BG5150

I thought non-deductible contributions are allowed in the plan.

Or is it that there can be, but a 15% excise tax applies (each year it's in the plan)?

The amount of match in a plan is limited by the max comp allowed for the year.

In a case of matching 100% of deferrals up to 2% of pay for 2025 would result in a maximum match of $7,000.  It doesn't matter what the person's YTD comp is.  You apply the match formula per period (in your example) until $7,000 is reached.  THEN it stops.

Another way to look at is is:

Say this person uniformly earned $700,000 in 2025--half thru June and the other half thru the last 6 months:  $350k per half year.  What if they didn't start deferring until July 1?  Are you not going to give them any match at all?  That's absurd.

And what would happen if you test ADP with prior and ACP with current?

Will an error be generated if there are two boxes checked for that item?

but will it mess up the interest due otherwise?  Will the final payment be off?

The accounts are daily val on Relius.

Participant is due $1.80 in earnings due to a late deposit of a loan payment.

How do I process that in Relius?  

Do I just do a Loan Payment for the participant and only allocate $1.80 in interest?  Will that mess up the amortization schedule?

Fromt he IRS website:

General rule: Generally, the safe harbor notice must be provided within a reasonable period before the beginning of the plan year. The timing requirement is deemed to be satisfied if the notice is provided at least 30 days (and not more than 90 days) before the beginning of each plan year. If the notice is not provided within this time frame, whether the notice is timely depends upon all of the relevant facts and circumstances.

(Emphasis Mine)

Give me a call.  I know a guy who can help someone or something 'disappear' 😉

Is there time enough to get the investment accounts properly set up?  

What is the new comp formula?  If it's everyone in their own group, then it's up to the ER who will get a PS and how much (subject to the testing limits, of course).  If it's the grouping method, you need to allocate the appropriate amount to everyone in each group.

Don't use Chat/gpt.  It can point you in the right direction, but the answers are still suspect.

We had someone here use it to determine eligibility of a rehire and it got it all wrong.

Often, when there are late deferrals to a plan, TPAs are using the DOL VFCP calculator to determine lost earnings.  I understand that's only allowable if the Sponsor is filing under VFCP.  And if not submitting, they must use EPCRS to determine the earnings.

The first and best option is to calculate actual earnings for everyone involved.  Than can get hectic if there are more than a few participants involved, or multiple payrolls.  Hectic and pricey--we charge by the hour, and the cost can easily overtake any benefit to the participants.

We may have a way to calculate the Rate of Return (RoR) individually for each payroll, rather than exact earnings.

My question is this:  Is that enough?  Using the RoR per participant (and if unavailable, the RoR for the during the same timeframe?)

The DOL calculator determines not only lost interest, but the interest on the interest.  Would I need to do TWO calculations?  First determine lost interest from payroll date to deposit and then another from deposit until 'today'?

How do you guys do it?  Several colleagues at other firms just take the path of least resistance and still use the DoL calculator.

I haven't heard anyone getting in trouble for doing it that way.  Have you?

23 hours ago, justanotheradmin said:

both testing groups would have to meet minimum gateway

Is this true?  Often in component testing, one group (the one with the young HCE) is tested on a contributions basis and the other one(s) tested on accrual basis.

Does the contributions basis 'plan' have to satisfy the gateway?  It's its own 'plan' after all....

'Tis been a few years since I last did one of these 'boutique' calculations as a former employer used to put it.

(And I kind of remember that the combined sub-plans, if you will, must satisfy the ABT?

I'd have to dredge up my notes....

I don't trust these new-fangled computing devices.

I do all my stuff on green sheets still.

Plus, i didn't the match could increase in later years. (In the same spirit as 'Cuse's question, I guess)

The contributions are funded by the employer, the r/k doesn't front any money.  The R/K pulls the funds via ACH they day they receive the contribution file.  Sometimes that is before the participants get paid.

I thought deferrals to the trust had to be from current, not future income.

Found a r/k who posts deferral transactions before the check date.  Basically, they process the contribution file when it comes in.

For example, they processed the 5/9/25 payroll on 5/8.

I didn't think they could/should do that, but they said it was ok.

Do you agree?

If so, is there a stock report I can run?  Do I ahve to get my backend team ro create a crystal report for this?

More questions:

I think maybe I'm asking if there is a rate of return report that can be run with ad hoc dates?

Could it be run on a plan-wide level but with participant detail?

The accounts are daily-valued in the Relius ecosystem.

I guess in a narrow view, nobody HAD to explain it to the ER.  It's up to them to understand the plan document they are signing, and they are the ones (usually) tasked with operating the plan.

However, I'm guessing someone approached the ER about setting up the plan and steering them to a SH arrangement.  Whoever did that should have at least explained it to the ER the mandatory contribs and the conditions under which they would be made.

It's certainly possible that the ER just tuned out and/or only heard the PS part of the funding.  Or maybe thought the SH and PS were the same...

I guess they can remove the SH for '26 and just do ADP testing.  And tehy doen' even have to give refunds!  They can do a QNEC.  And guess what?  Those don't even have to go to those employed on the last day of the year either!

Did no one explain this to the client during plan setup?

Is there something in EPCRS that addresses the issue of an Employer mistakenly deducting (from a paycheck) and depositing Roth funds for a participant when the ppt's election was pre-tax?

In other words I would correct this int he same manner as in my example above, regardless of its relevance to catch-ups.

If they don't want to change their address, change it to mine.  I'll gladly accept the check...

In that book, in the bio, it mentions some all stars (Mike Preston, Larry Starr, et al).  And also the PIX message board.

Good times, indeed!

I was straightening some things up around my house this weekend.  Part of it involved moving some books from one bookshelf to another.

I came across Who's the Employer:  A Guide to Employee and Aggregation Issues Affecting Qualified Plans by S. Derrin Watson.

I hadn't picked it up in a long while and I was wondering just how old that book is.

Turns out, it's a second printing from 1998.  My boss gave it to me in like 2000.  She had another copy.  Maybe the second ed.?

I'm wondering how much has changed from 1998 to the current 8th Edition...

Is there a way to get the job listing posts out of my stream?  I find they are clogging up my feed.