BG5150

We don't do Plan A. It's with Globo-Payroll.

I don't have the BPD for (A). The BPD for (B) [Datair] says that the participant does not have to get the allocation if they are in another plan and the ER has provided in the AA that the minimum will be met in another plan. I am guessing that (A)'s doc is similar. I'm not THAT concerned, and I think it would take an overly-zealous investigator to suggest the TH is actually due to both plans. No one is getting jipped here.

Company has two plans (A) 401k/Match (B) Profit Sharing. Together they are top heavy (and individually, too). Plan (B) states the TH will be made to Plan (B) Plan (A) is silent on the issue. The section in the Adoption Agreement does not even mention the existence of the other plan, it's entirely blank. Does that mean technically the TH is due in BOTH plans?

So, then to answer the OP: if the plans are covered by ERISA, then yes, they must be supplied. And to the OP: If the company does not provide an SPD, how are the employees supposed to know about their plan(s)?

$425 is cheaper than $750 for DFVC.

Is failure to provide an SPD an ERISA violation? https://www.chard-snyder.com/employers-and-advisors/compliance-watch/what-is-a-summary-plan-description-and-when-must-it-be-provided

I've seen loans done that way (for whatever reason). But, ostensibly, loans aren't taxed.

I would process it as a $100 fee then a $1,000 distribution. $800 check, $200 withholding. $1,000 1099-R.

Does anyone know if Datair will calculate a QNEC for a failed test? If so, how?

Time for a new accountant...

We have a company that did not remit it's 12/31/2019 deferrals on time. Using the 7-business day rule, they were due 1/10/20. So do I use a 2020 Form 5330? Can I use a 2019 form? They had 2 other late payrolls during the middle of 2019, so I'm filing a 2019 form anyway. I just don't want to forget about this at this time next year.

The rule is there not to get the funds into participant accounts, but to keep participant funds out of the hands of the employer. As soon as deferrals (and loan payments!) are recorded on employees paychecks/direct deposits, then that money is no longer the employer's. As long as the funds remain in the employer's bank account, it's like an interest-free loan from the 401(k) accounts to the employer.

I guess it depends on if the TPA charges for a failed ADP test.

And remember, with prior years testing, you know how much the HCEs can put away AS A GROUP. So if the NHCE % was 1.5% last year, the top group can put away 3% on average. That's great if everyone is on board. However, say, all the HCEs decide to put away 3% for the year, then one of them decides to spot for whatever reason halfway through the year. The the other HCEs can have the % raised a little. But nobody is going to really know that. The plan administrator cannot say, "hey guys, Erica decided to stop deferring for now, so you can go a little higher on your contributions." I like to reiterate to the clients that if the plan fails testing it's not a red flag with the IRS or anything; and no one is going to turn them into the DOL. It's a fact of life. And again, if the HCEs did the absolute maximum under the testing rules, hit the numbers exactly, then whatever above that is going to be taxed in their paycheck anyway. (And, if the funds go up during the year, they get the earnings in the refund, too. Sure, they pay tax on it, but it's still extra money. It's like saying "here's an extra hundred bucks, but I have to keep $35 for taxes, so I'm just gonna give you $65. For doing nothing, really." I'd take that.

Is it a problem that the test fails? The only issue (to me) for a failing test is that the HCEs will defer income tax on some of their deferrals until the following year.

If a participant and his primary bene are deceased. There are two contingent benes with 50% allocation. If one of the contingent bene passes away, would the surviving bene gain 100%?

What year(s) would that match count for regarding TH remedy? Could it do double duty--first and second years?

GoFileRoom

But the 100% QNEC should be ok, right?

EPCRS calls for a 50% QNEC for failure to implement a participant election. What if the ER wants to make the person "whole" and contribute 100% of the missed deferral? I'm guessing that would be ok, because EPCRS are suggested corrections, and the participant will definitely be better off with 100% vs 50%. But what about 415? What year would that apply to? If the 50% QNEC was supposed to be $5,000 and they put in the full $10,000, what year(s) do these QNECs affect? What about for ADP testing.

Even for a SH Plan?

Can I amend a SH plan now to change PS method from pro-rata to new comp for 1/1/20?

They could, but why would you want to? It's not that onerous to put one together. It'll probably take you longer to answer all the IRS letters you'll get than to prepare the EZ for the next five years.

It applies to QACA. Still have to make the match, though, if that is the SH contribution.

Would a plan get disqualified if no notice was given, but the fine was paid?