BG5150

I can probably count on one hand the number of PYT plans that I've worked on that the company actually took heed of the PY numbers and adjusted the HCE deferrals accordingly. I think as TPAs we should condition the clients that failing ADP/ACT testing is not a bad thing, and that given what the staff is doing, the highly paid workers can put the exact most into the plan the law allows. Especially now that taxation of refunds come in the year of distribution.

Does EPCRS address late deferrals?

Say you had $100 of interest to spread out over like 250 people for a late deferral in 2017. Many of the allocations are under a buck, and in some cases like $0.07. What would you do for the people who terminated and took their money? There are quite a number of these folks. To me, it's pointless to allocate 50 cents (or even 3 bucks) to someone who left so long ago. The funds would probably just get liquidated as fees anyway.

You can wait until more than 12 months after the plan year end to correct with a QNEC. See EPCRS for when tests are not corrected w/in 12 months. One option is QNEC. It makes no mention whatsoever of prior/current year testing. (The other option is refunds and a 1-to-1 QNEC in the amount of the gross refund). Thing is, you don't want to do this more than once as it goes against self-correction principles (putting in practices to avoid the error going forward).

This is truly an awful month to start taking out funds that had gain on them last year...

These are questions better left to your financial adviser. Generally, we here are not investment professionals, we deal with the administration of plans.

There was no yes or no question. It was an either/or to some degree. To expand on my answer: I don't think that an greater compliance measures need to be taken just because this was an HCE. I would certainly take steps to enhance the procedures to make sure this doesn't happen again.

Then they MUST supply the SPD. Here's a quick write-up: https://erisapros.com/faqs/spd-delivery-requirements/

I would just correct it normally.

The payroll company did calculate the TH minimum and related that to the company via the annual report. (However, I'm not sure if the match was calculated correctly, so the TH numbers are suspect.)

The question is, I think, when is the IRS late fee due? How long do you have to pay after you file?

Side note: what happens if you give participants the SPD when they become eligible. They even sign a piece of paper saying they got it. Then they lose it. What accommodation does the Plan Administrator have to provide if the participant asks for a new one? Can the participant be charged for printing another copy?

I just wanted to see the text of AO 77-08.

Do you have a link to that?

What does the document say? Is it something like "as soon as administratively feasible after the request is made"? If so, I don't think it's "administratively feasible" to wait to see what the market does. If the paperwork is in good order, and the Plan Administrator is in the position to request the funds from the Trustee, and the Trustee is in the position to liquidate the appropriate investments and remit the funds per the participant's instructions, then I don't think they can wait at all.

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...