BG5150

New idea: Plan 1: 100% to 3% of pay Plan 2: 100% to 0.75% of pay Coverage passes. What about BRF? Can I use Nondiscriminatory classification test?

The original admin was a big payroll company. Though "incompetent" may be a rough word, sometimes it think it's accurate... To confirm: Plan was NOT set up as SH. No other plans. No match. I forgot about the 3% first year thing, but it still doesn't change the TH bugaboo.

If a plan refuses to pay the TH, isn't that a DQ event?

Controlled group. Two different plans. Must be tested together due to coverage. Plan 1: Discretionary match: 100% up to 4% Plan 2: Discretionary match: 0.00% Do I have to test this for coverage? BRF? will zero discretionary match fail one or both current/effective availability?

I believe the plan was communicated to the plan. I also had the disqualification idea. So if the plan is disqualified it's as if it never existed and they can start a new one right away?

Plan started in 2018. Only the owners deferred. Obviously: ADP failed. Refunds done. Obviously: Plan is TH for '18 & '19. Owners stopped deferring for 2019. Not sure if any were made, but let's call it zero. Question: Is there any way around the $40,000 Top Heavy contribution that is due for 2018 given this fact pattern? (No TH for 2019, as no deferrals for keys) [I thought, aggressively, we could have had the refunds as 12/31/18 liabilities and accrued it back and thus have EOY '18 palace of zero. But one key was over 50, and some of his deferrals were considered catch-up and stayed in the plan....) ]

nope

My record keeps is telling me Relius doesn't do coupon loans. Does the program have the ability to generate a book?

I'm trying to talk a client (a big client) out of having coupon loans. They don't want to take on the responsibility of taking money out of people's paychecks. I'm trying to go the "you need to be reasonably sure these loans will actually get paid off, and coupon loans makes this job very difficult" route. Any other thoughts?

That's not the answer I was looking for...

Controlled group. 3 companies A B & C. A does not pass coverage on its own, B & C do. I can test A & B together, b/c together they pass coverage excluding C. C passes excluding A & B. Can A & B have different SH formulas? Ie, one a 3% and the other SH Match? If not, could I have A with SHM plus a discretionary match (that satisfies ACP SH) and B with just the SHM?

I think they structure those questions these days only with "All of these are True except..."

We have a bunch of plans that allow in-service and/or partial withdrawals fall all accounts, whether or not they are fully vested. Can we amend those plans to allow inservice or partial withdrawals only for fully vested accounts? Would that be a cut back?

Are you doing a valuation of the trust every time someone wants to take a distribution? Pooled accounts aren't subject to short-term fluctuations unless frequent valuations are done.

I would reword the tiers. For the first 3, I would add "if you are an NHCE..." For tier 4, I would change it to "if you are an HCE OR you make more than $125,000..." Because why you have there, an NHCE who makes more than $125,000 would get no match at all! Also, I would put some >= or <= rather than all >'s and <'s, because if anyone has income on the button, they get no match. For example, if someone makes exactly $45,000, then they don't fit into either 1 or 2.

Did B have a plan in 2019 with deferrals? If so, they can't have another 401(k) plan for 12 months after the last deferrals are distributed from the terminated plan

So, if it's not a recapture account, the revenue sharing deal is between the TPA and the provider. The the TPA tells the sponsor (employer) that it will offset the plan's fees by the payment. If that's right, the sponsor really has no say in the matter, except determining if it thinks the fee the provider is paying the TPA is fair given that the funds originally came from the plan. The TPA would simple get to keep the difference between the payment from the provider and the offset fees. What the TPA does with that difference is up to them--they can earmark it for future fees of the plan to the extend future payments fall short. Or they can just pad the company's profits. Or do a profit sharing to its own plan. Or use the funds to add staff or technology. The list is endless. At least that's the way I see it. I think the 408(b) Notice should outline the fees paid back to the TPA. The Service agreement can say any revenue will offset fees. But I don't think the SA needs to say what happens to a surplus. If there is extra laying around and the revenue doesn't cover fees, the the TPA can discount the fee, using the slush fund. Example: Slush fund: $1,000 2019 Revenue: $2,000 2019 fees: $3,000 Invoice: Fee: 3,000 Revenue sharing; (2,000) Discount: (500) Due: 0

When do you complete your compliance testing for plans moving to a MEP? Unlike a regular plan termination, where we still have the assets and can do all the testing and required corrections and contributions before the assets get liquidated. How do you handle that for a plan leaving for a MEP? Just do the annual work and do the corrections/contributions to the new plan? Hold off on the transfer until it's all done?

Here's a quick rundown on if/when they are plan assets https://www.benefitslawadvisor.com/2013/07/articles/erisa-fee-recapture-accounts/dol-provides-guidance-on-erisa-fee-recapture-accounts/

If the board wants contributions to be fully vested immediately, they can do that without being safe harbor.

What does the document say?

Why do you believe that? I see nothing in 402(f) that says there is a cutoff. If it's an eligible rollover, then they have to get it. "There's no taxes taken out, so they can just roll over the entire amount" you say. however, how does the participant know that? 402(f) notice. The notice is for eligible rollovers, not eligible rollover distributions where there is withholding.

But the gain on that investment came from dollars provided by me. I took them out of my pocket, parked in the 401(k) plan for a short time and then was taxed on that amount on the way out.

How does the arithmetic work if there is (nearly) zero gain in the account. For instance if the money was invested in the money market. Scenario 1: Account balance $50,000, salary $100,000. Income $150,000. Scenario 2: Account balance $40,000, loan payment $10,500, salary $100,000. Income $150,500. I look at it this way: say I always wanted to see what $20,000 in cash looks like? Where can I get my hands on some cash? My 401(k) Plan! I'm conservative, so I've kept everthing in cash. I have $40,000 in there I haven't paid taxes on, so I take a $20,000 loan. I get the amount wired to my bank account and then proceed to get 20,000 singles in cash from the teller. Then I go home, dump it all on the bed and roll around naked in all that cash! $20 grand, tax free! whoo hoo! Then the next day, I stack it neatly up and I'm ready to bring it back to the bank and put it into my account. Still not taxed. Now I'm gonna pay it pack. Lets say there's $100 of interest due by time I pay it back to my account. So, I reach into the coffee can and pull out a $100 bill that I've PAID TAX ON ALREADY, and put it into my account, along with the original 20 large. Next day I write a check for $20,100 which goes into my account in a couple days. Then I get fired. (I skipped work the day I was rolling in the dough, so to speak). So I want to take a distribuiton. I take it all in cash. My 1099-R is going to say $40,100. I will be taxed on my $40,000 basis, plus on the hundred bucks I've already paid tax on.

Is it that hard to use the participant's individual rate of return? Or even the plan's rate of return? Will the record keeper not calculate that for you?