Rai401k

We're having a little trouble trying to figure this out. We have 3 separate plans for 3 different companies that are considered a controlled group. All plans have exactly the same provisions (in short they all fund a 3% safe harbor and 50% up to 6% match). We just found out they had a 4th company that they never told us about. The 4th company has it's own plan as well. However it has different benefits. The plan has 183 employees 180 are NHCEs 3 are HCEs. Let's just say the 3 other plans have 1300 participants combined 300 are HCEs and 1000 are non-hces. How do we determine what testing has to pass in order for this 4th company to stand on it's own with different benefits?

Company A was bought out by Company B on April 1, 2018. Company A funded 3% SH and NCPS. The previous owners would like to fund the contributions for their compensation with company A from Jan 1 - March 31 along with the participants of company A's plan too of course. According to Co A, the acquisition was neither a asset or stock sale ?. They said " The entities are LLCs, therefore, the way the merger worked is that Company A contributed all of its assets and liabilities to Company B, and in return it received an ownership interest in Company B". 1. Sounds like an asset sale to me but i may be wrong. Has anyone heard of this? 2. Does the safe harbor profit sharing have to be funded pre merger (1/1/2018 -3/31/2018) for Company A’s Plan? Can a discretionary new comparability profit sharing be contributed pre merger (1/1/2018 – 3/31/2018)for Company A’s Plan? 3. Is it considered a short plan year, does the ER contribution get pro-rated. I feel like this depends on whether it was a stock or assets sale.

Participant in a 401(k) Plan has a life insurance policy and dies. I understand that the difference between the proceeds and the cash surrender value are non-taxable. The beneficiary is getting paid out payments of the cash surrender value how would we report this on the 1099R. Specifically what code do we use? for the tax free portion.

A participant just discovered that her 401(k) deferrals have not been deducted from her paycheck since 2012. Our client has reviewed their files and agrees that they mistakenly did not deduct from her paycheck for that year. They are willing to make up and fund a missed deferral opp. from 2012. However she believes that they should be making up for all year since. The client stated that they will not fund for 13,14,15 and 16 because they email employees every year requesting a new salary deferral form. This is part of their administrative procedures. Our client said that they have emails that clearly state that if they do not receive a new salary deferral form on Jan 1 of each year they will stop deducting and that the prior years form is no longer valid. Questions: 1. Is there a statute of limitation of how long a participant has to bring up a missed deferral opp? Do they have to fund a QNEC for the missed deferral opp from 2012? 2. Aren't salary deferral forms, etc. administrative procedures? In other words, they can argue the fact that the emails they sent out clearly state that prior years form will not be valid and therefore will not need to fund a QNEC for 2013-2016? 3. Finally would we have to submit to VCP? I know there's a 2 year window for SCP, however isn't this considered a insignificant error so we can still self correct? Thanks

not a QACA. Thank you for the link, yes I believe it's permitted. We are increasing the eligibility requirements and therefore it would only keep out employees who are not otherwise eligible for the safe harbor yet. Thanks again!

Now that we can make changes mid year to safe harbor plans can we increase the eligibility requirements? Plan currently has a 6 month wait for all contributions (including sh match). The client would like to increase it to 12 months. from ASPPA (under prohibited mid year changes) - "a mid year change to reduce the number, or otherwise narrow the group of employees eligible receive the safe harbor contribution" from Sungard (under prohibited mid year changes) - " a mid year change to reduce the number, or otherwise narrow the group of employees eligible to receive the safe harbor contribution. However this does not limit the ability of the employer to amend a plan mid year to change eligibility requirements for employees who have not yet become eligible to receive the safe harbor contribution. Sungard is stating that you can increase the eligibility requirements mid year but i haven't seen this anywhere else so i wanted to make sure that it is in fact permitted.

Does anyone know if you can set up payroll deduction IRAs and have a 401(k) plan under the same employer. We have a client that excludes all highly compensated employees from the 401(k) plan. Since the 401k is not offered to the HCEs they are looking to offer the payroll deduction IRAs to the HCEs. Does anyone know if this is permitted, I read on the IRS website that the Payroll Deduction IRAs would have to be offered to all employees of the employer. However they don't want to do this for obvious reasons.

Does anyone know what a QLAC is, we have a client that would like to transfer their 401(k) to a QLAC to avoid taking his RMD. He is 70 1/2 and 5% owner. The plan allows for in-service distributions at age 59 1/2. Can he move his money from the 401(k) in to a QLAC? If so would he be required to take his RMD from the 401(k) for 2015 before doing so?

We have a plan in place for Company A, they are a Management Company and wholly own Company B which is a Dentist Practice. Company B is currently and adopting employer of Company A's plan. Easy right! But now they have restructured the company and want to split everyone in to separate plan. I think we're ok but any advice would help. Company B (the Dentist Practice) was dissolved and 3 new companies were created as of 6/1/2015. The employees from Company B will be split up amongst these companies. Although there's common ownership between Company A and the three new companies (Let's call them Companies C, D & E) they are not a controlled group. However A (B dissolved) C, D, & E are considered an affiliated service group. Company A being the Management company and services provided amongst the C, D, & E which are all Dentist Practices. Company A will leave the current plan in place, but they want to create separate plans for C, D, & E. I think we are ok here, as long as testing etc. passes separately. Let me also state that all provisions amongst the separate plans will be the same. Here's what we aren't sure about. 1. Company C, D, & E will set up as of 6/1/2015 and as i stated employees will be moved over from Company B that was dissolved. Although the companies didn't exist effective 1/1/2015 can we still set up the new plans with this effective date to avoid a short plan year. 2. No employees are terminating they are simply moving from one company to another so do you agree that this can be done by a trust to trust transfer and would not constitute a distributable event?

The definition of compensation under the plan document is W-2 however there is self employed income language in it. We use Relius IDP V.S. (See definition of comp below). 1.22 "Basic Compensation" means the Participant's wages as defined in Code §3401(a) and all other payments of compensation by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Participant a written statement under Code §§6041(d), 6051(a)(3) and 6052 (Form W 2 wages), as well as amounts that would have been received and includible in taxable compensation but for an election under Code §125(a), Code §132(f)(4), Code §402(e)(3), Code §402(h)(1)(B), Code §402(k), or Code §457(b), plus, effective for Compensation Computation Periods beginning on or after January 1, 2009, Military Differential Pay. Compensation must be determined without regard to any rules under Code §3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code §3401(a)(2)). Basic Compensation for any Self Employed Individual (with respect to the Employer maintaining the Plan) shall be equal to such individual's Earned Income. Basic Compensation shall not include amounts paid as Compensation to a nonresident alien, as defined in Code §7701(b)(1)(B), who is not a Participant in the Plan to the extent the compensation is excludable from gross income and is not effectively connected with the conduct of a trade or business within the United States. The partner is part of an adopting employer of the plan. Would his 1099 income be eligible? He does not receive K-1 only 1099.

We have a new comp plan and each employee is in their own group. Each year the sponsor will inform us what percentage or dollar amount each HCE and Owners should get. We then test the plan and determine what the NHCEs must get. In most cases even though the NHCEs are all in their own group we will give them the all the same %. Enough to have the test pass. The IRS agent said that she's never seen so many different %'s across the board and that she usually sees three or four separate groups. I explained that all are in their own group and that the HCEs are able to get different percentages actually even the NHCEs are. However she wants us to demonstrate how we get to the % amounts for each HCE. I guess this is more of a "what would you do" than a question. I think we are just going to give her what the sponsor provided us to show what the HCEs are to get and then show her what we proposed to give the NHCEs and that's it. I don't think we did anything wrong here.

I've never heard of this for a non-elective contribution, only for matching. I was going to say to check the definition of compensation and to see if it excludes prior to plan entry but it seems that they are not even going by that they are strictly giving the SH based on the plan execution date. I would say that they have to true up from 1/1/2014.

Plan allows for hardship distribution based on safe harbor standards. A participant wants to take one to prevent foreclosure (as stated under the sh reasons). What constitutes as preventing a foreclosure? Actually receiving a foreclosure notice and then taking a hardship. OR Can he take a hardship because he is behind on his mortgage by two months. He is preventing foreclosure by taking the hardship to get caught up.

That's correct, participants are eligible for the contribution. It's sh profit sharing so it's based on their annual comp they are just funding it on a payroll basis And that's correct BG5150, we don't know if it's better to have them true-up when they enter or if it's ok to wait till the end of the year. So far, we've been doing it at the end of the year so we will leave it as is, we just wanted to get an idea if it was ok to wait. Sound like everyone agrees as long as we keep it consistent it's ok. Thanks!

We a plan that funds the 3% SHPS contribution each payroll period. All compensation is used, in other words they are NOT excluding comp prior to plan entry. Are there any problems if the client waits until the end of the plan year to true up new hires 3% safe harbor. Right now they start the 3% upon plan entry and then we calculate the true up. However should we require them to true up the 3% from the beginning of the plan year as soon as the participant enters the plan?