Alex Daisy

This question is related to a 401(k) Plan with many partners and rank and file employees and not to a Solo SEP or 401(k) with 1 partner. For the 2018 Plan Year: After i calculated a maximum Contribution (employee deferrals, Safe Harbor 3% NEC, and Employer Profit Sharing for a partner as $55,000, their accountant is telling me that the partners maximum Contribution should be limited to 20% of their reduced K-1 income, which comes to approximately $50,000. I have found information about the maximum contribution for self employees individuals to be limited to 20% of their reduced K-1 income, but does this apply to 401(k) Plans? and not just to SOLO SEP'S and 401(k)'s with 1 employee (the partner) Any guidance is greatly appreciated Alex

Correction: Can Company B increase the existing matching vesting schedule to 100% for existing participants and then be on the same vesting schedule as Company A (surviving plan) for any new matching contributions effective 1/1/2017?

Company A (surviving plan) acquires Company B and the plans will be merged effective 1/1/2017. For the company match, Company A (surviving plan) has a 1-5 year graded vesting schedule and Company B has a 4 year graded schedule. Can Company B increase the existing matching vesting schedule to 100% vesting for existing participants and then be on the same vesting schedule as Company B for any new matching contributions effective 1/1/2017? Or does the merged plan need to keep the Company B employees who were eligible before 1/1/2017 on the more favorable 4 year graded vesting schedule?

My question is on what is the definition of an "Officer" in a 401(k) Plan fo rTop Heavy Purposes. I know that its a facts and circumstances test. Someone with the title but no authority is not an officer, someone who has the authority but no title could be. My question is what Authority? Is it the authority to hire / fire, authorize / sign checks, legally bind the company to a particular course of action, e.g., set process or fees? Does each employee who is considered an officer need to be able to make these decisions independently of another employees? If two employees who can hire and fire but cannot do it independently of each other still considered OFFICERS? Thank you in advance

Thank you very much.

I am the TPA on a 401(k) Plan that has life insurance policies and the premium payments are paid directly from the life insurance policy holders 401(k) participant account. How should these premium payments be reflected on the 5500? The Plan Auditor is telling me the change in value is netted against the premiums paid and is reported on line 2b(5)(b) on the Schedule H. Any help is greatly appreciated.

An active employee had their loan balance deemed because it was not paid off within 5 years. However, the employee continued to pay off the loan after it was deemed. How is this reported on the 5500? Does it get reported under deemed and or corrective distributions?

It was reported as Non Employment compensation on the 1099 Misc. and the owner will be paying FICA taxes. Why wouldn't this qualify as eligible comp?

I am checking how it is being reported on the 1099 Misc.

A one person Sole Proprietor 401(k) P/S Plan. The owner is in the consulting business and gets paid commissions that are reported on a 1099 misc form. Is this eligible compensation? The Plan definition of compensation is 415 comp. If so, is it further reduced for the 1/2 FICA deduction?

Tom: The Discretionary Match formula is 50% of deferrals up to 12% of compensation, which comes to 6%. Because this is more than 4%, doesn't this require me to do run the ACP test on the entire Discretionary Match?

Safe Harbor Match Plan (100% on the first 3%, 50% on the next 2%) gives an additional Discretionary Mach of 50% of deferrals up to 12% of Compensation. I am pretty sure means that the ACP test must be run. Can you tell me what Matching contributions are included in the ACP test? Do I include the Safe Harbor Match plus the Discretionary Match, or only just the Discretionary Match? Does the answer change if the Discretionary Match has a Last Day rule? Any guidance is greatly appreciated. Alex

3 plans are members of a control group. Plans A and B are Safe Harbor Basic Match plans. Plan C is only a 401(k) Plan with no Safe Harbor feature. Can someone describe the compliance tests that I need to run for this control group situation. If I can pass the Ratio % test with Plans A,B, and C combined and with Plan C not benefiting, does this satisfy compliance testing? Any assistance is greatly appreciated.

Can you define participating employers in the plan?

The PS percentage given to 2 out of the 5 members of the control group is uniformed at 2 percent The other 3 out of 5 controls groups get zero Profit Sharing

There are 5 members of a control group, and only 2 out of the 5 companies give a Profit Sharing contribution. The formula is 2% of Compensation. Assuming that the control group passes the Ratio Percentage test, does the Gateway test and 401(a)(4) still apply? Any guidance is greatly appreciated. Alex

Does anyone have any insight into what remedies a Plan Sponsor has under the VCP for not making the Safe Harbor contribution as specified in the Plan Document for a 4 year period? In addition, the ADP test was not preformed and the Plan is Top Heavy.

So, my scenario would violate the Universal Availability rule? 401(k) Covers all employees 403(b) only covers HCE's

Yes, when the employer established these plan provisions, they did receive a practitioner's written opinion, but at that time, there were no other HCE's in the 401(k) Plan except those that were excluded by Job Title. In subsequent years, other employees fell into the HCE category that were not specifically excluded from the 401(k) Plan by job title. Regarding Universal Availability, if the 401(k) covered ALL EMPLOYEES, and the 403(b) Plan is only made available to the Highly Compensated Employees, does this Satisfy the Universal Available rule? The 401(k) and 403(b) both have immediate eligibility.

Correct, those excluded Job titles are occupied by HCE's. And the Plan does pass coverage. When I run the ADP test, do I need to include or exclude the HCE's who were excluded by their Job Title from being eligible to defer into the Plan?

A company has both a 401(k) Plan and a 403(b) Plan. The 401(k) Plan excludes employees by Job Title, such as Director of Finance, and CFO, and CEO from making elective deferrals into the 401(k) Plan. However they are eligible for the Profit Sharing Contribution. These employees instead make their deferrals into the 403(b) plan, which excludes any one who is eligible to make deferrals into the 401(k) Plan. Basically, if the excluded employees were to make maximum deferrals into the 401(k) Plan, it would fail the ADP test. Therefore, they instead are excluded from the 401(k) by Job Title and make the maximum deferral into the 403(b). The 401(k) Plan is being audited and the Auditor told the client that they need to stop excluding these employees by titles and that group of employees can chose not to make elective deferrals into the Plan, but he said it appears that the client is trying to avoid failing the ADP test. Does anyone agree that the Plan needs to stop excluding these employees by Job Title? Any guidance is greatly appreciated. Alex.

I understand that only income for partners of certain type of entities is eligible compensation for 401(k) purposes. Can someone tell me if I can use the K-1 earned income for the partners in a S Corp, C Corp, or LLC? Any guidance is greatly appreciated Alex.

I agree, thank you.

A Plan Sponsor is starting a new Plan effective 1/1/2015, but does not want to start the EACA Auto enrollment feature in the Plan until 3/1/2015. Does this affect if refunds could be processed for participants who are automatically enrolled after 3/1/2015 and want their money back within the 90 day window?

Company A is being acquired by Company B. Both of them have an existing 401(k) Plan. Company A wants to terminate their plan. Do they need to do this before the official acquisition date in order to not violate the Successor Plan Rules? If the Plan termination is done after the official acquisition date, what are the consequences? Does it matter if its a Stock sale or Asset only sale? Any guidance is greatly appreciated Alex