BG5150

How can you provide a summary of changes to a plan if you do not indicate what plan it pertains to?

Go into their census screen on the Service tab. In the Years box, check the Service entry. Be sure it says zero.

Here is an example I used when I taught a "lunch and learn" to new hires on Loans many years ago. You have a balance of $20,000 in your 401(k) plan, all deferrals. No taxes yet. You take a loan of $10,000 from your deferral account that you did not pay taxes on yet. You get a check for $10,000 and you take it to the bank and cash it. You get all $1 bills because you always wanted to see what 10,000 bills look like. Then you bring it all home, spread it on the bed, get naked and roll around in it. (My supervisor asked me to take out the 'naked' part for subsequent discussions). So far, no taxes. You do this every day for a month. Then you scoop up all that cash, pile it up nicely and return it to the bank. (STILL no taxes). The next day, you write a check to the custodian for $10,100 for principal and interest. Now, so far, only $100 of that money has been taxed. A week later, you quit and decide you need the money for a "personal growth" trip through Europe. You weren't the best investor, nor the worst, and your account had zero dollars in gains or losses. You get a distribution of $20,100. You are taxed on the totality of that amount. And only $100 of it was taxed before.

Next step, amend the plan to make TH to only non-keys.

I wasn't sure if I had to run the ABT on both plans together first. I just did, and it passes. Both mid-point and ABPT. (So, why am I doing component plans?)

When I run the testing in Relius for the component plan only, these are the results for the 3 HCE: Ratio test: Pass, Pass, Fail Nondiscriminatory Classification test: Pass, Pass, Pass ABPT: Pass, Pass, Pass ABT: Pass, Pass, Pass 410(b): Pass, Pass, Pass (I know this one is irrelevant) Again, 410(b) passes ont he ratio test. My population is: Total HCE: 4, NHCE 17 Plan 1: 1 HCE, 3 NHCE, 70.59% Plan 2: HCE 3 NHCE 14, 109.80%

410(b) is NOT an issue with my component plans. Plan 1 is at 70.59% and Plan 2 is at 109.8% It's 401(a)4, I'm concerned about. EVERYONE in both component plans are getting the 5% GW. Component plan # 1 passes on a contributions basis. The 1 HCE is getting 5% of pay, too. The other plan has 3 HCE. I am maximizing the owner, and truing to figure out how much the wife can get. At, say, $40,000 rate group passes the ratio test. Above that to about $45,000, it fails the ratio test,, but the ABT test, for the component plan passes. Is this ok, or not?

That leads me to the next question. What if I am breaking my plan into component plans (restructuring). Do I have to pass non-discrim testing using ratio test and not ABT? Coverage passes ratio test. I've asked this before. And I was told there is only one ABT for a plan, and therefore, if I'm arbitrarily creating two plans, with no business reason, I cannot use the ABT to pass non-discrim. Again, coverage passes the 70% test.

Do I have to pass my cross-testing with the ratio test? Or can I use the ABT?

So, nonexcludables, 3% SH + 2% GW, cross tested. Otherwise excludables, 3% SH, contribution tested. OK?

Having a brain cramp today. I have a plan that has 3 month wait, entry is date of event. Cross-tested 3% SH plan. Do I have to give the otherwise excludable folks the gateway if I am testing them separately? GW will be 5%.

^ Thanks, Doc. I wasn't planning on excluding them from just the SH. I'm going to exclude them from the plan altogether. deferrals, SH and PS. It should pass coverage.

Can I amend a 2019 3% SH plan now to exclude a certain class of Employee. Coverage not a problem. None of the current Employees thusly situated are eligible for the plan now.

It should be part of the loan paperwork they signed.

thanks, all

We have a company that would like to have each year's PS contribution to be on a separate vesting schedule. It would be a 4-yr cliff. Assume no Top Heavy. So, it would look something like this: 2019 contrib fully vests 2023 2020 contrib fully vests 2024 2021 contrib fully vests 2025, etc. I don't think this is possible due to the minimum vesting standards. For example, someone hired in 2019 has 4 years service in 2023, so the 2020 contribution would have to be 100% vested for that person in 2023, not 2024. Is there any way around it?

I meant someone who owns stock in the company where that stock is not held by the plan. For example, I own 80% shares of the BG Company, and 10 others own 2%. We start an ESOP. We issue NEW shares to the ESOP. Whereas the original owners' share % drops with the issue of new shares, I will be an HCE with respect to the 5% owner rule for quite some time, I hope.

ESOP's don't own 100% of a company's stock, usually. You can have other stock owners outside the plan.

When I worked on daily plans, the forfeitures were usually held in cash, so no dividends.

If the plan isn't TH now, no one is subjected to that schedule. Can't you just amend the plan to have the TH schedule match the regular one? There's no cutback b/c no one is currently on that vesting schedule.

I doubt the original e-mail (if it went out) showed everyone's e-mails. usually, in a mass e-mail, companies send the email to one person in the company and blind copy everyone else, so as not to expose everyone's email addresses. So, I wouldn't use that as proof that you didn't receive it. Do you usually check your spam folder? Or just delete everything automatically? Many times, an e-mail that goes out with more than a couple recipients will automatically get flagged as spam, even if the sender is a trusted source.

Company ABC had a 401(k) plan for several years. In May 2017, they adopted the XYZ MEP. It's an open MEP. How does the ADP test work in this case? Do we (they) do one ADP test for the entire 2017 plan year? Or, do they run two ADP tests, one from Jan to April and the other May to Dec?

Hardships under facts and circumstances can be for almost anything. There are many financial considerations to consider, though. From: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-hardship-distributions So, if they have a brokerage account, or a pleasure boat, or even a coin collection, then they may have other resources available.

So, no 2018 RMD it seems.

Participant turned 70 1/2 this year and died in late November. His RBD is 4/1/19. Spouse wants to roll over the entireaccount now. I believe the RMD must be taken first. Others in my office are sticking to the RBD of 4/1 and she can roll out the entire amount. Who is correct? Cites?