justatester

Does it impact the SH status of the plan?

No....I get when it is due...but what happens when not funded by due date?

If a plan funds the match on a per payroll period, but the "computation/determination" period is annual per document, we calculated a "true up" calculation. The clients now owes additional 2019 SH Match. What happens if this amount is not funded by 12/31/2020? I can only find reference to it must be funded, but no real answer as to what if not funded.

Scenario #1 MEP adopter terminates services with MEP effective 1/1/2020. Per agreement, once termination occurs, they immediately are no longer eligible to contribute to MEP. New plan is not effective until 5/1/2020. It is established as a new plan with a short plan year in the document. Can the employer withhold contributions from 1/1/-5/1/2020? I am assuming no since there was not a "plan" in place. If the answer is no, if the employer withheld contributions, what should the ER do with them? Since there is a gap in the time from leaving the MEP to the new SEP, how does this impact testing? Would HCE determination be from 5/1/18-4/30/20? What about prorating the compensation limit? For top heavy, would the 12/31/20 balance be used for 20 &21? Scenario #2 MEP adopter leaves the plan effective 4/30/2020, New Plan is established 5/1/2020. Document indicates it is a short plan year for the first year. How does impact testing? HCE determination. Do we test contributions from 1/1-4/30 under the MEP and only test contributions from 5/1/2020 through 12/31/20?

Ok...New added twist to this question... MEP adopter terminates services with MEP effective 1/1/2019. Per agreement, once termination occurs, they immediately are no longer eligible to contribute to MEP. New plan is not effective until 5/1/2020. Can the employer withhold contributions from 1/1/-5/1/2019? I am assuming no since there was not a "plan" in place. If the answer is no, if the employer withheld contributions, what should the ER do with them? Since there is a gap in the time from leaving the MEP to the new SEP, how does this impact testing? Would HCE determination be from 5/1/18-4/30/19? What about prorating the compensation limit? For top heavy, would the 12/31/19 balance be used for 19 & 20? Let's say, the ER left the MEP effective 4/30/19 and new plan established 5/1/19, based on the above, you would test everything for the full year?

An employer is part of a Multiple ER plan. They decide to leave MEP plan and establish there own SEP plan. Would the SEP plan be considered a "new" plan? Additional Questions: 1) If new plan is established with an effective date of 5/1/2020, can the contributions/compensation be combined in the new plan for the entire year? (assume 12/31 PYE for both) 2) Does it matter if it is a Safe Harbor plan?

Plan has a fixed match with last day/1000 hours requirement (waived for RDD) 12/31 PYE Effective 7/1/2020 they amend to remove the match. Are they obligated to fund the match through 7/1. I say no since no participant (except RDD) met the last day/hours. For the RDD, I would think if the terminated prior to 7/1 they would be owed the contribution. What if the plan is a 6/30 PYE and they amended the plan effective 6/30 to remove the fixed match? (Plan has last day/hours requirement) I am thinking they owe the match since it was removed on the last day. Had they amended the plan on 6/29, I think they would not owe the match. Thoughts?

Plan has 1 YOS/age 21 for pretax, match and nonelective. Based document (not AA) has language that indicates no age/service requirements to receive DB contribution. So in theory, all employees are eligible for DB contribution. However, to actually receive a contribution you must work a DB job. Here are my questions: 1) For ADP/ACP, do we only include those with 1 YOS/age 21? What if someone received a DB but did not have 1 YOS? 2) Plan is top heavy, of those employed on the last day of the plan year, who receives the Top Heavy allocation? Only those with 1 YOS/age 21? 3) Can the Davis Bacon contribution be used to off set the Top Heavy obligation? The plan has the option to use the DB as a QNEC for ADP or to Off set ER contribution. Does this matter?

Follow up question: The plan makes a discretionary match of 25% up to 4%. If they use the new Secure Act SH NEC option, are they ACP Safe Harbor as well.

Plan wants to add a SH NEC via the Secure Act provisions. This gives them ADP SH but not ACP. The plan typically only passes ACP using borrowing. Can they still borrow from the ADP if it is SH? Also, testing method was prior...I assume they should amend to current for the ACP portion?

Makes sense..thank you!

Is there a reason why? THey can pay other "bills" with the forfeiture money.

Can the plan sponsor use the proceeds from the forfeiture account to pay the excise tax due on late ADP corrections? I understand they will need to pay it directly and the potential get reimbursed from plan.

We have a PR plan that only uses base pay for their definition of compensation. So they have excluded comp. Does this require 414s testing? Does it matter if it is dual qualified? Do you have the PR code reference?

Along this line...Here is what the client has said. The received extra funds from a Small Business Association from a business loan and they would like to put the extra money into the Retirement Plan. They have to use the funds within 8 weeks (by June 16, 2020). Is this permissible? would it be a 2020 or 2019 contribution?

Sorry for the confusion. For my top heavy question, the plan does not have a SHNEC, just a 4% PS that has an hours/last day. So you have participants who only receive the top heavy 3% and not the PS.

Plan makes a 3% SHNEC contribution-all ees receive contribution Plan makes a 4% ER PS contribution-this contribution has a last day/hours requirement. Not all EEs receive. For 410(b), it is my understanding that all ER contributions must be tested together. Since all ees are not receiving the same allocation rate (due to last day/hours), this triggers the need for a 401(a)(4) rate group test. In reading through the EOB, it seems that if you can pass 410(b) on each source separately, then you are ok. What is the best approach to solving this? You need to run the 410b on an aggregated basis, but then run separately to satisfy the rate group? Or do you aggregate and go to rate group testing? How do these rules come into plan when you have a ER PS allocation and a Top Heavy minimum? Example: ER has 1000 hours/ last day. Employee is employed on last day, but does not met hours. This EE receives a Top Heavy min contribution of 3%, but not the ER allocation is 4%. Does the same logic apply to this situation as it does to the SHNEC/ER allocation?

I would agree that giving the HCEs a PW is not a good idea. They specifically opted in the document to "allow" HCEs to get the contribution. In this case, it is an owner's son who got contribution and is only 27 years old making only $16k. I have attempted to run on accrual, but can't get it passed gateway. In addition, the owner's wife contributed 30% in pretax (only 6 HCEs) so my ABPT percent is very high...in comparison to my NCHEs. The employer contribution provision is TWB not individual groups. They are just in a really bad place currently. We are going to recommend HCE do not receive the contribution going forward to avoid this.

Ok..so crazy question...If I am allowed to shift the Davis Bacon as a qnec for the ADP, what amounts are then required to be included in the general tests? Do I need to pass the general test with and without the amounts shifted to adp? For example if I use the entire HCE DB contribution in adp testing, what amount is included in general testing? I realize it will negatively impact the ADP, but that seems to be an easier correction then fixing the General test.

So what is the correction if it fails? One HCE received a 24% contribution...never going to pass.

Employer make prevailing wage profit sharing contribution. That is the only profit sharing contribution. Is it subject to General Testing? If yes, Gateway if using accrual basis? In this plan's case, there is an HCE who receive the PW contribution. Also, how do you determine who is "eligible" for the prevailing wage?

Plan is a Safe Harbor Non-Elective plan. Plan has compensation exclusions (ie non safe harbor exclusions-OT, commissions, bonus etc). The plan does not pass 414s. Can the plan satisfy the 414s requirement by using General testing? Or must the amend their definition of compensation to satisfy 414s?

Safe harbor for ADP/ACP via SH match. Oh, and the plans ARE aggregated for coverage purposes; that's why we can, theoretically, have every participant in their own plan (just salivating over the fees) and still be ok with coverage. When aggregated for coverage, are you saying treated as one plan? Or treating each plan separately, but taking the entire group in the denominator? BTW...the only HCES are the Pharmacists and the mangers. No other ee, meets the HCE definition. Does this make a difference?

This one goes into the category....just doesn't seem correct. 2 plans: Plan A: Age 21, no service requirement: Excludes all EEs except Pharmacists and Managers Plan B: Age 21, 1 YOS no exclusions Both plans are safe harbor. After 1 YOS, the pharmacist/managers move over to plan B (at least in payrolls eyes). I am not sure of several things. 1) what provisions makes the Pharmacists and manager "no longer" eligible for Plan A. I believe there are still eligible 2) What about coverage? Can the plans be aggregated for coverage purposes? If so, are they still safe harbor since less than 1 YOS ee except Pharmacists and mangers are not eligible. How do I count those non manager/pharmacist ees in combined coverage? I think that the manager/pharmacists are still eligible for Plan A and therefore they will not pass coverage.. It just seems a bit fishy to me.

I have 2 plans that are part of the same controlled group. Plan A: No age/service, daily entry Plan B: 21/1 YOS/Semi Entry When determining the groups for coverage, when doing plan A ratio, we count everyone since there is no age/service. When doing Plan B, do we only count those that have 1 YOS/21/semi for determining the benefiting group? I am trying to figure out who is excludable (for age/service) to those that are non-excludable not benefiting.