BG5150

A retirement plan is like a gym membership. You have to keep paying for it even if you are not using it. When you cancel your membership/terminate the plan, you can stop paying.

How about that! Hey, IRS,I think my tax rate should be 0%

So, in the absence of anything making the deferrals a catch-up, they will have to make the TH contribution. I don't want to hamper the HCE from making more than just the catch-up.

The amounts in this case will be merely pennies. Not to each participant, but the whole earnings calc.

PS, give us an example of one of the people. How much should they have received via the formula and how much they got? Show the formula and comp.

The usual is about 5 days later. I don't think it's when it clears the participant accounts, that's for sure. Oddly enough, the rules are not necessarily pro-participant, but anti-employer. The DOL wants to make sure the ER is not getting unfair use of the money. So, to me, it's when the funds leave the ER's control.

Just taking the temperature of the room here. What date do you use as the start to determine how late the deposit was. Is it the pay roll date, or the end of the 7-day safe harbor? For example: Pay date: 1/4/21 Seven day safe harbor: 1/13/21 Deposit date: 1/15/21 You you use 1/4 as the starting date for interest calc (9 days late) or 1/13 (2 days late)?

Unless the plan has quarterly valuations, I would go with the 9/30 balance.

thanks!

Company formerly was two partners. One left in 2015, now sole prop. Former partner still has balance in the plan. Can they still file an EZ?

Does anyone have a version with page numbers?

Is this a pooled plan, or individual accounts?

There is no "final" 5500 until the plan is officially terminated.

So, how do I go about contacting the IRS to remedy this miscarriage of facts?

I would think that the nonelective contribution would factor into a "fully-informed decision," too. Are you saying people will remember that 3% but would forget about the match?

Is there still time to do an 11-g amendment? Is it even possible?

Or, at least I think the site is wrong in this case. On the page Is my 401(k) Plan Top-Heavy? (https://www.irs.gov/retirement-plans/is-my-401k-top-heavy), the section titled "Making Minimum Contributions..." it says: "If the average contribution for all key employees is less than 3%, non-key employees also receive that lower percentage instead of 3%." I do not believe it's the average, but the HIGHEST Key EE contribution that is considered here. So, I have one Key EE with a contribution of 2.5% and another with 1.5%, the the TH minimum is 2.5%, not 2%. So who do I contact at the IRS to ask about it? (Or am I really wrong? I consulted Treas Reg 1.414-1 M-7 and the EOB Chap 3B Sev IV Part A.2 which seem to agree with my position)

If it was a pro-rata allocation based on participation pay, but got allocated on full-year pay, it would be considered an excess allocation (unless an 11-g amendment was done and testing then passed--which it would b/c it was only NHCE). Or pro-rata and these people just so happened to get allocated too much by accident.

Update: one of the Key EEs is under 50. I thought they were brothers, but the owner is the father and the otehr key is the son. Ages 60 & 28.

Plan has two key employees who are the only HCE. Plan passes ADP test b/c they defer low amounts, let's say $3,000 each (and they each make $100,000) for simplicity. Both are over age 50. The Plan is top heavy. Because they aren't failing the ADP test, nothing is re-characterized. They did not run afoul of any other limits. Do they owe the 3% TH? Or can we say b/c they are both over age 50 and their deferrals were less than $6,500, they can be considered catch-up and not used in determining the Key employee allocation for the year? (There are no employer contributions.)

So not in time to get it closed out this year...

Why remind everyone about the match every year if you do not have to do it for the NEC?

Is there a way of doing an 11-g amendment letting them keep the higher match? Are they mostly NHCEs?

No. Any SH Match (basic, enhanced, basic QACA, enhanced QACA) MUST get the notice. At least that is my understanding of the rules and the chart I got from the FIS seminar we did in September.

Geez. That's a lot.