austin3515

This has been done already. Not sure when it's effective, but it's in the next couple of years.

Medical care under 213(d) is defined as: (1) The term “medical care” means amounts paid— (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, (B) for transportation primarily for and essential to medical care referred to in subparagraph (A), © for qualified long-term care services (as defined in section 7702B ©), or (D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B (b)). So just to be clear because I have actually never come across this. An employee needs to pay premiums for a spouse's insurance policy (or perhaps to pay his or her own premiums while out on an unpaid leave). Is this eligible for hardship? I seriously did not expect to ever learn anything new about hardship distributions!

Fidelity's documents allows all sorts of exclusions for all sorts of things. IT's a table where the rows are the comp items (bonus, overtime, etc), and the columns are the sources, with check marks as applicable throughout the grid. There is one column entiled "401k and SH Match", with separate columns for each of profit sharing, Safe Harbor Nonelecitve, Non-Safe Harbor Match, etc.

Me neither. I know some people do though., For example, Fidelity's preapproved plan does not allow a different definition of comp for SH Match and deferrals. I think the issue is that they are inferring that some NHCE's might end up with an inferior match to some HCE's due to the disparity. So HCE 1 gets not bonuses, but NHCE 1 does get a bonus and defers. The NHCE 1 gets no match on some of his deferrals while all of HCE's deferrals are matched. I think that is a very overzealous interpretation, akin to the IRS's belief that forfeitures can't be used for SH contributions. And I also think it would be ridiculous if federal policy denied the opportunity for someone to defer from a bonus, which I think counts for something. I just lost a plan, and the new provider is questioning whether or not that provision was permissible, so I just wanted to see what others thought.

The question is not just can I exclude bonus for safe harbor match. It is can I a) both exclude bonus for safe harbor match AND b) include bonus for purposes of determining payroll deduction contributions. As I mentioned, I'm passing 414s by a very wide margin. In fact it is specifically because the HCE's are getting such big bonuses relative to the staff that they don't want to match the bonus.

Our Corbel VS PT Formatted appears to me to very clearly allow me to include bonus for purposes of determining the elective deferrals, but exclude bonus for purposes of determining the match. My definition satisfies 414(s) by passing the ratio percentage test. I think some people argue that the issue is that an NHCE who gets a bonus, where an HCE does not, is somehow getting an inferior match as a result. To me it seems contrary to logic that the IRS would insist that employees in such a plan be barred from making payroll deduction contributions. But I do believe that is how some document providers feel. Thoughts?

That is awesome!! Thanks!

I guess I'll take any suggestions.

Good call on the IRS, but nothing is upcoming on their phone forum website... Here is the site for anyone curious to know where it is: https://www.irs.gov/Retirement-Plans/Phone-Forums-Retirement-Plans

Yes, I think you would be ok, unless everyone but the HCE's work for minimum wage and there do not effectively have the opportunity to contribute more than 4% of pay. I don't see how you would ever pass the ACP test, unless you can aggregate with the SH Match for testing, which I actually think you can?

Anyone know of a cheap way to get some ethics CPE? I am aware of ASPPA's webinars but I am thinking there must be someone else out there? I am looking for something for the QPA/QKA ethics CPE requirements.

Definitely not an ACP Safe Harbor because you are forbidden from having the match increase as the rate of deferrals increase. From 26 CFR 1.401(m)-3 - Safe harbor requirements. (2) Matching rate must not increase. A plan that provides for matching contributions meets the requirements of this paragraph (d) only if the ratio of matching contributions on behalf of an employee under the plan for a plan year to the employee's elective deferrals and employee contributions, does not increase as the amount of an employee's elective deferrals and employee contributions increases.

So let me get this straight, after year end, you decide whether the match is 50% of the first 6% plus 100% of the next 3%, or if the match is 25% of the first 4% plus 100% of the next 3%? You'll have a hard time convincing you're not doing that to increase the share of the match allocable to the owner.

Why not just a 1 pager saying what the error was. I don't think you would need to reprint the whole giant thing.

If you read my parenthetical and my comments, I am only assuming that it will eventually be phased out altogether. Certainly in 50 years when all the current ERPA's are retired (hopefully!) there will be no need for the designation. I simply assume it will be deleted before then.

Don't forget if Ted Cruz gets elected there won't be anymore IRS That's gotta be one of the most cockeyed things I ever heard. I'm sure his secret plan is really to move all of the functions to the newly established Service for Internal Revenue.

Such as what? I just think they are going to phase this out. That's too bad because ERPA's were a good substitute for ERISA attorneys for loan failures for example. It is profitable work for me and saved the client a lot of money. I just think if it is too much work to provide the test the following is going to happen very soon: Vendors will stop going to all the trouble of being approved as an ERPA trainer The IRS is going to decide it is no longer efficient to track CPE the way that it does. And that will be that.

I assume it is only a matter of time now before they take my ERPA away... That's very disappointing. https://www.irs.gov/Retirement-Plans/Enrolled-Retirement-Plan-Agent-ERPA-Program-Changes

Match calculated/funded each apy-period, no annual true-up. NHCE contributions $18,000 in first 9 months. Based on the true-definition of catch-ups, everything in Q4 is catch-ups and no match is accrued. Under 50 HCE 401k contributions are all matched, thus violating the rule that HCE's cannot have a better rate of match at any level of deferrals (1.401(m)-3(d)(1)-(4)(d)(4)). Agreed? I actually think that if there was annual true-up for the match, there could essentially never be a (d)(4) issue. It seems related to the calculations made more frequently where it crops up because catch-ups are obviously going to materialize later in the year.

Well, I don't think that is litmus test. Moving expenses are cash, opt out of health insurance payments are cash, STD disability benefits, and on and on.

Our PT Formatted VS document does NOT allow me to exclude catch-up contribtions from the ACP Safe Harbor Match. What is the basis of that prohibition? I am familiar w/ the preamble to final 401k regulations where they explained why catch-ups could not be excluded from the ADP basic safe harbor match. Is there anything else out there that ties in the ACP Safe Harbor Match as well, perhaps an LRM or something? From the Preamble: https://www.irs.gov/irb/2005-05_IRB/ar06.html The proposed regulations did not include any exception to the requirements for safe harbor matching contributions with respect to catch-up contributions. As part of the proposed regulations the IRS and Treasury solicited comments on the specific circumstances under which elective contributions by an NHCE to a safe harbor plan would be less than the amount required to be matched, e.g., less than 5% of safe harbor compensation, but would be treated by the plan as catch-up contributions, and on the extent to which a safe harbor plan should be required to match catch-up contributions under such circumstances. After reviewing the comments and the applicable statutory provisions (including the amendments to section 414(v)(3)(B) made by the Job Creation and Worker Assistance Act of 2002, (JCWAA) (Public Law 107-147)), the IRS and Treasury have determined that no such exception is appropriate.

We had a very very brilliant attorney say it could be considered a taxable fringe (edit: I'm not being sarcastic here by the way). Which certainly reminds me of the old adage about attorneys - "what does the Plan Documnent say? That depends. What do you want it to say?"

OK, I definitely see the point. But would also recommend that for something like that, which in my opinion is at best gray, to say something like "sign-on bonuses are excluded" or "sign-on bonuses shall be considered taxable fringe benefits" or something like that?

Plan excludes taxable fringe benefits from compensation. What say you regarding whether or not a sign-on bonus might be considered a taxable fringe? Perhaps along the same lines as moving expenses?

If the question was about bonus, I would not have thought twice. I just wasn't sure if GP's and OI were so intertwined one could not be distinguished from the other for these purposes. But I am inclined to agree with you. My definition would simply say, The determination of Earned Income with respect to the calculation of Employer Matching Contributions shall be made by disregarding positive ordinary income reported on the K-1, but taking into account any ordinary losses reported on the k-1.