austin3515

I have a weird situation, it's a 6/30 plan year end, where the employer contributions are funded each pay-period and are substantial. So the HCE neds to limit his 403b contributions. Problem is, they way everything plays out, he never generates any catch-ups. He never exceeds 402g, and because of the way he scheduled his deferrals, he doesn't have enough 403b in the plan year to reclassify enough of his 415 additions as catch-ups to pass (he barely contributes 403b in first 6 months of calendar year). Options: a) Go back to 2015 and reclassify some unused catch-ups?? b) Take the position that his 403b was limited for 415 to ~$8,000 (he gets around $45K of Profit share, for a total of $53K). Therefore, he can cotnribute $14K and treat the extra $6K during the year as a catch-up. I know b) works for an ADP limit, what about 415?

In case you're not sure what I am referring to: http://www.wklawbusiness.com/store/products/coverage-nondiscrimination-answer-book-fourth-prod-0735581940/hardcover-item-1-0735581940

That;s why they let Tom literally "write the book."

"You just blew my mind"

Ah, ok, I was not grading on grammar, only substance!

There is nothing technically wrong with it. It's the textbook definition of a CODA and why technically 401k is considered an "employer contribution." Well, I guess this is worked backwards, but the point is the same. Your choosing between an employer contribution to the plan or a bonus. It is a pre-tax deferral, subject to 402g and ADP testing.

We put our resolution right on the contribution spreadsheet.

Switch to FT!

http://www.asppa-net.org/Portals/2/PDFs/GAC/Comment%20Letter/IRS_Compliance_Questions_Comment_Letter5.31.16.pdf Especially read the piece about trust EIN's. It sounds almost rude and snarky, but then it is so true which makes it very reasonable to say...

HAve I ever had this ridiculous request in particular? No. Have I ever had ridiculous requests for which I could not fathom any rationale? Absolutely. There is no telling what client's passions will convince them of.

I'm sure you would be more careful than me, but then you're posting under your real name and I post under a pseudonym And presumably Tom's document drafters and mine (who I know I have the utmost respect for) thought it was ok. Not to mention the IRS agreed that it was ok with none of those caveat statements about "this provision could potentially be discriminatory!" So call me cavalier for making such a controversial statement, but I still stand by it even if perhaps I may have overstated by a millimeter or two.

What difference does this make? Philosophy is inherently subjective and it doesn't sound this client is asking for opinions on philosophy. Since anyone can do either with no restrictions whatsoever, I don't see where the issue would be. Not to mention every pre-approved document includes the option to match or not to match Roth.

It wouldn't be a coverage issue because everyone is eligible to make pre-tax elective deferrals. Just an ACP testing issue. Your treated as eligible for the matching portion of the Plan as long as you have the ability to make matched elective deferrals and you met any allocation requirements. If the sole reason you did not get the match is because you didn't make any "matchable" contributions, that's not a coverage issue - that's an ACP test issue. This situation is no different than the employee who makes no deferrals at all. They could have, and that is what matters. They chose not to, and that does not matter (for coverage).

Another thought: The key here is the choice between cash and compensation. That is what makes the CODA. So no election forms that say "I'd like to contribute $53,000 this year." If you have that, then you've got yourself a CODA. Perhaps my clients are doing that informally (not on paper), I would not know... But as far as I know the Employer is the one deciding how much each employee gets in contributions.

I know the type. They don't know why they feel so strongly about something, but they do, and though the rationale might not make sense to you (albeit, you are subject matter expert), their instincts have made them tons of money in their life time, so hey, better trust all of those instincts! I think as long as your not safe harbor, you just need to pass the ACP test. It's not a BRF issue because everyone has the ability to make pre-tax contributions and is therefore eligible for the same match. They voluntarily elected to contribute Roth, and at their own peril it would seem.

He had no 401k contributions. Those were ineligible contributions, so they do not count towards 402g. You should adjust it off of payroll so it doesn't show on his W-2.

T Best post I've read in a long time... Fabulous.

Confession: I had to look up the word obverse and it was used correctly.

:D Mojo, you do make me laugh out loud...

This Plan has fewer than 5 participants.

Yes, but I think it is unfortunate you're suggesting "failure to abide by the law" is a universal concept, where you either do or you don't. Have you ever gotten a speeding ticket? Let your registration lapse? Rolled through a stop-sign at 10PM on a deserted street? You know what they say about people in glass houses Mojo!

Man you can be tough on good, hard working, law abiding citizens sometimes.

Part of it too is that we switched this plan to a prototype where we can do the amendments. The Plan was New comp and until the EGTRRA restatements we had to use the Volume Submitter (and back then we could not amend for them). I will say this, if the penalty is more than $250 I will be incensed.

Oh, I'm sure that would result in a very amicable audit! Mojo - I didn't research those SOL's - I found them all listed in a single article. Clearly there is a difference between signing the final 401k reg amendment late, and for example, doing a bottom up QNEC under the old rules in 2014. One is clearly a clerical error while the other is a blatant disregard for the rules. The latter is fair game, while the former smells like never being able to sleep at night. Perfection is a very tough standard. Just asking for a little forgiveness, and forgive me, but different standards for IBM versus John Doe Manufacturing with 10 employees.

So an auditor is accusing a plan sponsor of late amendments from 2006/2007. So it occurred to me, wow, we have a statute of limiations for crimes, but we're looking over our shoulders forever with amendments. I found this on a webpage, it's a listing of statutes of limitations for crimes I consider far more egregious than a missed Final 401k amendment: Federal tax evasion (U.S. Code 26 Section 7201) – 6 years Failure to file a tax return with the I.R.S. (U.S. Code 26 Section 7203) – 6 years Major fraud involving at least $1 million against the federal government (U.S. Code 18 Section 1031) – 7 years Non-violent violations of federal terrorism laws (U.S. Code 18 Section 3286(a)) – 8 years Arson (U.S. Code 18 Section 3295) – 10 years Embezzling funds from a federal financial institution (U.S. Code 18 Section 657) – 10 years Using false or fraudulent citizenship papers (U.S. Code 18 Section 1423) – 10 years Failure to amend in a timely manner for EGTRRA, or TRA 86: 100 million bazillion years. Do I have a point or what??