BG5150

You should speak to your accountant about that.

I think that's right. It does not match on deferrals over 6%, and I think that's the only cap.

Secondary question: Which takes precedence: a will or a properly executed beneficiary designation for the retirement plan? Say I name my brother beneficiary of my plan when I first start. Later in life, I make out my will and designate the benefit to go to my sister. Who gets the goods?

Participant passed away, so no new designation is possible. Our staff attorney opined that only the primary beneficiary election was revoked and everyone moves up a level.

Directly from the basic plan document: (f) Divorce revokes spousal Beneficiary designation. Notwithstanding anything in this Section to the contrary, unless otherwise elected in Appendix A to the Adoption Agreement (Special Effective Dates and Other Permitted Elections), if a Participant has designated the Spouse as a Beneficiary, then a divorce decree that relates to such Spouse shall revoke the Participant's designation of the Spouse as a Beneficiary unless the decree or a "qualified domestic relations order" (within the meaning of Code §414(p)) provides otherwise or a subsequent Beneficiary designation is made. Side note: there are no special instructions in Appendix A. So, the ex-spouse is no longer the beneficiary, but does that mean everyone else (the contingent beneficiaries) move up a level (secondary to primary, tertiary to secondary, etc)? Or is the entire designation scratched?

Me, too, Bri. That's my question. JUST the beneficiary, or the whole shebang. I have the question to my documents team now.

Participant indicates spouse is primary beneficiary and the contingent beneficiary is his nephew. participant then gets divorced so spouse is no longer primary beneficiary. Does the nephew now become the primary beneficiary until he (the participant) remarries? The bene form says the spouse is primary and if not living at the time of participants death, the the named contingent benes will get the benefit. But the ex-spouse is still living... Does the whole thing get blown up due to divorce, and new paperwork would need to be filled out or the plan's hierarchy will take over?

I'm not a big fan of this, as it could cause census nightmares. Chances are you are getting a census from each location separately, and you'd have to remember these X participants should be in the other plan.

Maybe send this to an ERISA attorney?

Has nothing to do with Safe Harbor or not. The voluntary after-tax (VAT )will be in the ACP test regardless. Like chc93 said, I've only seen it work in large plans, and then, only if there are a bunch of well-paid NHCE who are near the HCE comp limit, or in plans that have a ton of HCE but a bunch are NCHE b/c they use the top paid group. These days, I usually only see it in a owner only plan where the ACP test does not apply since there are no NHCE. The VAT used to be a great way to get more money into a retirement plan, especially when the limits were so low, like under $10,000. Now, with higher amounts allowed, and with the allowance of Roth Deferrals, participants and sponsors alike are bypassing the VAT.

This is a good point.

But will have to make up any withholding if he wants it as a tax-neutral transaction.

I don't see why this would be a problem. Same calendar year, same plan year, probably same tax year (unless sponsors tax year ends 5/31. As long as the contribution was made for the right amount and no one was left out. Like someone said above. At the time of deposit it wasn't a plan account, but now it IS a plan account. Could you MAYBE say that the value of the account on the day they executed the document was truly the contribution amount? Sure. But I doubt any IRS auditor would get upset at this, unless somehow the sponsor was trying to get some sort of unfair tax break.

What type of in-kind asset? Do they want to transfer over actual stocks instead of selling and re-purchasing them?

Can you give a QNEC to just one person?

The LTPT rules only allow for them to defer. has nothing to do with eligibility for match,

Datair has a similar option. Not sure about Relius of FTW and I'm too lazy to look. lol

Hopefully it's a NHCE

Wouldn't the plan document have to allow for QNECs other than corrective ones?

I believe this is the correct answer. Section 6.02(5)(c) Special exceptions to full correction, recovery of small overpayments. (e) is similar.

Participant elected to have Roth deferrals taken. Company deducted funds pre-tax. (However, the proceeds were "correctly" placed in the Roth source at the record keeper.) Crossed tax years. What might the fix be here?

But are there no penalties for late "adoption"?

I would. couldn't hurt. This way, they get the new address earlier.

It's not related match, really. In this case, if the plan matched catch-ups, we wouldn't be forfeiting anything. It's just that some of the deferrals are being recharacterized and moved out of the test.

While reading about not matching catchups and the timing, a thought came to mind. What happens if a plan has match that is payroll based and the company deposits it with each deferral. Participant is an HCE who defers $15,000. After the ADP test is run, it fails and $3,000 is recharacterized as catch-up. Do we have to go back and forfeit all the matches working backward until the $3,000 deferal mark is hit?