PensionPro

Recommend asking the CPA. Some of them are tax-exempt but not under 501(c), so most likely not subject to 457(f).

If you have a significant operational failure that was not corrected within the two-year correction period you have to correct via VCP. I have serious doubts that the IRS would approve a retroactive amendment with no corrective costs in VCP but no harm in trying. Advising self-correction by means of a retroactive amendment is imprudent.

Unless I am missing something the plan is not subject to universal availability. The plan should seek legal counsel.

If you improperly exclude eligible employees the correction is to make a QNEC.

401(k) deferrals and rollover funds have different characteristics and may be subject to different distribution and other rules so it may be a little more than an accounting issue. Excess contributions are deferral amounts that caused the failure of the ADP test so the failure could not be corrected by directly or indirectly distributing rollover funds.

Minimum Coverage Requirements. In the case of a section 401(k) plan, a corrective amendment may only be taken into account for purposes of satisfying § 1.410(b)-3(a)(2)(i) under this paragraph (g) for a given plan year to the extent that the corrective amendment grants qualified nonelective contributions within the meaning of § 1.401(k)-6 (QNECs) to nonhighly compensated nonexcludable employees who were not eligible employees within the meaning of § 1.401(k)-6 for the given plan year, and the amount of the QNECs granted to each nonhighly compensated nonexcludable employee equals the product of the nonhighly compensated nonexcludable employee's plan year compensation and the actual deferral percentage (within the meaning of section 401(k)(3)(B)) for the given plan year for the group of NHCEs who are eligible employees. [§ 1.401(a)(4)-11(g)(3)(vii)(A).] I believe the bolded portion of the citation provides the formula for calculating QNECs. We had the approval of legal counsel in a similar situation and had no fears about defending our position under audit. I am just narrating our experience and hope it is helpful and no pressure to agree with my position!

The QNEC is 0 according to the regs.

imo part of the loan needs to be distributed but check the plan provisions

do 0% MPPPs still have reason to be established?

if excluding nhces arbitrarily you will have to pass rpt for coverage.

top heavy minimum is based on 415(c)-2 comp, which states that items includible as compensation are ... The employees' wages, salaries, fees for professional services, and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the employer maintaining the plan, to the extent that the amounts are includible in gross income (or to the extent amounts would have been received and includible in gross income but for an election under section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b)). These amounts include, but are not limited to, commissions paid to salespersons, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan as described in § 1.62-2(c).

Depends on the reason some participants are getting zero. For example, if they are getting zero because they failed to meet allocation conditions, you could still pass coverage using ABT.

Tom, Thanks for your response! I understand the general rule. The question comes up because the testing group is different: for 410b I am testing ees of X and Y (and it passes on an otherwise excludible basis). Since 410b passes I can run ADP test for ees of Co X only. I would like to run ADP test aggregating all ees of Co. X (including otherwise excludible ees of Co. X). Can I do that? I believe you are saying no?

Facts: Company X and Y form a controlled group. X has a 401(k) plan, Y does not. To pass coverage for the Co. X 401(k) plan, the RPT passes by disaggregating otherwise excludible employees of both companies while treating employees of Co. Y as not benefitting. Question: When performing ADP test for Co X 401(k) plan am I required to carve out the otherwise excludible employees or can I run an aggregated test including all eligible employees of Co. X? Thanks!

Also, is there any exposure from using the DOL calculator (instead of computing actual earnings) if not filing under VFCP? Thanks!

Did something change or is this still an option to pay the excise tax to the trust if that amount is less than $100? Thanks!

Yes, they are public institutions that are 403(b) eligible employers due to their 501(c)(3) status. They have to meet certain requirements to enjoy this dual status. They must not be an integral part of the government, and must not have significant enforcement, regulatory authority.

plans sponsored by agencies, schools or instrumentalities of state, county or municipality are exempt from erisa. these include hospitals, libraries, museums, etc.

There are about 4 entities involved. Employer X was unrelated to any other employer at 12/31/15 and is top heavy. However as of 1/1/16 Employer X is an ASG with Employer Y. Both employers have key employees. Which employers are part of the required aggregation group as of 12/31/15? Thanks!

If the employer pays cash in lieu of fringe benefits why would that cash be considered fringe benefits?

Here are the (simplified) facts: 2 unrelated employers (unrelated till 12/31/15) sponsor a 401(k) PSP. As of 1/1/16 they became a controlled group and are tested together. Question: When determining top heavy status as of the 12/31/15 determination date would I aggregate the employers for the top heavy test or not? Cites appreciated. Thank you! PS: the actual facts are more complex, it is an overlapping CG/ASG situation.

That was helpful. It appears that if anyone has US source income then they are not statutorily excludible regardless of whether they are resident on nonresident aliens and regardless of whether or not that income is exempt is exempt for social security tax and medicare.

We have this exact situation. Are the QNECs based on ADP/ACP or is there any updated guidance anyone is aware of? Thank you!

Thanks! How about nonresident aliens receiving W-2 wages exempt from U.S. social security and medicare taxes - are they eligible?

Certain classes of non-immigrants are paid W-2 wages but are exempt from U.S. social security and medicare taxes. Assuming these employees are resident aliens, are they eligible for the 401(k) plan just like other regular employees? The plan statutorily excludes non resident aliens. Thank you!