austin3515

Participant elected in 2015 to contribute Roth 401(k). From 2014 through June 2018, the participant contributions were inadvertently set up as pre-tax in all respects (w-2 reporting, deposits at recordkeeper, withholding calcs, etc). What to do? Note: The participant has since rolled his entire balance out to an IRA, but if it helps we can start by assuming the money is still in the plan...

Let the record reflect that I have liked a post from Larry Starr!

Ahh, now it's getting interesting. So you're saying the hospital is the trustee of a trust that owns the surgical center shares for the benefit of the surgeons?What I mean of course is, that is what you presume is going on here? A trust/beneficiary connection?

I just saw this now. I appreciate the attempt but I'm not sure what it means. If the hospital owns shares for the beneficial interest of a surgeon, is the surgeon considered an owner for CG purposes. I gather the answer is "it depends on the legal documents" which is what QDRO was essentially saying.

So it is possible to not be the legal owner, to have only a beneficial interest, and still be treated as a direct owner for controlled group rules? Believe me I will leave it to the lawyers but I'd like to know more about this topic so I have a better understanding of what I don't know!

I've never heard of beneficial interests before, but I am now learning that the shares of a surgical center owned by a hospital are held for the "beneficial interest" of the surgeons who perform their surgeries there. Now, its an affiliated service group either way (i'm omitting details, take my word for it!), but I am curious as to how the controlled group rules are impacted by beneficial ownership. I'm reading it's the same concept as Merrill Lynch holding 10MM shares of Facebook in it's own name for the beneficial interest of its brokerage account customers. (i.e., the account holder owns the securities, albeit indirectly). Any insight appreciated!

That's just it, it is not, I don;t think. Probably a simple video camera (not a big fancy production studio with $50,000 high def video cameras). The value is derived from the instructors "performance." But it just seems hard to rationalize that this would be a service business in the way an accounting firm would be.

Company creates digital media for distriubtion on websites. Custoemrs pay a subscription to watch a tutorial on line regarding how to do a particular task. Let's say for example it was cooking. Does that sound like it would be a service business?

I also found this in 1.410(b)-5 Average benefit percentage test. (5) Determination of employee benefit percentage—(i) General rule. The employee benefit percentage for an employee for a testing period is the rate that would be determined for that employee for purposes of applying the general test for nondiscrimination in §§1.401(a)(4)-2, 1.401(a)(4)-3, 1.401(a)(4)-8 or 1.401(a)(4)-9, if all the plans in the testing group were aggregated for purposes of section 410(b). Because they referenced "if all the plans in the testing group were aggregated" that suggests the permissive aggregation rule applies, and they are all one plan for purposes of determining the testing age.

Makes sense!

hmmm... I suppose aggregating or not I would get the same result. I actually misspoke about one thing- one plan is just a 401k/match plan. The other is the cross-tested plan. But whether I "aggreagete" or not I guess I end up in the same place. Agreed?

Aha - I am not aggregating. I do have to run one average benefits test though. But otherwise I am testing each plan separately for coverage, and of course the rate group testing applies those coverage principles. But I'm not aggregating.

Plan A and Plan B (profit sharing plans) are in a controlled group (ok, their respective employers are). I am running rate group testing with cross-testing for both plans. Plan A has an NRA of 62 and Plan B has an NRA of 65. I can see in the regs (1.401(a)(4)-12) where the rule is that you use the latest NRA available (in this case 65) for testing, but the language of the reg seems to all speak in the context of one single plan. Can somoene point me to the language that you would apply that definition in the way I have described when the testing is being performed at the controlled group level for 2 separate plans?

There is no question that it is eligible compensation. I have a ahrd time believing if the CPA reads hyour plans definition of compensation and its reference to w-2 wages could conclude otherwise. ASSUMING your document does not exclude Taxable Fringe Benefits.

I am having trouble with something. On that we certainly agree ?

Yes

Well by that rationale we'd better cancel the ASPPA Q&A sessions :)

The requirement you cited above (regarding adopting the language before the first day of the plan year) isn't exactly on point because it deals with what must be done to be a safe harbor plan. We are trying to NOT be a Safe Harbor Plan. I know, I know, if your plan doesn't have the language and you fail to meet the requirements then you're not a safe harbor plan. I get that, I just think it's an indirect conclusion. I kind of feel the same way about the timing of the notice requirements. Those are the notice requirements for being a safe harbor. I think some specific clarification regarding changes to a safe harbor plan after the notice is distributed but before the first day of the plan year would be well received. I don't doubt what you are saying and in many respects your rationale is completely sound. If we disagree on anything it's whether or not some additional clarification/guidance would be welcome (even if the guidance merely says that any such amendment would not be treated as a reduction/discontinuance). That's all I'm looking for from the IRS.

Participant terminates in May 2018 with a $10,000 loan. Participant has until the due date of their 2018 1040 to repay the loan to avoid the taxes under the new tax rules. Question is, if that participant does NOT close his or her account, can they re-contribute the $10,000 to this plan if it is past the grace period? Our plans typically do not allow former employees to execute rollovers, which I think technically this would be. Thoughts?

This would be a great ASPPA Q&A if there isn;t something concrete out there. I am inclined to agree with you but, I could also understand someone like me having some reservations considering how many rules there are about amending these plans. I just like to have official guidance for things like this.

Plan distributed the Safe Harbor Notice for 2019 in November 2018 indicating the Safe Harbor Match would be made. The Employer loses a big customer on December 15th 2018 and on that date they call us to discontinue the Safe Harbor effective 1/1/2019. Are there any timing restrictions considering the notice was already distributed? Could the plan have been amended on December 15, 2018 to eliminate the safe harbor for ALL of 2019? Or is there some form of a 30 day notice required? Kevin C and Larry Star commented in this thread but it was more of an offshoot the original question. I wanted a question dedicated just to this topic:

Well to be clear I neither agreed nor disagreed :) But I did find at least very lengthy discussions on just this topic. But they were so old they can barely be trusted. I see the point about the commitment not being "solidified" until 1/1/19. I am just not sure there is a black and white answer anywhere. But if someone has something (even an ASPPA Q&A) I would sure like to see it. Not that I don't trust you guys of course! Maybe I'll start a new thread...

I just don't recall the rules for terminating a safe harbor plan after the notice was distributed to the participants. And they're not terminating the plan, they're merging it in. But like I said I'd be curious to know if the plan was a safe harbor and whether the notice was distributed, and whether or not notice went out prior to 12/31/18 that this was all ending. Depending on that fact pattern, I think the plot would thicken.

Isn’t it the anti-cutback rules that your position is based on? Those rules don’t apply to SEPs. And the rule was added ton401k/ps plans because without them you could cutback in benenfits. So if that rule does not apply then what rule is stopping you?

Oh my God make this effective 12/31/18. Someone botched that one in my opinion, and you have 3 days to fix it, can I get a "Hallelujah!" A day makes all the difference in the world in one sense (by eliminating even a shadow of doubt), and no difference at all in another sense (because really what practical/logistical difference does it make?).