BG5150

Side note: I wouldn't get any of the optional modules (other than the 2, I think, you must get). I don't think it would be impactful.

I have a plan that wants to do a fixed match in excess of 6% of pay (dollar for dollar up to 10%) --generous, I know. There's a 3% SH Nonelective. Oddly enough, I've never had to perform an ACP test on match in a SH plan. I know I can test ALL the match together. But if I just want to test the non-safe harbor piece, what percentages am I using? I'm guessing if someone has a 10% match, do I give them a 4% in the ACP test? Someone deferring only 6% gets a 0?

Company had SIMPLE IRAs for their EEs in 2017 & '18. There were deferrals (one in '17 and one in '18) that were withheld but not sent to the IRAs. The IRAs are closed (they still exists, but no new money is being contributed) Company has 401(k) Plan for 2019. Most of the people still have the IRAs as they are waiting to roll the money into the K plan. One person cashed theirs out. They are small amounts, less than $50. I'm guessing they need to deposit the amounts to the existing IRAs. What about the one who closed theirs?

I can probably come up with billable hours totaling $6,000. Send them my way. ;)

We have a SH plan that was effective 5/1/2019. We generally write plans with a full initial year, but this one slipped through the cracks. Can we amend the plan to be effective 1/1/19 (with a deferral start date of 5/1)? Could I interpret this as an allowable amendment because it is increasing the SH benefit (12 months of compensation compared to 8)?

To answer my own question, yeah. At first, it's not he list of prohibited changes, but you can if certain requirements are met. A mid-year change to modify (or add) a formula used to determine matching contributions (or the definition of compensation used to determine matching contributions) if the change increases the amount of matching contributions, or to permit discretionary matching contributions. However, a plan may make such a mid-year change if: a. the change is adopted at least 3 months before the end of the plan year, b. the change is made retroactive for the entire plan year, and c. the plan sponsor gives an updated safe harbor notice and additional election opportunities to each employee otherwise required to be provided a safe harbor notice at least 3 months prior to the end of the plan year.

I know I can add a discretionary match to a safe harbor plan mid year. But can I add a stated match? We have a client that wants to make a big match on top of the 3% SH. More than the discretionary match constraints would allow.

That's the one! Thanks so much!

Does anybody have a good link to this document? Or a copy of it? All the links I could find are dead.

He notified us about a week ago.

The BPD says this: It doesn't mention anything about the 4/15 deadline.

So, this participant CANNOT take the distribution AT ALL until they have a distributable event?

Does an one have first-hand knowledge that there is a significant (or slight) chance that answering the late deposit question on the 5500 will result in an investigation? I've been hearing it for years. We've answered yes to more than a handful, but I've only been part of two DOL investigations in the past 10 years, neither of which involved late deferrals.

So, if a person defers $10k into two unrelated plans, they are stuck with the double taxation with no remedy?

Was the 20,000 including penalties of some sort? The calculator back them was about 3% per annum. If the interest was only $400 on 150 payrolls, that's like $3 each time. If it was higher than 3%, then each p/r's interest was even less. How did the DOL get $133 each?

So, if someone missed the 4/15 date. Do they still have to take the funds out? Or can they wait until have a distributable event.

Great. Thanks!

Participant has an extension on his personal taxes. He had a 402(g) violation--he had two jobs in 2018 and deferred $14,000 to each. Does the personal extension also extend the 4/15 deadline for removing the 402(g) excess?

Where does one indicate that they want to file through VFCP?

So, it would be stupid to "reduce" safe harbor and not suspend it. (Unless you are ok with your testing).

I was never a big fan of using the DOL calculator. However, it's been entrenched in every ecosystem I've worked in. Never heard of either service not taking the results, though. Any stories to the contrary?

I agree!

Is the Excise tax 15%? I always forget which ones are 10 and which are 15. I believe the only time you are really allowed to take the penalty tax and apply it to the accounts is if you are applying under VFCP. Something so small, sure. Add it.

OK, that was the first part of the question. Now to the crux of my inquiry: let's say all the proper notices were produced and provided. The ER want's to reduce the benefit (in effect) What is it meant by a "reduction" in the SH benefit? 4% NEC to 3%? Could they modify compensation that in effect reduces the benefit? For example, exclude commissions? (assume that 414 passes).

Notice 2016-16 states that a permissible mid-year amendment for a SH plan can be: 1.401(k)-3g says you can change SH plan mid year if a) there the company is operating at an economic loss OR b) the ER adds the the annual notice a statement that the plan may be amended during the year to reduce or suspend the SH NEC contributions provided a supplemental notice is given at least 30 days before the reduction. I checked the SH notice that comes out of or doc system (FT William) and I don't see such a paragraph. So, are we out of luck under b)? How would they stop it, then, if they can't afford it but not operating at an economic loss? Can they just send a notice now that says: effective Sep 1, we are stopping the SH? (plus all the other conditions, like letting participants change their deferral elections, etc).