BG5150

We have a plan that has a 21/1, quarterly entry policy. However, they started letting a bunch of people defer early. I know one correction is to amend the plan retroactively to allow them in. We have four people involved and 1 will become an HCE in '17. So, it's a 75%-25% HCE/NHCE ratio. Is that ok? My main question is: do they have to let everyone in whom the ALLOWED to defer? Or just those who CHOSE to defer. For example, if we have 12 people hired in '16 who were given the chance to defer, but only the aforementioned 4 people chose to do so, whom do we have to structure the amendment around?

...and under $10 no 1099-R needed!

Does he HAVE to get a PS contribution to begin with?

Spiritrider: 1) You wouldn't be rolling anything over in the first place. It would merely be a transfer. No 1099's. 2) I don't have much experience with choosing different vendors and their limitations. But you originally mentioned a no-cost plan at Fidelity. I'm sure there are LOW-COST options that allow for after-tax money. If they go to a TPA, chances are it will have its "own" document that can accommodate a myriad of options. 3) For a one participant plan, you are only going to need a 1099-R (maybe two?) probably only once in its lifetime--when it terminates.

Ooops.

He is excludable from the testing because he is terminated with less than 500 hours. Nevermind.

OP, just curious: what is your relationship to this client? A few points on your original post: As people have said, you won't terminate the old plan, it will just become a one-participant plan ("Solo-K") because of its make-up. Plans are free to move their assets to other providers whenever they want, how often they want. Where the assets are held has no underlying affect on the plan itself. You mentioned brokerage accounts. Will the brokerage house separately account for the different contribution types that may be put into the plan? (401(k)/Roth deferrals, Match, Profit Sharing, After-Tax, Rollover, etc) There may be withdrawal restrictions on some of the money types, as well as taxation issues on distribution. My suggestion is that you find several Third Party Administrators in your area whose primary job it is to take care of these things. Ask them about servicing a 1-particiapnt plan. There may be some up front costs to transitioning to a new plan document and client on-boarding, but nothing even close to $20,000. An ERISA attorney won't even be involved.

Failure was <=3 months. Plan effective date was 10/1

Keep in mind, once you transition to current year testing, you are stuck with it for at least 5 years.

^ no. (about needing the rate groups to pass) You can split your population into two "plans." The first has the offending HCE and a few NHCEs enough to pass coverage (in BOTH plans!). Then you give them all the same ER contribution. That plan will pass on a contributions basis. It's usually better to use the older NHCEs in the first plan. That way, the second plan the participants with the lowest EBARs are out, making it easier to pass the rate group or ABT. The second plan, you allocate in the manner you intended. You can then run the nondicrimination tests for that plan in either the rate group testing on an accrual basis (assuming Gateway is satisfied), or if necessary, the ABT. This is assuming that everyone is in their own group for allocation purposes. You probably would only need an 11-g amendment if you are failing somethinge due to the last day or 1,000 hour rule.

In my reply box, I can drag files or choose them. See attached screenshot. screenshot.docx

Can you utilize component plan testing? Sometimes known as restructuring?

I just attached the last spreadsheet I had open that didn't have client info in it.

Have fun with it!

I was able to upload a spreadsheet just fine.

Test 2016 Partic Count.xlsx

But I know I saw it somewhere.

I am writing a plan with effective date 1/1/2017, but a deferral effective date of 4/1/17 so I can implement an EACA. Eligibility is currently 21/1 with plan entry dates of 1/1 and 7/1. Do I have to do anything to make those who would have entered on 1/1 actually active on 4/1? (Because 1/1/17 there were no deferrals allowed. Absent any specific language, would those eligible on 1/1 be able to make deferrals on 4/1, or would they have to wait until 7/1?)

I seem to remember reading that the earnings need to be deposited within 5 business days after the calculation date, but I cannot find that in EPCRS.

Can it pass BRF?

This is only going to be relevant for a small population of plans. Think about who would take advantage of this, especially now that there are Roth 401(k) contributions: pretty much only those participants who are already maxing out. And usually who is that? The HCEs. Granted, there are some NHCEs who max out. But, for most plans, it will only be a very small portion of the staff (unless you have a professional group with a top paid group...but, again, that will be a small portion of plans). Then what happens when the NCHE(s) leave the company? Are you going to tell teh HCEs they can't make voluntary after tax contributions any more? Passing the ACP test would probably be a difficult endeavor. Does this mean you shouldn't do it? Nope. But just be aware of the demographics of the employer and see if it could fit. It seems like a great idea until you run the numbers through that ACP test...

Not for nuthin', but you HAVE to 'advertise' the feature to ALL participants.

Well, that's just plain wrong, I think. Is your employer planning on terminating the existing plan? If so, you won't be able to make 401(k) contribution for a year after the current one completely closes down and has all its assets paid out. If not, then there is no way for you to "save" your money and then deposit it at a later date. Plus, they can't make you stop your 401(k) deferrals outside of amending the plan to just not allow them any more. If they did, you should get a Summary of Material Modification detailing the amendment to the plan. Again, if the deferrals are suspended in the plan, you won't be able to just write a check from your bank account for the deferrals you saved on your own. The match is a different animal. The company can amend the plan to stop the match any time they want. (pretty much) You are not in an enviable situation here, that's for sure.

Can the QACA escalation go beyond 5 years as long as it's capped at 10%? Or is that 5th year the high as it goes and stays there?

Oops. 3.5%! Investment house is giving them a breakpoint if they have auto-enroll and a "4%" match. Not sure what that means. For some reason I was thinking QACA and 4%. But I knew there's a .5% at the ens of the QACA match so I added up. It's Friday after a snow day. I'm not firing on all cylinders.