BG5150

It was more of a "just make sure" kinda thing. But I guess if his benefit was calculated on a full year basis, the test would bomb just as bad. You just need to make sure your testing software is set up to do the test on full-year comp, but the allocation software uses participation comp.

As long as his benefits are being calculated on partial year comp, I believe you can still test on any definition of comp that satisfies 414(s).

Would the OP lead to a deemed CODA and thus $20,000 in deferrals?

The are out of luck for deferrals. S-corp dividends and not eligible comp for qualified plans; just their W-2 wages. They can allocate a PS enough to give them a total of $53,000 (+6,000 if they are over 50). But who knows how much more it'll cost for the staff?

This could all fall apart if you add a 3% SH in there, right? You would have to test it on a benefits basis? Fact pattern: 3% SHNEC. $20,000 PS to be allocated on top. In the past, it was allocated using an integrated formula (100% of TWB, but integration % was small, ~1%). Was thought ok, b/c the PS is on an integrated formula. New comparability allocation method, each in own group called for in doc. But I thought, after reading this thread, we would need to test both the PS & SH on a benefits basis b/c you can't integrate the SH piece with the PS and the HCEs will have a higher overall contribution rate.

^ or is it the date they actually file? I've talked to some accountants who say it's okay to accrue the deferral as long as it's actually made before the due date of the return. For example, an owner files his taxes on June 1, but he has until 9/15 to make all his contributions. And then some say everything has to be in by the time they postmark or otherwise file their return.

You would only have a 410(b) coverage problem if you are using the ABT. Ratio test doesn't care how much you make or what the allocation is.

^ That says CE credit. But for whom?

I disagree. Some people consider the 3% a supplement to their deferrals. So with an elimination of that, they may want to increase their deferrals.

^^ In bold and red from that website: We will not be offering Continuing Education Credit for this event.

Side note: if it's a small company, did losing the CPS and a few of the staff create a partial plan term?

Side note: who prepared the obviously incorrect EZ?

^ Relius wouldn't calculate it correctly?

^ true. And sometimes, firms just prepare the same form as the previous year "because that's the way it's always been done."

To go further, see if any of these apply:

Is this a daily valued plan? Aren't these fees mentioned in the 404(a) notices?

I would think that putting in the deferrals the first time was failure to follow deferral election. Say my pay for the period is $1,000, with $100 fringe benefits. My election say 10%. If using all the comp, then it's $100 of deferral. per the document it should only be $90. They withheld $10 too much.

Never mind my silly "match goes down" thing. It's been a long day. Good news is that the PS passes on a contributions basis imputing disparity using full comp. Now, I just have to give everyone more match. No other way around that.

I have a plan that fails 414(s). They are a safe harbor match plan. (QACA, 100% of first 1% comp and 50% on all other deferrals up to 100% of pay) Plan excludes bonus for allocation purposes, plan allows people to defer from bonus. Thing is, if I include bonus, the employees' deferral rate goes DOWN, therefore DECREASING the match. Should I just let it go? Also, for the PS. Can I allocate it excluding the bonus (it's a pro-rata allocation) and then TEST it using full comp? (It's about a 7% PS, so I think I'd be ok with gateway.)

What does the plan document say about timing of distributions? Is it something like "as soon as administratively feasible"? If so, then I can't see a reason for waiting over a month and a half. What if the asset value takes a nosedive between now and next year?

You are correct. The match cannot get bigger as the deferral %'s go up. Why the 1/2% penalty at 4%?

Do you have to put the group names in the SPD?

If the non-key is deferring, and there will be no PS, then the QACA match will suffice. If the non-key is not deferring and there is no PS, the QACA match will suffice. If the non-key is deferring and there will be PS, then QACA match may suffice. The non-key must get 3% of full year comp between the QACA & PS. So if the calculated match is at 3.5%, they are ok. (I believe the doc must say the match offsets the the TH. If it doesn't you have to do a 3% on top of the match). If the match is lower than 3%, the ER must add enough to get the non-key to 3%. If the non-key is not deferring and there is PS, they are owed 3% of full year comp.

Did you ask Relius? They have live help now.

If all the assets were gone by 12/31 except for the owners, and all the plan doc stuff was up-to-date, I'd charge like $300 to file the final 1-participant plan 5500. Could even do it on an EZ.