BG5150

Not sure what you mean there? Am I not allowed to use negative numbers in my question?

Doing a Profit Sharing. The only reasonable way the test is passing is using the accrued to date method. Contribution basis is obviously out, and the regular benefits basis is failing too. The accrued to date method is passing. But I want to make sure the compensation used is correct. Does negative income (a loss) get used as part of the average? Or do you use zero for those years? Example: Year 1: 100,000 Year 2: (50,000) Year 3: $100,000 Is my testing comp $50,000 or $66,667?

Woman owns half of an S-Corp with husband. Each takes $40,000 W2 income, defers $15,000. Also owns partnership w/ husband (50-50). Both have losses of ($150,000). Each. Because there is a controlled group, can they make the 401(k) deferral b/c it came from W2 wages? Or are they out of luck, because the combined income is negative?

Did the sponsor get an ACKID? If not, there might have been some sort of filing error. Was the 'Amended Return' box checked on the form? I find it odd that the original one went away. Did you try searching with the tax id or employer name instead of plan name? Did they get an ACKID the first time? Try searching with that. Have all this above info ready for when you call the DOL.

ADP/ACP tested plan. Plan allows for in-plan Roth rollovers. HCEt does the Rollover early January of entire account. In February, plan fails ADP & ACP tests. How does the refund get processed? How are earnings taxed? Are they? All the funds are now in the Roth Rollover account.

I agree. It's a valid SH Match under a QACA.

There are two HCE tests. Ownership. If you are in this group, you are an HCE. Compensation. If you are in this group, you are an HCE. You only need to be in one of the groups. You can be in both. And, indeed, many owners are, but not necessarily.

What hasn't been your experience, Mike? Do you just use the VFCP calculator for this stuff? Even just a few missed matches? For 2020, VFCP returned 4.06%. (I used $1,000 from 1/1/2020 to 12/31/2020, amount due $40.61) If I only have a handful of transactions, I just run reports from the vendor for the dates I need, and calculate estimated earnings from that. I ahve a spreadsheet, and I just enter open balance, contribs, withdrawals, loan payments and it does the rest. If it was a big plan, I might be tempted to use VFCP.

We have stuff like: L Ramirez DOB 1971

My problem is that the ER doesn't have the SSNs.

That's at lease what I recall. I could be wrong. I'll let someone else chime in on that. PS: If I'm right, the the match can be even higher to get them to the 415 limit. Again, watch the deductibility limit. And watch out the staff doesn't wise up and reap a huge match.

Why would interest rates play into anything? It seems as though the participant has allocations to the match, so it's very simple to determine a close approximation of how much the earnings would have been. If it's only a few missed matches, once the reports are run, It'll take just a few minutes to put the numbers into the formula in a spreadsheet.

If you want to get the match even higher, I think the third tier could be, say, 300% up to 6%. Tier 1: 6% of $125,000 = $7,500 Tier 2: 4% of $125,000 = $5,000 Tier 3: 300% of 6% = $22,500 Total Match: $35,000 You would have to watch out for deducibility, but the match is only 28% of pay.

Church, the assets of the plan are in an employer-directed pooled account. Not individual accounts. Certainly not a MEP. Employer says they do not have the records. Also says these employees may have had fake SSNs. Small employer, I doubt they vigorously examined the employment status of their hires.

No records left for these people. Company closed up in 2011. Nothing in the r/k system here. Been here since mid-2000's. I think sending them to an ERISA Atty may be a good idea. As to the plan doc:

My client only has names like L Ramirez born in the 1970's sometime, or S Kelly born in 1981 as records. No SSNs. What happens then? Can't even escheat to the state w/out an SSN.

I would feel confident in correcting the match as described in the OP via SCP. I would add earnings from the time each of the original matches for the other EEs were processed.

Where does it say insignificant failures are in the 2-year window. I see where that is the case for significant failures under SCP, but not insignificant.

Plan terminated a bunch of years ago, and accounts were paid out in drips and drabs. The only accounts left are for the owners and several people who left the company long ago (like 2010, 2011-ish). The employer doesn't have SSN for these people, so rollover places wont take the accounts. Pooled PSP, not at a nat'l provider or anything like that. What becomes of those accounts?

Bill, do you send them to everyone who had a balance on 12/31 or currently? For example, Kim is termed and had a balance on 12/31/20. She took a full distribution on 1/31/21. Do you instruct the plan administrator to send her an SAR?

And don't forget ownership attribution. Side note: when did they get rid of HCE attribution due to compensation? Like when the wife was an HCE due to comp only and the husband wasn't. He'd be considered and HCE by attribution. I seem to remember it in the mid-90's

But then why is she in the Rate Group testing? I guess rate groups don't get separated into excludable/non-excludable?

Never mind. Asked and answered:

I have a participant who was eligible for the 401(k) piece of the 401(k) plan in 2020. She had deferrals, got a match and a Top Heavy contribution equal to 3% of comp minus the match. Comes out to about 2% of TH. She is not eligible for the Profit Sharing component until 2021. It's a cross-tested plan. Gateway is 5% as an owner is getting a 22% contribution. My software is saying the plan passes gateway even though the participant above is at 2% ER contribution. Brain cramp right now. Is that right? TH only doesn't need a gateway? She shows up on the rate group test.

404(c) is investment related. I don't see where vesting comes into play. And, I don't think daily valuation is a requirement either, just that the participant must have control over the investments. Nothing in there says that an investment be immediately under the control of the participant. The plan can impose restrictions on the frequency of changes. I believe the participants must be able to give instructions at least once every quarter. I think is was the "final" 401(k) regs that added the vesting requirements to the statements? Or, at least, something after EGTRRA. Here's the 404(c) reg: https://www.law.cornell.edu/cfr/text/29/2550.404c-1