BG5150

Employee participated in two plans during 2022 and went over the 402(g) limit by $1,000. Can we just remove the funds from the plan and the ER issue a corrected W2? Before all of the "Nooooooo" answers, consider this: The ER is already reissuing a new W2 b/c of another, unrelated problem. Can/should they "correct" the deferral and remove the funds from the plan? If so, does it get placed int he suspense account or can it be sent back to ER as Mistake of Fact?

Participant contributed in two plans in 2022 and went over the deferral limit in the aggregate. I know there is no distribution after 4/15, the money just stays there and he's taxed twice on the gross excess. However, he lives in California and there is a federal extension for taxes due to the wild fires. Does that 4/15 date for CA residents get moved?

You also need to check how often the match is calculated. Just because they deposit it once a year doesn't mean the match is calculated on an annual basis. (Just like if the ER deposits the match every pay period, it doesn't mean the match is calculated on a per-pay basis.)

How much money is in the plan? Does he even have to file?

Participant auto enrolled and had three paychecks worth of auto deferrals taken. Then she left the company. Age 31. Can she take a permissible withdrawal (plan allows them) and avoid the 10% penalty tax? Or is that only for in-service withdrawals?

Plus there may be different distribution restrictions between QNEC and deferrals, so another reason not to mix the two. Also, if the participant only has Roth deferrals, the QNEC funds should not get Roth treatment.

Ask the document provider. They wrote it.

Being uber picky: TH minimum is only 3% when the highest Key allocation is 3% or more.

This is assuming all four units are the same size and are worth the same. (Would an end unit or higher floor unit be worth more than the others? Less?) Also you don't absolutely know if the owner will live in only one unit. maybe they will decide to tear down a wall and occupy two of the units.

I think FIS/Relius will do that for you. Not sure these days, though.

This is/was my understanding of the rule: A small plan filer can elect to file the same form until the participant count is over 120 and when over that must file as a large plan. A large plan is considered a first year plan over 100 or over 120. And that plan must file as a large plan until the count gets below 100. (*) see blow The 80-210 rule allows any plan to file the same form (large or small) is the count is between 80 and 120. But once under 80, the plan must file as a small plan. Not even allowed to file Schedule H. I am seeing some internal correspondence here, that a plan, once that it is considered large, must still file as large until the count dips below 80. So this goes against my (*) above. When can a large plan filer move from Schedule H to Schedule I? At 99 or 79 participants?

I have a union employee that used to participate in a non-union plan. The employee is still employed at the company but no eligible now due to being union. They just processed a loan from the non-union plan for this union employee. Is this allowed? Loan policy says : "Any Participant that is actively employed may apply for a loan from the Plan." This person is a Participant due to the fact (at least) that they have a balance. And they are actively employed (so, thus can have payroll deductions). However, they are in an ineligible class. The loan policy does not address that.

So then "No"?

Has anyone talked with him about his overall benefits package?

I would think the Trustee has access to participant statements even though it would be on an ad hoc basis (if they aren't online somewhere). In fact, I would think the Trustee MUST have access to that information. Those accounts don't belong to the participant (yet), they belong tot he trust FBO the participant. Same with the plan administrator. I would think they must have access tot he current assets and transactions within the plan.

Can the cost of calculating the interest for late contributions (and preparing the 5330) be charged against the plan? i.e. taken from forfeitures? What about the cost of calculating interest for missed deferral opportunity? I know the interest itself must be paid by the ER.

What would happen if there was a missed deferral opportunity in January and February and then participant maxed out their deferrals in the remaining 10 months. So no QNEC at all is due? No earnings on what the QNEC would have been? Does the plan still have to put a written procedure into place to avoid future errors to comply with self-correction? Or is this not a self-correction even though an error was made?

I know 403(b) Plans do not have to file a 5330 for late deposits of deferrals/loan payments. But does one need to be filed for late ACP refunds?

I know 403(b) Plans don't file a 5330 for late deposit of deferrals and loans, but do they have to do one for late refunds of the ACP test?

An ineligible employee was allowed to make several deferrals. (She works less than 20 hrs a week) Usually, the correction is to either make an amendment to allow the person early entry or to refund the money. This is a 403(b) plan, so I believe the former is not an option due to the universal eligibility rules. (I thought if you let one of the <20 hrs people in you had to let them all in...) But, before this was caught, the account was reduced to zero via monthly fees. Are we done? Or does the account have to be sort of rebuilt and distributed so the taxable income is realized by the employee?

If you have a valid beneficiary designation on file, to you segregate those assets to the beneficiary right away? For example, if Sam passes away and there are two beneficiaries, his son and daughter, do you split the account up for them and wait for then to claim the benefit? Or do you leave the funds in the deceased participant's account until they come calling?

Maybe ask FTW.

Side note: does the plan offer hardships for safe harbor reasons? B/C it doesn't seem like his request satisfies one of the reasons...

And remember, the 50% of vested account balance must subtract out the value of any existing loans.

If you think about it, all 401(k) Plans are really just Profit Sharing plans with a salary deferral feature. (Sure there are 401(a) qualified plans that have a 401(k) feature but the discretionary contribution provision is not chose int he adoption agreement, but the underlying document certainly addresses it.