msmith

Thanks to all that responded! I will be making QNEC's to pass Coverage and they will only be made for NHCE's.

Tom - I am not sure what you mean by passing 410(a) with and without the QNEC. This Plan has a 3 Month eligibility condition, with Entry on the date eligibility is met. Can you advise?

Thank you, Tom! I cannot consider this plan as the "Precious."

401(k) Plan is failing Coverage (both Ratio and ABPT) on the Match portion. The ADP and ACP Tests are also failing. If I use QNEC to bring in more participants (remove last day/1,000 hour requirement), can I also use that QNEC for ADP/ACP purposes? I thought I read (somewhere) where the QNEC could not be used for the ADP or ACP Testing. But I can't locate it now.

Thanks to everyone for their very helpful comments. I am not sure if a County Treasurer's office would accept a 3rd party check. In particular - this County. I believe I will deny the loan and discuss with the Plan Sponsor.

My question is - how would you handle the second loan, when the first loan was not used for the intended purpose. The first loan was granted to pay the 2013, 2014 and 2015 property taxes. His new loan document shows that the same property taxes have not been paid.

Loans are only permitted for hardship necessity and they use the same safe harbor standards that is applied for hardship withdrawals.

In January 2016, a participant obtained a loan to pay delinquent property taxes. As a rule, we require proof of the hardship. That loan has been paid in full. The participant has applied for another loan and the documents show the same unpaid property taxes. The Plan Document and Loan Policy are silent on this and I just wanted to get some opinions as to what other TPAs would recommend to their Clients about approving or denying the loan.

Many thanks!

Partners will be receiving bonuses in January 2017, attributable to 2016 settlements. Can the Partners: 1. Assuming an election is made in advance of the settlement payment, defer for 2016 from the 2017 settlement payments? 2. Have 2016 Profit Sharing allocated based upon the settlement payment?

Perfect. Thank you!

Lou - that is correct. The Match is discretionary and would normally be exempt from the ACP Test. I could find nothing on the inclusion of the Voluntary After-Tax voiding the Safe Harbor ACP exemption.

The Plan has a 3.5% Safe Harbor Non-elective feature. Even if a Discretionary Match qualifies for Safe Harbor ACP, can we elect to use it in the ACP Test? The document is silent on this and I would like to include as the Voluntary After-Tax contributions, alone, will cause the ACP to fail.

I should further state that there is clearly a paper-trail as to when the various contribution types were allocated.

My document states that "the Excess Annual Additions will be deemed to consist of the Annual Additions last allocated..." In my situation, the PS was the last allocated contribution. In this respect, I prefer to take a conservative approach - and cap the Owner at the normal 415 and make the corrective distributions for the failed ADP Test.

Tom - would you agree if corrective distributions were made due to a failed ADP Test that the amount distributed cannot increase the Profit Sharing contribution? Thank you for your valuable input (as always).

The document we use (Relius IDP) states...."the amount that would otherwise be contributed or allocation will be reduced so that the Annual Additions for the Limitation Year will equal the maximum permissible amount,,,,,"

Yes. That is my understanding of the 415 limit.

Calendar Year 401(k) Plan - deferrals are contributed throughout the Plan Year. After December 31st, it is determined that the Plan failed the ADP Test and corrective distributions were made. For the same Plan Year, the Employer has decided to make a Profit Sharing contributions (decided after above corrections). A colleague states that the Employer may contribute Profit Sharing over the 415 Limit to make up for the corrective distribution of deferrals that were made. Is this possible? It seems unreasonable.

It is now 12/07/2015, and the 2016 Safe Harbor Notice was timely distributed. Can a Plan be amended, effective 01/01/2016 (adopted by 12/31/2015), to make changes that are not referenced by the IRS? A change might be to how a Profit Sharing contribution is allocated for the 2016 Plan Year. The Safe Harbor Notice typically refers the participant to the SPD for the Profit Sharing allocation method and conditions for receiving Profit Sharing.

That is exactly what I want to accomplish. Thanks to all that responded.

To further clarify, I would like to run the ADP and ACP together, for the 3 traditional 401(k) plans. I believe these 3 will pass the ratio % test (of course, considering the Safe Harbor participants as not benefitting); and I might be able to obtain better ADP/ACP results. These 3 plans have the same Match formula. Historically, we have tested using ABPT and Non-discriminatory classification so that we could test separately for ADP and ACP (better results in past years), without complications of the Safe Harbor plan.

Thank you, Tom.

And I can ignore the Safe Harbor plan for ADP/ACP testing, even though is was included for coverage testing? Thank you, Tom.

Background Information: 4 Plans in a Controlled Group. Plans 1, 2 and 3 are traditional 401(k) Plans, with a Match. Plan 4 is a Safe Harbor Match Plan. We had to utilize the ABPT and the Non-discriminatory Classification Tests to pass coverage. Question: Can Plans 1, 2 and 3 be aggregated for the ADP/ACP testing?