BG5150

We have the following groups: Each HCE and/or physician in own group Each member on management in own group All other particpants Plan is Safe Harbor and has last day rule for PS. For the people who get SH and terminated, they must get the Gateway to get to cross testing. But since they are all in the "All other participants" group, do I have a problem because the people in that group will not be getting a uniform allocation? In this case, the allocation will be a little higher than the gateway minimum. Second question: What if a manager becomes an HCE, and is therefore in 2 groups. Which do you use? Doesn't this formula fail the definitely determinable requirement?

Was he already eligible to take an in-service withdrawal? The sticking point with me is that the checks were written directly to people or entities other than himself, thus, perhaps, violating the anti-assignment rules.

I never understood why people draft documents that have everyone in their own group and still an hours requirement or a last day rule. Just allocate to those who didn't reach hours or service milestone zero.

Of all the questions, I would leaver preparer blank. Why announce to the world your client list?

IRS says "don't answer them! https://www.irs.gov/Retirement-Plans/IRS-Compliance-Questions-on-the-2015-Form-5500-Series-Returns So, yay.

Person is getting 3% of total pay for TH. So, b/c this person is getting an ER nonelective contrib, he has to get the gateway, no? Applying the gateway formula seems to say zero. 11(g) amendment to get them to 5%? We are talking $180 here. Just give him the $180 buck. What's the worst that can happen. Plan gets audited and they tell you he got too much. Take it back. Or, if he took a distribution, write him a letter asking for it back.

Where does it say that?

Well, they are changing carriers for a reason. The reason should ostensibly be for the benefit of the participant. After all, the plan exists for the sole interest of its participants, right? Right? If this doesn't benefit the participants, why the move? These 5 former employees, but still participants, still deserve the right to have the same investment alternatives and fee structure (and access to investment adviser, and website capabilities, etc.) as all the other participants.

TH + Gateway (at minimum). May need more if testing is not passing. 11(g) amendment if that's the case.

Unfortunately, that only addresses people whose accounts must be reduced when someone else didn't get enough profit sharing.

EPCRS says we need to adjust excess allocations for earnings (someone was over-matched). Section 6.02(5)(a) says if you cannot make a precise calculation, you can make [a] "reasonable estimate." Then, if a reasonable estimate is not possible, we can use the VFCP calculator. We are in a situation where a precise calculation would be too onerous and expensive. However, I believe the DOL calculator just compounds the error by imputing gains on the excess allocation where most accounts over the time lost money. Since there is no published (by the gov't) "reasonable estimate," management says we should go with the DOL calcuator for now. (There are Earnings Adjustment Methods in Appendix B, but they specifically state the section doesn't apply for corrective reductions of account balances. Further, it says to look to "section 2.02(2)(a)(iii)© for rules that apply to the Earnings adjustments for such reductions." Umm, Section 2.20 is "Modifications to VCP submission procedures" and has no subsections.) So, I'm looking for anything published as to what might be considered a "reasonable estimate" that would apply to excess allocations.

What if this plan ONLY has payroll deduction for loans? Is is not incumbent on the Trustee to ensure all the loan payments posted to the accounts actually ran through payroll? In this case, the Trustee (probably really just the Plan Administrator, or, heck, the payroll lady) got two years of reports showing loan payments to her account that did not match the payroll records. Unless she paid herself extra via payroll, then it's not the Trustee's problem. If she just added her loan payments to the 401(k) data submission spreadsheet and the R/K just ACH'd the funds, then I think it's an operational error--accepting loan payments that did not get paid via payroll.

I didn't say this was a crime (on the plan's part). Just that the plan should take steps to correct this operational failure. The Trustee or the Plan Administrator obviously did not match up plan loan payments to loan payments made through payroll. Therefore unauthorized funds were put into the plan and paid out erroneously. In your thoughts, should the plan do nothing? Including allowing an obviously incorrect form 1099-R stand as issued?

But the plan received loan payments it should not have received. It paid out those funds, too. To me, it's similar to putting in deferrals to someone's account that didn't come out of a paycheck.

Review the loan policy & loan agreement. It seems as there is an operational error. Does the loan agreement say payments would be from payroll? In this case, the funds were never withheld from pay and are excess payments to the loan. Does the plan allow people to pay from personal checks? It seems as this didn't happen either. Unless she funneled funds from the ER account to her personal account then to the plan. For the distribution, she was paid funds she was not entitled to. 1099-R was wrong, as she should have been taxed ont he true outstanding balance of the loan.

B is no longer in the CG. My thought was that C would be getting a bigger deduction by contributing funds to the plan based on compensation not paid by the company. And B would be getting no deduction. It's only one person, but still...

At my previous job, we used Inspira. They will try to track down the people, and if they can't they'll do an auto rollover.

No one?

Side note: once under 80, you MUST file as a small plan.

Depending on the definition of comp of the plan, when he takes the money OUT, it may be included in that year's income, so he'll get a SH on that comp.

*side note* You can allocate a QNEC for a prior year test, too. BUT: you have to wait more that 12 months after PYE and do it under SCP. (And you really should only be doing this once, as one of the tenets of doing SCP is that you put a process in place to conform to the plan doc.

I've seen discussions where the DOL doesn't want TOO low of a rate either.

I think you may have missed my point. HCEs don't have to take a 12% loan since they surely have access to standard rates through a normal lender. NHCEs may have poor credit, meaning that it's either the plan or another loan shark if they need to borrow. There are plenty of HCEs with bad credit or who have maxed out loans elsewhere.

Company A sponsors plan, with Companies B, C, and D adopting employers as a controlled group. Calendar year plan. 3% Safe Harbor allocation. On Oct. 1, 2015, Company B is sold. One participant leaves Company B and starts working for Company C. She made $75,000 for B and $25,000 for C. The sponsor wants to know if Company C can pick up the entirety of the Safe Harbor for the participant. Or must the cost be proportionately shared between B & C?

FULL refunsds