Kevin C

The timing of deferrals becoming catch-up depends on the limit that triggers the catch-up. For 402(g)/401(a)(30), deferrals in excess of the deferral limit become catch-ups as they are deferred. Catch-ups triggered by 415 or ADP testing become catch-ups at the end of the plan year. The rules are in 1.414(v)-1. There are mentions of timing in (b) and (c). As C.B. pointed out, In your case, with $22,500 contributed in 2018, the last $4,000 of deferrals made in 2018 became catch-up when deferred. Before the PS allocation at the end of the plan year, the participant still has $2,000 of the 2018 catch-up limit available. When the PS allocation takes the participant to the 415 limit, the next $2,000 of PS causes $2,000 of the $18,500 of regular deferrals to be reclassified as catch-up. The participant ends the year with $16,500 of regular deferrals, a PS of $38,500 and catch-up of $6,000. Be careful about assuming that everyone age 50 can get to $61,000 for 2018. That only works for those who defer at least the full catch-up limit during the year. Someone age 50 who doesn't defer can only get to $55,000.

No, it must be an eligible rollover distribution. Also, Millennium won't accept a rollover if the SSN is known to be incorrect.

I would also suggest looking at the 408(b)(2) regs to see if your situation still meets the requirements for the TPA contract to be considered reasonable.

Here is an old discussion on the subject.

On the 411(d)(6) issue, do we know the plan's allocation conditions? Larry is assuming it has a last day requirement with no exceptions, but I don't see where PMZJohn has said what the plan says.

There is no guidance (formal or informal) on mergers with a safe harbor plan. The IRS reserved a section in the 401(k) regs for it, but never did anything. With no guidance, the best you can do is follow a reasonable, good faith interpretation of the code and existing guidance. If Plan B is merged into Plan A during 2019, won't that result in a short final plan year for Plan B that ends on the merger date? So, wouldn't the merger be at the end of the final plan year for Plan B, instead of mid-year? You didn't say how recently the transaction occurred. 1.401(k)-3(e)(4)(ii) provides a way for a plan to remain safe harbor for a short final year if the termination is in connection with a 410(b)(6)(C) transaction.

If the participant's account balance is small enough that the search fee substantially reduces it, I would expect the balance to be well under $5,000. With auto-rollover providers available who will take accounts less than $1,000, having the cashout apply all distributions under $5,000 should take care of most of this kind of situation. One of the reasons we use Millennium is that they search for missing participants who are rolled over.

We don't do 3(16) services, but our clients have access to very reasonably priced searches for missing participants through the auto-rollover provider their plans use, Millennium Trust. We've had really good results and none of our clients has complained about the fees.

If there is more than one tranche of stock, you will also want to keep in mind that you can only use dividends / S-Corp distributions attributable to the stock purchased with an exempt loan towards the loan payments on that loan. I've seen the cite listed as 54.4795-7(b)(5). Here is a National Center for Employee Ownership article on the subject. https://www.nceo.org/esop-operational-issues/c/esop-debt-payments-dividends-distributions

If the plan says the required beginning date is delayed until the year of retirement for non-5% owners age 70.5, then there is no RMD for this person until the year of retirement. The definition of required beginning date in 1.401(a)(9)-2 Q&A 2 does not take into account when distributions are received, it is based entirely on age, ownership, employment status and plan provisions. The statement in an earlier post here that a distribution to a currently employed non-5% owner after age 70.5 triggers an RMD is WRONG. So, 1. is no, unless the participant retires during the year. The EOB discussion you quoted deals with the treatment of distributions during the distribution calendar year if an RMD is required. In your case, that will only apply if the participant retires during the year. 2. The premise is wrong. Unless the plan says otherwise, the first distribution calendar year [1.401(a)(9)-5 Q&A 1(b)] for RMD purposes for this participant will be the year of retirement. No RMDs are required prior to the first distribution calendar year.

That doesn't work for someone deferring less than 5% in the OP's situation. If you only add a maximum $ amount for the match, a person making $286,000 and deferring 4% would still have a match based on compensation in excess of the 401(a)(17) limit. The current calculation method would yield a match of $10,010 for 2018 ($286,000 * .035), which doesn't exceed the maximum possible match for 2018 of $11,000. But, the $10,010 is calculated using compensation in excess of $275,000.

You're not missing anything. You can't do that and satisfy the ACP safe harbor. The ACP safe harbor match rules send you to the ADP SH match provisions so each NHCEs eligible to defer has to receive the SH match. You would also have a problem with the match restriction in 1.401(m)-3(d)(4).

If they are not currently eligible, you can. See Notice 2016-16 Section III D 2, last sentence. If they are eligible, you can't.

The times we've done it, the split was effective 12/31 and the original plan's end of year participant counts on Form 5500-SF reflected the counts after the split. The new plan was effective 12/31 and we prepared a 5500-SF for the new plan's one day initial year. I don't know if the IRS/DOL views a drop in the participant count between 12/31 and 1/1 as an audit flag, but it would sure look strange to me. Besides, it only takes a few minutes to do the 5500-SF for the one day. We also make sure the assets are split by 12/31 so the DOL can't claim that a single asset account on 1/1 means a single plan on 1/1.

I've had several DOL Investigators tell me they are not allowed to tell you why they are investigating the plan. Sometimes you can figure it out from the circumstances, or the information they request. We had a client receive a call from the DOL about a participant complaint and the client told the investigator to stop harassing her and to go bother someone else. Surprise, surprise, they soon got a letter announcing a visit from the DOL. When we met with the investigator, the first thing the client said was I'm sure you are here because of what I told you when you called. The investigator almost managed to keep a straight face and did not respond. My experience with the IRS is also that they will sometimes tell you.

Didn't the IRS already cancel them?

I'm with Larry on this one. No advanced notice was required for a calendar year SH plan if the freeze was adopted by 12/31 and effective 1/1/19. The safe harbor rules for terminating plans are in 1.401(k)-3(e)(4) and they only apply if the final plan year will be less than 12 months. Even with a short final year, no advanced notice is required if the plan termination is in connection with a 410(b)(6)(C) transaction or a substantial business hardship. I also agree the participants should be notified asap. Distributing a SH notice and then terminating or freezing the plan before 12/31 may very well create an employee relations problem. But, the SH notice doesn't prevent them from timely amending the plan. The terms of the plan control whether the plan is safe harbor (and whether there will be any contributions), not the notice.

If the plan document provides that the non-vested portion is forfeited when the vested balance is paid, they wouldn't be entitled to retroactive vesting when the plan terminates. See GCM 39310. The GCM also says, as CuseFan indicated, that if the participant has not yet been forfeited, they become 100% vested due to the plan term. I've never done an amendment for a plan termination that far in advance. I don't think I would be comfortable recommending that they pay someone based on partial vesting after the termination amendment was adopted.

Question 36 from the IRS DC Q&A session at the 2012 ASPPA annual conference dealt with amending a safe harbor plan mid-year to create a short plan year. The IRS agreed that it was permissible if the conditions in 1.401(k)-3(e)(3) are met, as long as the amendment is adopted by the last day of the short plan year. The question deals with a 7/1 - 6/30 plan year that is amended in September 2012 to create a 7/1/12 - 12/31/12 plan year. The only guidance on missed or late safe harbor notices is a page on the IRS website. https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice

The timing requirements for the safe harbor notice are in 1.401(k)-3(d)(3). The notice must be provided a reasonable period of time before the beginning of the plan year. Your first question implies that a notice was not distributed during the 30 - 90 day window that is deemed reasonable under 1.401(k)-3(d)(3)(ii). Whether or not the notice is/was provided a reasonable period of time before the beginning of the plan year will depend on the facts and circumstances of your particular case. The only guidance I'm aware of that deals with late (or missed) notices is informal guidance on the IRS website: https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice The timing rules for the amendment that adds safe harbor match provisions to an existing plan are in 1.401(k)-3(e). The safe harbor match provisions must be in the plan before the beginning of the plan year and remain in effect for the entire plan year. As for your last question, the participants get what the plan says they get. The top heavy exemption under 416(g)(4)(H) only applies if the plan is safe harbor for the year and the only contributions for the year are deferrals and ADP/ACP safe harbor contributions.

Your experience may be different, but among prospective clients I've met with recently who have "1099 workers" about half really have misclassified common law employees. If the clinic has common law employees, the answers to your questions will be different.

For at least the 2017 and 2016 filings, the software we use had Forms 5500 and 5500-SF available January 1 (2017 Forms available 1/1/18). Form 5500-EZ was available a bit later.

NAPA Net sent out an email today with an article you may find helpful. https://www.napa-net.org/news/technical-competence/case-of-the-week/case-of-the-week-voluntarily-correcting-governmental-457b-plans/ When you get to the EPCRS Rev Procs, searching for "overpayment" is a good idea. There are several references to overpayment in different locations. Under EPCRS, the term overpayment includes an amount distributed in excess of what is allowed by the terms of the plan. When looking at the correction method for an overpayment from a DC plan in 6.06(4), don't overlook the last sentence of 6.06(4)(b).

If they really were independent contractors, what business entity did they use when they filed their taxes? I would expect sole proprietorships, but you won't know unless you ask. Our VS document uses this definition: "Predecessor Employer. An employer that previously employed the Employees of the Employer. " But, I agree with the others that your description sounds like they were employees. I was merely pointing out that if they really were independent contractors, is it possible to credit prior service.

I would modify that slightly. If they really were independent contractors, their service as an independent contractor won't count unless the plan is amended to specifically credit that service. A pre-approved document should have the option of crediting service with an unrelated predecessor employer.