BG5150

If there is no valid company (of which he purports to be sole prop), then there is no valid employer. Hence, no valid plan.

I don't want to look the wrong thing up. is that 401(m)(11)((B)(ell) or 401(m)(11)((B)(eye) or 401(m)(11)((B)(one)?

What does "open up a 401(k) plan" mean? Did he complete plan documents and open a trust account? Or just open up an account he told the broker was a "401(k) account"? Does his company have a plan and allows SDB accounts? What kind of shady or professionally derelict brokerage office would open up such an account on the say-so of a guy coming in off the street? (Or even just on the say-so of a current client?)

I thought the 4%/6% limits were for discretionary match when added to the SHM.

Yes.

^ does doing something like that put the TPA in a fiduciary position in any way?

Mine works just fine on this cite, too.

"cite"! They are cites. Not sites.

I, too, would feel comfortable using the FAB 2006-01 as a basis. Also, if when the allocation method is decided upon, and if the amounts to the participants will be de minimus, you can use the amount to pay plan expenses. The easiest was would probably be to just reallocate to everyone in the fund in the plan pro rata across account balances on a current basis. Excerpt: (emphasis mine)

If the amounts are small (per participant), you can use them to pay expenses.

I think it's FAB 2006-01 https://www.dol.gov/ebsa/regs/fab_2006-1.html

Given the fact that ADP excesses are taxable in the year of distribution now, rather than in the olden days where they might be taxable in the previous year, I don't see why anyone gets uppity about failed ADP tests. To me, with a failed test, you are guaranteeing the economic engines of your firm are putting away, to the penny, the maximum allowed given what the staff is contributing.

I am humbled that ToPo cribbed his answer from mine...

Wow, Tom and I posted eerily similar posts moments apart...

It doesn't matter when you actually RUN the test. You still have all the available methods to get the ADP and/or ACP tests to pass. When none of those methods produce a passing result, you must correct the test somehow. Within one year, you have your standard corrections. After one year, you look to EPCRS, and there you find you cannot disaggregate to calculate your refunds/QNEC amounts.

I think you can use it, but only for a passing result.

If it was a mistake, I would say that it must be repaid to the plan account(s). With earnings, no less. As long as the custodian is disgorging the improperly paid fees. So this would be a correction rather than a reimbursement.

I would look to EPCRS and the overpayment sections

Ah.

Why don't you just pay off the whole $10,000 now? You'll be rid of the loan and have $10,000 less in savings for the college aid people to see. Side note: if the loan program allows for it, and if someone wants to pay down a load from their own funds (additional payment(s) above the payroll deduction), I suggest the participant writes a check to the company and the company remits the payment along with the regular payroll. This way, on audit, all the payments are flowing across the company's books and no one will forget about the payment.

Why not just do a retroactive plan amendment and make him eligible? Is this person an HCE or reasonably expected to be an HCE in the near term?

Is there anything in the service agreement that allows them to charge a late fee? For what? You are not paying the TPA or Voya, you are paying the plan. Also, I would refuse to pay the late fee, as, per the loan note, the payments are indeed NOT LATE. And, like Bagwell said, loan software that doesn't have quarterly payments? Ridiculous. Our software goes beyond quarterly even, with semi-annual and annual payments allowed.

Vesting schedules, if different, would be subject to BRF, I think.

OVER 120.

But isn't there something about employees whom you reasonably expect to be an HCE when looking at people who are included early? If not, then why not let your brand-new CFO right into the plan; he's (currently) an NHCE after all...