BG5150

We have a bunch. Though many of them are sole proprietors. Or small professional company where the only staff, if any, work less than 1,000 hours.

Allocation is new comp, but it won't pass testing.

Someone mentioned just calling it bonus pay, under which some people decided to defer the entire thing and others to not do that.

So, unbeknownst to me, the ER wanted to give everyone $1,000 in their 401(k) plan. However, if they didn't have an account, it was paid as a bonus. If they had an account, but chose otherwise, it was paid as a bonus. I know this is a no-no. The contributions will be considered deferrals for 402(g) purposes. (I think it pushed one person over the threshold) But what other correction needs to be done? Could they give all the missing people the $1,000 and just call it a PS? (I'm not sure if they filed their 2021 taxes yet.) I've heard of situations like these, but never encountered one first hand.

We are the 3(16) plan administrator, and are tasked with approving/denying DROs as QDROs. Our legal department does them. Does the fact that the Advisory Opinion was issued in 1990, but the DOL webpage that shows today was obviously created much later mean anything? Has the stance changed?

Some companies fund their match or safe harbor or profit sharing each pay period to amortize their cost over the entire year instead of making one big deposit, so 415 excesses can and do occur from time to time.

Coincidentally, one of the attorneys who pioneered the "In Marriage QDRO" is representing the participant in this.

I got a DRO today for a participant in Louisiana. The DRO says there is no divorce and that in LA, a community property state, the DRO can be a mechanism by which a participant can "donate" to the spouse "of his undivided interest in a thing forming part of the community." Anybody ever come across anything like that? Everything else in the Order lines up nicely to form a QDRO.

In my experience they say the plan is covered for $X but the coverage will increase to the amount required by ERISA (which is 10% of BOY assets). That's why I generally put 10% of opening assets for the bond.

Where is the gold cup thing?

I know the missed deferral opportunity amount is a % of the ADP of the group to which the participant belongs. But what if it crosses plan years? I have someone who was missed on 7/1/21 and we just found out about it this month. The ADP of his group was 3.25% for 2021. But do I have to calculate the 2022 ADP (next year!), or do I just use 3.25% for the entire period?

And just think of the billable hours to fix it all...

That's a simple fix under EPCRS. Just move the excess amount (adjusted for earnings) to the suspense account. The employer can (must) then use those funds to offset the next employer contribution until the amount is exhausted.

i didn't fees were deductible to the employer

Not necessarily. They could use those funds to pay fees. So, there is a reduction in cost to the ER. Or the ER can use the funds to supplement the contribution, thus getting a higher allocation with the same deductible contribution.

You would just need to make sure to separate that match out from the SHM at the custodian.

I don't see why you would need to test ACP. The discretionary match is 1) not matching on deferrals greater than 6%, nor is the match 2) greater than 4% of pay.

How many people are we talking? Two or three NHCEs leaving, could be because a competitor stole them. More than that, it's a very odd situation indeed when your entire staff quits. Do they all qualify for the PS already, or will it be all via -11g?

Do employers get a deduction for the corrective contributions?

Not if the plan requires 1 YOS for entry.

Side note: what if the NHCE group has a zero ADP (think SH match plan and no staff participates)? With OEX or not, the ADP is zero. So no correction? I always thought this correction in EPCRS was off base. What if the person missed is a newly-hired executive who was planning on deferring 10% of pay. But the staff puts away nearly nothing. Now the participant is stiffed on the QNEC and the employer makes out b/c the ADP is much lower than what the participant would have started out with. Or, the flip of that. Maybe the person skipped was a minimum wage data-entry type, and the rest of the staff are high paid science researchers or something. They are all putting away 8-10%. Now the ER is penalized (I know, it was their fault to begin with, no tears here) b/c not they have to give a 4.5% QNEC to someone who probably wasn't gonna defer anyway. I wish EPCRS just said do a flat 2, 3, 4% or something. Also, if the correction happened early in the year, they have to remember to do the correction the next year. SH plan would be even more difficult to remember--no ADP testing generally.

What if the person you are correcting would be in the OEX group and the group as a whole has a zero ADP. Would the correction be zero?

Too late to do a QNEC, I think.

Key Employees. Not HCEs. An amendment to the contribution limit would probably be effective 1/1/23. So, the Keys should know ahead of time whether or not they can contribute.

The EOB says that's, well, undetermined as yet.