BG5150

It can be self-corrected. Use EPCRS. Some people say to use the DOL calculator, some say no. I was always under the impression, that the calculator could only be used if you are filing under VFCP for late deposits. However, I know many people in the industry use it even if they aren't filing the correction with the DOL.

I don't have access to the EOB at the moment, I thought this was addressed in there. Participant terminates December 28, 2020, but the next pay date is January 5, 2021. Is she in the 2021 ADP test even though she did NOT perform services for the employer in 2021?

I thought that if they achieved the service but left before entry date and got rehired later (and after an otherwise entry date has past) then they are eligible immediately. (sencond example) But if they didn't get the service requirement the first time and only by the spanning rules that get it, they they will enter the plan on the next entry date. (first example)

Plan specs: age 21, 2 mos service, monthly entry. Participant: DOH 3/7/21 DOT 4/29/21 (not 2 month svc) RH 10/5/21 When is entry date? Rehire date or 11/1/21? Slight change DOH 3/7/21 DOT 5/17/21 (2 months but did not make entry date) RH 10/5/21 When is entry date? Rehire date or 11/1/21?

The Relius document section that deals with that is titled "Waiver of conditions of Participants NOT employed on the last day of the Plan Year." (emphasis in original) I'd say it's okay to change now. Are they having a lot of people retire before the end of each year? Side note: I always draft my "everyone in own group" plans with no allocation requirements at all. As you mentioned, you can artificially create those conditions anyway. Plus, it allows you to pick and choose for whom you want to waive those conditions. For example, if Mary was a long-time, valued employee who decided to finally retire during the year, you could give her an allocation (under my document conditions) without having to do an -11(g) amendment.

The way I understand it, the participant has cash withheld from their paychecks that then stays in the the employer's bank account. The ER then uses that cash to purchase company stock and transfers that stock to the ESOP. The DOL's rules try to ensure the ER does not keep that cash for longer than it should and turn it into plan assets as soon as it can. So it really doesn't matter if the funds are in cash or co stock, it matte5rs who has control over the funds: the company or the trust.

I wouldn't file late WITHOUT DFVCP. Unless the DOL came knocking and I wasn't able to use the program. File it late (with the DFVCP button checked) and go thru the DFVCP procedures. It will tell you what the late fee is, and it won't be more than 750 for a small plan filer (for one year; you get two or more years for a grand total of $1,500)

I like to prove that people can be BOTH smart AND devastatingly handsome at the same time...

But keep in mind, that extension for a lot oc companies is only until 9/15... And if you are running late this year, no one is going to catch that you are late for quite some time, so you'll be able to file under the delinquent program before any fines are levied. Even if you get an IRS late notice, you can still file under DFVCP as long as the DOL hasn't caught you yet...

yes, both are adopting employers.

New twist: Controlled Group, one a partnership and one an S-Corp. So S-Corp issued W-2 for $150,000 and she rec'd a K-1 from the p'ship for (25,000). Just combine the two?

And the record keeper so they can make the change on their end.

...and Employees get W2's.

Also, I believe, you can only get relief from the excise tax only once every two or three years. I don't have a source, it's just how it was explained to me at a former job.

So, take 12 the SE tax off of the $150,000 amount, them combine it with the loss? In the case above: $150,000 (-) 1/2 SE tax (-) $25,000? No further reduction for the partners share of the allocation to participants?

Often, smart people try to be smart with their money. ADP refunds affect taxes. And the people may be okay with the refunds, they would just like to know how that figure is derived. And, who's to say I'm worried about this during work hours? And, even if she knew how the test worked, she would need to be privy to the calculations which include people's compensation and their deferral amounts, which are generally not public knowledge, even to all HCEs, of a company.

I doubt that would be a productive conversation. Are you going to tell a COO you are paying her "a lot" and not to worry about the specifics of her refund. "Just trust us, it's correct." Every other payment out of a plan can be quantified to the participant that I can think of. Except ADP/ACP failures.

Thought just came to me: what if a participant is questioning his ADP refund? What if he says to the employer: prove to me my refund is correct. What do they do?

That shouldn't be a problem. Why go through the time, effort and expense to terminate the PSP and immediately start at 401(k) when, when it takes about a hour of work to just amend the current plan to allow a CODA and maybe some match and/or SH contributions? If the new record keeper won't do that, find a new record keeper.

Does the K1 amount get reduced further for 1/2 the SE tax and contribs to the employees? For example, if she has +$150,000, we would be reducing that via the SE comp calculations (taxes and contribs to others). Say it got reduced to $135,000. I would add the $150,000 W2 to that and end up with $285k. But if it's negative, to I further reduce it? In the example just above, the cost of taxes and the ER contribution attributed to her was $15,000. Say, on the K-1, the net in 14A was -$25,000. Would her plan comp be $125,000 ($150k W2 (-) $25k loss)? or $110,000 ($150k W2 (-) $25k loss (-) $15k taxes and contrib)?

Company is LLC, taxed as a partnership. A partner was issued a W2 for $150,000 from which she deferred $20,000. The partner's K1 shows a loss. Do I combine them for plan purposes?

I'm still not sure what that means. Did extra money come out of his paycheck? Or did the employer just send too much? For example, deferral was $1500, but the deposit was $3000.

The ADP test will be deemed to pass. Because of the service requirements of the discretionary match, you will have to run the ACP test.

No you don't. See CBZ's post right above yours.

Why kind of testing? Coverage? Nondiscriminaiton?