking complete the 5330 as normal and then in lieu of sending a check, attach a cover-letter. Has anyone ever been in this situation before?

I definirely knew the statement would be straightforward but even still was hoping to plagiarize something! Thanks for the clarification! I think WDIK once said, in response to an accusation that common sense was not employed in the drafting of regulations: "It's not that no sense was used in drafting regulations; it's that the sense used was not common." Found it! It was 13 years ago! It's my all time favorite quote on benefitslink; and for the record, I'm almost certain that I would not have such a thing if it were not for this quote. "Certainly there was sense involved during the creation of regulations such as this. It is just that those individuals involved in the process are of such elite caliber that the sense used is not common."

This is the reg my question is in regards to. The quesiton is, does anyone have a template election form that I can "borrow"? Also, I assume this reg applies to all 403b accounts. I noticed that the it references only 403b annuity contracts but I presume the reg just pre-tdates 403(b)(7) (allowing custodial accounts). §1.415(j)-1 Limitation year. (e) Limitation year for individuals on whose behalf section 403(b) annuity contracts have been purchased. The limitation year of an individual on whose behalf a section 403(b) annuity contract has been purchased by an employer is determined in the following manner. (1) If the individual is not in control of any employer (within the meaning of §1.415(f)-1(f)(2)(ii)), the limitation year is the calendar year. However, the individual may elect to change the limitation year to another twelve-month period. To do this, the individual must attach a statement to his or her income tax return filed for the taxable year in which the change is made. Any change in the limitation year must comply with the rules set forth in paragraph (d) of this section.

Well, I agree that is easiest, but sometiome speople have been gone for 7 or 10 years and its a bit awkward to tell them they are in straight away. "In the case of a Former Employee who under the Plan does not have a nonforfeitable right to any interest in the Plan resulting from Employer contributions, " A Participant who took a distribution 8 years ago does not today have a "nonforfeitable right to any interest in the Plan" so I'm not convinced that taking a distribution is irrelevant. For example if a participant still has money in the plan 8 years later they never stopped being a participant in the first place and they clearly have a non-forfeitable right to an interest in the plan...

"In the case of a Former Employee who under the Plan does not have a nonforfeitable right to any interest in the Plan resulting from Employer contributions, " Has anyone found a good article from a good source on what this means. I feel like you need a table with entries for the following: Eligible for 401(k) but never made any contributions Eligible for 401(k) but took a distriubtion shortly after termination Eligible for 401k and never took a distriubtion Eligible for profit sharing but never received an allocation Eligible for profit sharing and took a distribution shortly after termination You ge tthe point. There is a different logic for each of these scenairos. Anyone ever see anything that really go through this in detail?