legort69

During 2019 there were 2 employees and one earned > HCE limit. If we elect the TPG in 2020 , then there should be no HCEs in 2020 since we round down (2 x 20%) Just want to confirm that there is no issue here since we are consistent with our rounding policy and that there is no rule we are not considering.

The SEP is a new plan with a new effective date. All compliance testing be performed for the 12 months. Issues I run into is retrieving the data required in a good format when the plan was under a separate provider Safe harbor has to be continued unless revoked through the normal process

Client is told from prior TPA that while they deduct pretax as a % of gross, they withhold Roth based on Box 1 W2 (or at the least, Gross - pretax 401k). Per Document - definition of wages = wages, tips and other forms of compensation (W2 box 1) Is this common? Any thoughts or concerns I can advise on?

Nothing in the MEP prohibits this. It's legit.

So does the community agree that under RB 2019-19, where there is a failure to auto-enroll EE before the 5500 is filed for the year, if that EE terminates during this period and prior to discovery of the failure then correction requires a 50% QNEC and full match. Whereas, if the EE did not terminate and a notice was provided timely, then only the missed match + gains is required. Amazing that the RB provides examples but not in this scenario for termed EES within the 'grace period'.

If a participant terminates within the 3 month period, then is no QNEC due? i assume same conclusion if the plan is auto enrollment and the participant terminates prior to the 9 1/2 months after the plan year end (assume extension). I guess i just need to clarify that a participant that terminates within the 'rolling period' does not have to be QNEC'd for missed deferrals if they are no longer employed when the error is discovered within the 3 month (or 9 1/2 month AE) period.

How is the match allocation limit determined for mid-year match changes with respect to the compensation limit? For example: Match is funded per pay period. Match formula changes July 1 from 100% of 10% to 100% of 4%. Pt earns 30k/month and contributes 10% for 1st 6 months and 4% for last 6 mo. Jan - June - match allocation = 18,000 (180,000 x 10% ) July - Dec - match allocation = 4,200 (105,000 x 4%) Total match allocation = 22,,200. Option 1 - The per pay period match total of 22,200. Option 2 - is the match limited to (10+4 )/ 2 = 7% x 285,000 = 19950 Option 3 - Something else? Thank you for your responses.

Hope everyone is practicing safe social distancing. We have a participant who makes contributions to 2 plans. We administer one of the plans. He is an HCE and receives an ADP refund in the plan that we administer. Later he provides proof of combined excess deferrals between both plans. My question is whether the 402g excess deferral refund is a refund in addition to the ADP refund, or can the 402g excess be included as part of the ADP refund?

Is there a 10% penalty for a late refund of a year-end 401k match funded after March 15 that fails ACP ?

Which date is the actual final date to make the refund sans penalty? Also... Folks gonna be mad with their refunds with the market correction

Hi Larry, thank you for your response. So the way I read your statement, a discretionary match paid after year end for the initial plan year would be included in the top heavy calculation. Correct?

I am curious how other TPAs manage this. Loans that default throughout the year due to EE termination - Do you update the participant accounts with the loan benefit offset periodically throughout the year, or do you offset their account before year end?

Just to confirm, A match that behaves like a QMAC - has always been 100% vested and has distribution restrictions (like a deferral) - is by definition a QMAC, even if the document does not say explicitly call it a QMAC. True or False?

I was just thinking aloud that it sounds like a deferred vested benefit has the same meaning as a vested benefit for terminated participants. I wasn't arguing with anyone.

Then they should change the name to Vested Benefit.

Why is this not the definition for a deferred vested benefit in a 401k plan? If you terminate employment and you have a vested retirement benefit that you are not eligible to receive until later, that information will be reported by your plan to the Internal Revenue Service, which, in turn, will inform the Social Security Administration (SSA). This information must also be provided to you by the plan. The Social Security Administration will tell you, upon request, whether you were reported as having a deferred vested benefit under any plan. Why report a person on a form if they choose to keep their funds in a participant-directed 401k account, receive quarterly statements, has access to real-time balances on the website, and do not have to wait until retirement date in order to take a distribution?

Elective deferrals were not deducted on bonus. A missed match was processed but the deferrals were not made up. Now client is performing a true up match for the year, Would the true up formula exclude the funding of the missed match?

A sponsor is required to fund a safe harbor match for 2018. They changed their formula from basic to 200% of 5% in 2018, however they only funded the basic amount. They are now saying that they can't afford to fund the SH match for the difference between the basic and the updated formula. What would be the consequences for not funding the full amount which was included in their safe harbor notices?

If you re-allocate the forfeiture this year to a participant who termed < 2019, then do you have a 415 violation?

Sponsor wants to allocate the forfeiture balance as a fee credit to participants with balances. The participants receive a forfeiture "credit" proportional to their account balance, and not necessarily with regard to the actual fees they were charged that year or over multiple years. My questions are below. Any input is appreciated. 1) Does the fee credit have to represent actual fees incurred over time in order to be a valid reimbursement? 2) Is this a legitimate way to expend the forfeiture? 3) Should the forfeiture credit be an annual addition?

Another March 15 come and gone. Hope everyone faired well and I appreciate the folks on here that help us navigate through the sea of complex rules and regs. Kudos.

You also may be able to fund an employer contribution for 2018 - the initial plan year - at some point in 2019 and get the top heavy ratio under 60% (or less). By doing so, the plan may satisfy the top heavy test for both 2018 and 2019 and it can potentially be a cheaper option.

Good point Tom. We generally do not have matches that become QMACs mid year, but it can happen. I will clean up the language a little and I think we would be covered.

Kevin/Tom - would the below plan language qualify the 100% vested match to be a QMAC? MATCHING/QUALIFIED MATCHING CONTRIBUTIONS. The Employer may allocate Matching Contributions either to the Regular Matching Contributions Account or the Qualified Matching Contributions Account (QMAC) of each Participant, payroll by payroll or annually. Administrator elects to treat Matching Contributions as QMACs if they are nonforfeitable when allocated to Participants’ accounts in the Plan and are distributable only in accordance with the distribution provisions (other than for hardships) applicable to Elective Deferrals

Hi Tom - I indicated that the match is subject to the same withdrawal restriction as deferrals. Does that change your response?