Madison71

Sorry does meet..misread - then yes, fine even with outstanding loan

No - as long as meets safe harbor criteria which it sounds like he does not

Plan Sponsor can prepare board resolution to terminate the plan, but I wouldn’t distribute all the assets until the audit wraps up. Are they planning on filing a 5310? Assets have to be distributed as soon as administratively feasible after termination, but waiting for the audit to wrap I think is reasonable. Sponsor could also just freeze if concerned audit going into perpetuity. Ceasing contributions for 2-3 years would be equivalent to a plan termination. I don’t think you can prevent the participating employers from distributing assets and filing their final Forms 5500 during this time if plan terminates.

My understanding is you always use original hire date to determine eligibility. Terminating and being rehired may affect vesting depending on the length of the break in service and the plan document or possibly waiting to enter the plan, but not to determine eligibility. I guess the plan could be amended to plan year eligibility after the first year and quarterly entry. If participant worked 1,000 hrs in 2017, would come in 4/1/18 along with everyone else who met that requirement.

The big dogs are weighing in now....this is where I slowly back out of the room (forum).

That’s my understanding and think the notice with nothing changing on the notice is belt and suspenders which I like

My understanding is a corporation cannot deduct a 2017 profit sharing contribution on a 2018 tax return unless the 2017 profit sharing contribution exceeds 25% deductibility. Why does the 190k have to be a 2017 profit sharing contribution? They could treat the 190k already deposited in 2018 as a 2018 profit sharing contribution and any additional as 2018 as well subject to deductibility limits

WEB CE is inexpensive if you have a chapter in your area - World Wide Employee Benefits. They have CE monthly or semi-monthly

No - same rules apply - can utilize 25% QNEC on missed deferral as long as notice provided within 45 days of starting correct deferrals and corrected within the SCP window. The 3% SHNEC plus earnings is required

You're welcome - that's my two cents...which is about close to what it is worth...maybe a little less.

I interpret that to mean there is a fiduciary requirement to continue to enforce the loan after a deemed distribution until the loan is repaid either by resuming the loan payments or by offset against the participant's accrued benefits. The plan sponsor can require that loans must be repaid through payroll, but there is nothing to prevent the participant from revoking this. The employer discovered that they did not start loan payments in June 2017. They elected not to go through EPCRS due to cost and instead deemed the loan and tax reported. The loan plus accrued earnings continues to be outstanding and owed to the plan which is proper. I cannot see the plan sponsor now starting repayment of this loan through payroll deduction without the participant authorizing the plan sponsor to do so. What level repayment is going to be deducted - the amount agreed to in June 2017 with a balloon payment at the end or a re-amortized amount that the participant did not authorize possibly creating an undue hardship to the participant? Just my two cents.

Employer cannot force the participant to begin making payments. Once the loan is delinquent and goes beyond the cure period, then the loan is deemed and tax reported and as you noted the loan plus accrued earnings remaining outstanding. There would be basis in anything repaid after the deeming of the loan.

You can correct through EPCRS even though the plan is terminated

I think the safe harbor is applicable where an election wasn't properly implemented or for a situation where someone wasn't given the opportunity to defer. Rev. Proc. 2015-28 incorporated into 2016-51 defines an Employee Elective Deferral Failure as a failure to implement elective deferrals correctly in a 401(k) plan or 403(b) plan, and a failure to afford an employee the opportunity to make an affirmative election because the employee was improperly excluded from the plan. I think where it gets tricky is in the notice. You are providing the notice within 45 days of correct deferrals beginning. You can include language that states the deferrals have begun (or will begin shortly). I think in this case you may want to include the notice prior to starting deferrals to give them an opportunity to opt out or change their deferral percentage.

Does it trigger payment upon separation of service when certain employees leave Company A and go to Company B?

This is my understanding as well - plus earnings of course

It doesn't count for 402(g) purposes, but counts toward 415. Make sure to send out applicable notice to affected participant to take advantage of the 25% QNEC.

That reminds me of a joke I heard....so, Descartes walks into a bar and orders a drink. When he finishes his drink, the bartender asks him if he would like another. Descartes replies, "No, I think not" and disappears in a puff of logic.

Thank you! I thought so....but then thinking often gets me into trouble.

Good Morning - It is that time of year for questions on ADP/ACP Testing failures. One of these years I will get this right. Lets say you have both an ADP and ACP Testing failure. Participants are 100% vested in the match. Only one HCE is due a refund which is distributed out to the participant as an excess contribution. My question goes back to the rate of match which I still cannot understand. In this example, the HCE earned $200,000 in plan compensation and deferred $18,000. The Plan provides a match of 100% on the first 3% of compensation. The Plan contributed $6,000 to the HCE's account. HCE receives a refund of $1,000 for the ADP failure and $500 for the ACP failure. With the refund, the HCE now shows $17,000 of deferrals in the plan and a match of $5,500. Is there an issue here with rate of match? If not, then when is it an issue? Thank you!

I'm attempting to revise an old post with two additional questions. Participant of a 401(k) Plan and current employee requested and received an impermissible distribution that was transferred directly to an IRA 2 years ago. Participant received a 1099-R reporting is as a rollover back in 2016. The Plan discovered the error and are self correcting by treating this as an Overpayment requesting the amount plus earnings be deposited back into his account. The Participant has agreed to return the funds. He will receive a 1099-R this year from the IRA custodian reporting the rollover back into the Plan. Does anyone see an issue with correcting this way and does the Plan have to file an amended 1099-R for 2016 because it was impermissible distribution? Thank you!

...also don't forget 3(16)...the TPA is now the Plan Administrator - although often limited to certain services and not designated in the Plan document. There can be real value to it, but some of the agreements I've read have no teeth to them.

Did the deferrals start-up? Notice is required within 45 days of starting correct deferrals to take advantage of 25% corrective QNEC contribution contributed by end of 2018 Plan Year

What is the match formula? Is it 140% on the first 5%? What if you defer 4%...how much do you get. Match is subject to the ACP Test

Not top heavy...lucklily. Thank you both. This makes sense.