austin3515

What I mean is, sometimes we tell the whole group of HCE's, the max you can do is 5% of pay, plus the 5,500 in catch-ups. So they elect 5% of pay for regular deferrals, and $211.54 in catch-ups each pay-period. By year-end, guess what? The HCE has followed instructions perfectly. The catch-up payroll deduction code really does equal actual catch-ups. The 5% cap is the plan imposed limit imposed by the ADP Testing section where we can limit HCE's administratively to prevent a failure.

Why give the daughter nothing whent a few extra minutes allows her to be treated just like everyone else? My experience is that owners hate it when they can't treat their kids just like their other employees...

They have separate elections because (and this is even worse) payroll companies have diferent deduction codes... Why why why?? So now hte payroll company is coding contriubtions as catch-ups even though in total contriubtions might only $10,000. Then the ______'s of the world will exclude those amounts from the ADP test because they're catch-ups. Then you've also got participants who are 50 who elect to contriubtion 45% of pay and who get capped at $18,000. Why? Because they didn't prepare separate catch-up election. Why indeed... The only good thing that comes out of it is if I'm trying to manage an ADP test, I will tell a client to contribute their testing limit as a percentage, and divide their 5,500 of catch-ups over 26 pay-periods.

I personally would like to see someone prove that integration was used for 35 years... I've always ignored it...

If the Plan is Top Heavy for the given year, you MUST provide a 3% TH Min allocation to the ENTIRE Plan. So if the Plan is a safe harbor match, anyone not getting a match of at least 3% of pay needs to be topped off. Anyone not getting any match gets the 3% THM. If you're using comp as a participant in a 3% SHNEC, you might need to top off the Newly Eligible employees. What does gateway have to do with this? Is this a cross-tested plan? If so, you can ignore the excludables for purposes of the gateway anyway. Dangerous plan design for a top-heavy plan especially if you don't already know the answers to these questions. Lots and lots and lots of traps for the unwary...

You do have to run the ADP/ACP for the non-safe harbor portion of the Plan. 1.401(k)-3 Safe harbor requirements. (h)(3) Early participation rules. Section 401(k)(3)(F) and § 1.401(k)-2(a)(1)(iii)(A), which provide an alternative nondiscrimination rule for certain plans that provide for early participation, do not apply for purposes of section 401(k)(12), section 401(k)(13), and this section. Thus, a plan is not treated as satisfying this section with respect to the eligible employees who have not completed the minimum age and service requirements of section 410(a)(1)(A) unless the plan satisfies the requirements of this section with respect to such eligible employees. However, a plan is permitted to apply the rules of section 410(b)(4)(B) to treat the plan as two separate plans for purposes of section 410(b) and apply the safe harbor requirements of this section to one plan and apply the requirements of § 1.401(k)-2 to the other plan. See § 1.401(k)-1(b)(4)(vi), Example 2. 410(b)(4) (4) Exclusion of employees not meeting age and service requirements (A) In general If a plan— (i) prescribes minimum age and service requirements as a condition of participation, and (ii) excludes all employees not meeting such requirements from participation, then such employees shall be excluded from consideration for purposes of this subsection. (B) Requirements may be met separately with respect to excluded group If employees not meeting the minimum age or service requirements of subsection (a)(1) (without regard to subparagraph (B) thereof) are covered under a plan of the employer which meets the requirements of paragraph (1) separately with respect to such employees, such employees may be excluded from consideration in determining whether any plan of the employer meets the requirements of paragraph (1). i.e., you have two plans. One safe harbor plan covering everyone with 6 months and one non-safe harbor plan covering everyone with less than 6 months. But of course that is only an issue if the owners kid/spouse gets hired because no new hire without ownership would ever be an HCE.

Not my call

Is there something specific about this precise tolpic? I did not see anything, but did notice it referneces "payments made" - is that what you are referring to?

For reals??? That makes this easy! So in other words, let's assume they defer 100%. They get NO 1099 until they take a distribution X Years later, and then they report the 1099 MISC income as SE income at that time. jpod, anything written up that I could have for the files??

20% for the SEP but almost 100% for the 457b, because there board fees are just above the 18K limit. This is very interesting jpod. The 1099 probably is just the amounts actually paid to the board member. Then when the distribution is paid, it's reported on the same 1099-MISC. The only issue I have is how does the board member pay the full amount of payroll taxes because the contributions will be fully vested. Sounds like so far no one has actually been through this...

As I mentioned, they are already maxing out their 402g limit. Any thoughts on how the 1099 reporting would work, and how the deduction is actually reported in this situation?

http://www.irs.gov/pub/irs-dft/f8951--dft.pdf I just found this draft of the new form... Lot of good it does me though.

How do I complete 8951 to pay the reduced loan fee that came out in 2015-27?

Bingo, that's what I would always do.

But here is the issue - in this example, for the 9/30/2015 ADP Test, you can only exclude $4,500 of his 2014 Deferrals from the 9/30/15 ADP test. Absent the failure, you could have excluded the full $5,500.

Perhaps some 401k was deposited in January 2015 that was actually a 2015 contribution

It actually was well written and seemed factually accurate, even though I had the same thought as you.

As I often to say to Doctor clients "you incur more risk before noon each day" then we are talking about here...

"We have several without bonds that use a Trust Co as Trustee and have no direct access to the funds in the trust account." Come again? Corporate trustee = no fidelity bond requirement? I haven't ever heard of that exception before.

But as a practical matter, I'm sure the sponsor does not want to go to all that extra trouble, not to mention the service provider. If it was me, I would have faith in the recordkeeper. The requirement is NOT that the plan administrator have the documentation, only that the rules are complied with. Unlike Fidelity's position (which relies on employee self-certification) I think as long as SOMEONE has the support and verifying compliance you are in the clear. Odds are the recordkeepers record retention policies are better than the clients anyway.

I don't see any connection between the RMD and the 402g. He needed to take the RMD AND the 496 needs to be distributed. Now of course it will be taxed twice.

I said this too, but most of them have day jobs and max out there 401k.

Great write-up! I took out the phone # and web-site, but very informative post Perhaps you should add a signature line that references your Linked In page (settings, Signature)...

Also, how is the 1099-MISC reporting handled when an independent contractor participates? Presumably the taxable amount should be lower by their contributions, but because the contribution is vested they would need to pay the SE Taxes. I find a lot of articles that say "independent contractors can participate" but not a lot that delve into the details...