Marjorie Lucas

TO NOTE: The frozen PSPlan was Amended and Restated effective 1/2024 into a Safe Harbor 401k PSPlan, eligibility is 12 mos / 1000 hours, min age 21. [LTPT eligibility is based on the standard provisions.] In the original message, enough information is provided to draw conclusions as to the administrative decision. For Profit Sharing Plans as posted on the IRS website: April 1, 2021 A profit-sharing plan has the same contribution limits as a Simplified Employee Pension (SEP) Plan; however, it gives you more flexibility than a SEP. A profit-sharing plan may: Exclude employees that work less than 1,000 hours, while a SEP excludes employees who work less than 3 of 5 years or have less than $650 in pay. Allow for loans to participants, while a SEP may not make loans. Require vesting that rewards longer-term employees, while a SEP is always 100% vested. Limit distributions, while SEP participants have no restrictions on taking withdrawals. Profit-sharing plans have a Form 5500 series filing requirement and must meet other administrative requirements compared to a SEP. Adopt a written plan document Plans begin with a written document that serves as the foundation for day-to-day plan operations. There are two basic types of plan documents. Individually designed plans are provided by a retirement plan professional and may be designed to meet your specific needs. IRS pre-approved plans are provided by plan professionals or financial institutions and have fewer options. You have until the due date of your tax return to adopt a profit-sharing plan for that year. You're bound by the terms of the plan document, and your plan document may need to be amended from time to time for new law changes. Eligibility and participation An employee becomes a participant in a profit-sharing plan when they meet the plan's eligibility requirements. Employees that are at least age 21 and work 1,000 hours over the 12-month period after being hired become participants on the next plan entry date. If you have ownership interests in another business, the employees of that business may be eligible to participate in your plan. It may be possible to exclude those related employees, but your plan will need to work with your plan professional to determine if the plan meets coverage testing. Contributions The plan sponsor decides how much to contribute to eligible participants' accounts in the plan. Contributions made to a profit-sharing plan must be allocated among the participants by a formula outlined in the plan document. Many plans decide to give a set percentage of compensation to all participants. Contributions and forfeitures (nonvested employer contributions of terminated participants) are subject to a per-participant annual limitation. This limit is the lesser of: 100% of the participant's compensation, or $58,000 for 2021 The deduction for the contribution cannot exceed 25% of total eligible compensation. Vesting Vesting is the percentage of the account that the participant owns, based on years of service. A year of vesting service is normally given for each plan year a participant worked 1,000 hours. Vesting schedules range from 100% vesting after 1-3 years, or 20% vesting for each year, leading to 100% ownership after six years. Resources Publication 4806, Profit Sharing Plans for Small Businesses PDF Profit-Sharing Information Webpage Nonetheless, you may need to review the "Eligibility and Participation" section as well as "ELIGIBILITY YEAR OF SERVICE", "EMPLOYMENT COMMENCEMENT DATE", "PARTICIPANT", "PERIOD OF SERVICE". Based on the original message, all accumulated service prior to the plan being reinstated on 1/2024 would be considered null and void because John was under the age of 21. Even if he had met the plan minimum requirements, per IRS regulations and governance, those credited services would still be deemed null and void. Based on information in the original message. Key Takeaway: Review the Company's Profit Sharing plan prior to any amendments and reinstatement and verify in the language the different topics as listed above and check with counsel. When did John first become age 21? When was his employment Commencement Date?

Since John has not yet completed the minimum requirements of 1000 hrs as specified in the plan document based on his rehired date, he will become eligible to participate in the plan as soon as he completes the mandatory 1000 hrs. His previous employment will not be taken into consideration in any future calculation, should he remain employed for the foreseeable future.

In my experience, auditors typically send a formal Request for Information (RFI) or Prepared By Client (PBC) list, outlining exactly what they need and the expected date of their arrival. The scope depends on the type of audit. Below is what is generally requested in a retirement/benefits environment. Auditors almost always request foundational documents first: Plan document (current and prior versions) Adoption agreement Summary Plan Description (SPD) Trust agreement Service agreements (TPA, recordkeeper, custodian) IRS determination or opinion letter (if applicable) Most recent Form 5500 and schedules Auditors will request detailed census data such as: Employee eligibility dates Compensation used for deferrals Hire/termination dates Date of birth (for testing) Hours worked (if eligibility is hours-based) Ownership status (for controlled group testing) They may ask for other items as they review the files.

Your conclusion is correct. You referenced: Vested balance = $25,000 Existing loan = $25,000 50% vested balance limit 50% * $25,000 = $12,500 Maximum total loan amount allowed across all loans $12,500 - $25,000 = ($12,500) ($12,500) is less than 0. Not eligible for any additional loans. All loans cannot exceed the Maximum statutory limit, which is the lesser of 50% of the vested account balance or $50,000

Yes, a participant can generally take multiple 401(k) loans if allowed by the plan; however, care should be taken to ensure that all loans combined do not exceed IRS limits.

You can find forms, instructions, and publications by going to the IRS website at IRS.gov/FormsPubs or IRS.gov/OrderForms. Please keep in mind that it is not for all filers. For plan years beginning after 2013, must file electronically using the FIRE system. Hope, this helps!