BG5150

Does that $32,000 vested balance INCLUDE the loan? If so, the add'l amount the participant can take is $12,000 (($32,000 x 50%) (minus) outstanding loan balance)

What does the definition of an HCE have to do with a top heavy plan?

It's not exempt from top heavy, it simply is not top heavy. From 416(g)(4)(H): (bold emphasis mine) (H)Cash or deferred arrangements using alternative methods of meeting nondiscrimination requirements The term “top-heavy plan” shall not include a plan which consists solely of— (i) a cash or deferred arrangement which meets the requirements of section 401(k)(12) or 401(k)(13), and (ii) matching contributions with respect to which the requirements of section 401(m)(11) or 401(m)(12) are met.

Where does it say you have to put the corrective match into QMAC? EPCRS mentions a "corrective employer nonelective contribution." Notice it does not include the word "qualified."

Don't you have to do ADP/ACP testing on the folks who defer but don't qualify for the SH yet?

What kind of time frame are we looking at here? If someone has been working 18 hours a week for half the year, but then summer kicks in and they work 25 hours a week for a few months, are they in the plan? Also, how do you measure? Is it an average? Over how long? What if someone works 35 hours a week every other week? It averages 17.5 hours a week. But each week they actually do work, it's 35.

I would just do the 11-g amendment as long as this person s an NHCE. If you retroactive amended the plan for everyone, you would have to re-amend to bring it back to 21. Unless they WANT to make it 20.

Here's a situation (not the current situation I have): Participant's spouse dies. Funeral parlor needs $5,000 deposit today. Does She have to keep the body in the funeral home (probably incurring additional expenses), wait a week or so to apply for a hardship, then write a check to the funeral home? Costs for funerals/burials come fast and furious. Some fund houses have a 3-5 business day turnaround. And nevermind if this is a brokerage account plan. It could take two weeks for money to be available. (And add to the fact pattern, the plan allows for hardships for the IRS safe harbor reasons only; it's not fact & circumstances.)

A participant has an expense that is due immediately that would qualify under a safe harbor hardship distribution. Since payment is due, like, right now and they pay it with a credit card, can they use a hardship distribution to reimburse themselves for that cost?

Thanks. That's what I thought, but I was tripped up with the universal eligibility aspect. To me, like in a 401(k) plan, if someone moves to an excluded class, they are no longer eligible to participate.

Fact Pattern: 403(b Plan EXCLUDES employees who normally work less than 20 hours a week. Employee was working full time for a few years and now is on an abbreviated schedule of 15 hours a week. Question: Does this person continue as a participant in the plan? Or are they now no longer a participant because they are in an excluded class?

I would look in the plan doc to see if "determination" date really means what they think it means. I don't think it could mean "whenever the Employer determines they want to make a contribution."

Maybe ASPPA can answer your questions directly.

True. From time to time I do a calc for myself and check vs Relius (or Datair or whichever the software du companie is). If I'm off, it's my mistake, not the software.

Doesn't your software calculate the deduction limit for you?

I always thought if you had fail safe language you COULDN'T use the ABT. Today I learned.

You do not need a "failure" to execute an 11-g amendment. From a Relius write up from a while back: Does the plan actually have to fail nondiscrimination testing before the plan adopts an 11(g) amendment? In other words, must the employer make the contribution, fail nondiscrimination testing and then adopt the amendment, or, can the employer amend the plan without failing the test first? No, the plan does not need to fail nondiscrimination testing before adopting an 11(g) amendment. The preamble to the 1991 Code 401(a)(4) regulations (Note: The IRS reissued the nondiscrimination regulations in 1993 but did not make changes to the rules regarding 11(g) amendments except to add a mechanism to correct a benefits, rights and features problem) states: “In order to permit employers to make practical choices based on administrative concerns, use of the retroactive correction period is not conditioned on a demonstration the plan actually failed to satisfy the nondiscrimination requirements. In addition, correction is not limited to amendments correcting disqualifying defects.” Accordingly, a plan sponsor could amend the plan to place certain highly or NHCEs in different classifications so that it doesn’t have to make as large of a contribution to the NHCEs to pass nondiscrimination

Plan has three allocation groups, with pro-rata allocations within each: Owners (2 participants) Other HCE (3 participants) Staff (6 participants) Passes testing at gateway (4.25) Right now HCE group gets 5% of pay. They want to give ONE of those HCE 8%. Can they do an 11(g) amendment giving the HCE 8% and 2 NHCE also 8%?

The 11(g) Amendment is only available if the plan does not have fail safe language for the coverage.

it might take more than one person... If you are trying to satisfy the rate group test, then you need to get the right number of people into the HCEs rate group; enough to get that group to pass. That, to me, is as much art as it is science. If you are using the ABT, then, I guess you can get one person's EBAR high enough to get the group's average up, but I found that increasing a few people just a little bit might be better than giving one person an out-sized allocation. (eg: would you rather give one person making $30k a $1,000 contribution or 3 people making that amount $333?)

Hmm. Did you see Bri's note above mine? Is this ineligible match due to ADP failure, or the ACP refund itself? Side note: there would NOT be a rollover from the IRA back tot he plan. You/they would inform the IRA holder that $x was an inadmissible contribution to the IRA and it should be removed from the account and transferred back (with earnings) to the plan trust. A rollover would generate a 1099. There should NOT be a 1099 for this reversal. And this is why HCEs are last in having their accounts distributed in a plan term. Gotta wait for the testing to be done. Or risk having to go through these shenanigans...

How much is it? And how many people would it be reallocated to?

Nope

If the entry requirements are different you have to run an ADP/ACP test.

Side note: why even have a SHM?