BG5150

Ooops. Never mind. I was basing my answer on a 1-yr wait, not six months. I have since edited my post. Sorry for any confusion... :(

Not only bad, but totally wrong. Any in-service withdrawals will be added back into the plan assets for Top Heavy purposes for 5 years. (4 years after the year of distribution). So you are stuck with them for 5 years for each you you have an in-service withdrawal.

Those who probably will get the Top Heavy contribution: anyone hired on or before 1/1/2016. (Those hired on 1/1/2016 became participants on 7/1/2016). But anyone no longer with the company on the last day of the year can be excluded. Even if the plan says that you only take into consideration pay earned only while a participant for most things, anyone who entered the plan on 7/1/16 (and still there at the end of the year) will get 3% (or whatever TH % is required to be that year) of their full year's pay. I said "probably" because I haven't seen the document. But outfits like Paychex usually don't have clients with wacky provisions in the plan doc.

Remember, the earning don't have to be exact. Just reasonable.

Thanks. It's been a while since my office has prepared 1099's. Or at least a while since I had a part in it.

Is there a 1099-R code for an early withdrawal (under 59 1/2) of Roth Deferrals (assume 5-yr seasoning satisfied)? All I see in the instructions is early distrib from Roth IRA (code J).

This post is relevant to my interests...

In order to receive a PS contribution: An Employee must be employed with the Employer on the last day of the Plan Year. So, if someone has a term date of 12/31, do they get an allocation. I would say yes, because, generally, your term date is the last day you worked. Therefore, a DOT of 12/31 means you worked on that day and, thus, you were employed on that day. Your thoughts?

My post asked, "what were the PS allocation requirements"? Not the allocation method. You said the amendment was made mid-year. If one participant earned the right to a PS under the allocation requirements, you cannot change the method. So, scriveners error or not, if anyone satisfied the allocation requirements, the method for the year is locked in. At least for '15. (If there was an EOY condition, then you are out of luck)

We have, from time to time, done a "scrivener's error" amendment if it was something a simple as one of the plan terms recorded incorrectly from one plan version to another. For 2015 what were the PS allocation requirements before the amendment? Had anyone successfully satisfied those requirements? If so, I don't think you could've changed the allocation method, even by mistake.

Got it. Thanks. I did just that. (At first I was totally confused and the latest seemed to look nothing like the first one. But it was just the instructions page!)

I have two plans whose ERs are in a controlled group. Do the owners who are in both plans have 2 415 limits? Does it matter if they pass coverage on their own or if they must be combined for testing to satisfy coverage?

Tom, can you (or someone) update this for 2016? There's so much going on that I don't want to miss something. Thanks in advance.

...and then amend the plan to everyone in their own group?

I know that if a participant terms with less than 500 hours, I can exclude him from coverage testing. But can I exclude him from the general testing, too?

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.