K2retire

How do you retroactively notify employees that they won't be able to defer? Isn't that notice required 30-60 prospectively?

If it's not in the document that HCEs are excluded, am I the one one troubled by operating the plan differently than the document requires?

As someone who regularly sleeps with ear plugs, I can attest that they do not help with brain leakage!

I agree, but so far I have not had any luck persuading the client! They have other wonky rules. Because they are so concerned about their budget, all match is capped at $2,500 regardless of compensation. They fail testing, but won't implement auto enrollment or safe harbor because they don't think they can afford it. And this is not a small struggling office -- it's a bank with branches in 5 states and almost 1300 employees.

That's what we're trying to figure out. Here's an example. A newly hired person is paid $2,000 in what the client calls "recoverable wages" before earning any commissions. Once the commissions start coming in, they earn $100,000 in commissions, but are only paid $98,000 additional. Their W-2 wages are $100,000. The plan excludes commissions for match calculation. They are asking if this person has no match comp, or $2,000, or the base hourly rate times the full year's hours (Since the wage and hours laws would require some minimum comp all year.)

We are TPA for a client that has a number of commission only employees. They allow deferrals from all W-2 compensation, but exclude commissions from the match calculation due to budget constraints. Apparently various state wage and hour laws require them to pay a minimum base hourly wage that is later offset by commissions earned. Should that nominal base hourly wage be included in the match calculation even though it is deducted from the commissions paid?

It's more along the lines of assuming they won't file until the last day when we tell them to make the deposit before they file.

I've heard concerns about how to treat a potential loan default if the loan included Roth. I suspect that the difficulty in tracking that detail is why record keepers don't want to do it.

And we typically tell them they must make the deposit before they file so that they don't "forget" to make it and have to amend the return.

The plan is bundled with a large payroll provider. We're checking with them to see if they have any evidence of an attempt to make an election online. I'm inclined to agree with post # 3 also, but wanted to see what others thought, particularly since I also agree with post # 8.

A 401(k) plan client without automatic enrollment has an employee who recently asked why the deferrals that he requested in 2014 were never implemented. Neither the employer nor the employee has a copy of an election form. Absent any evidence of an election being submitted, how would you handle a possible correction? The employer wants to do what's right, but doesn't wish to be taken advantage of!

The DOL investigators that I've encountered were typically delighted by the option of NOT meeting face to face. We typically respond via a secure web site. This often allows them to get what they want without ever meeting with the plan sponsor face to face.

Many plan documents allow the employer to choose to automatically enroll only those who have not made an election, only new employees, or employees who have not made an election of at least the automatic enrollment percentage. What does your document say?

The DOL has been sitting on it for months. One of the investigators has agreed to an extension. The others are pushing to get it now.

After sitting on the requested information for months, (in one case over a year) I now have 4 DOL investigators who are demanding information between March 11 and March 15. Has anyone heard if one of their new regulatory agenda items is killing TPAs?

Were there any corporate resolutions authorizing any of these actions? If so, would they suffice?

Be careful, some states limit how much you can withhold from someone's pay. That may prevent them from using all of the paycheck toward the loan.

Why do employers who refused to track hours keep insisting on having an actual hours requirements as part a of their plan provisions? It won't help you in the past, but I tell clients that they either have to figure out a way to track hours or change their plan provisions.

You could also exclude the HCEs from the SH Match but give them a fixed match that is capped at that amount.

I'm having a "chemo brain" moment. Plan is SHNE and top heavy. Eligibility for deferrals is immediate. Eligibility for SHNE is 3 months. Is it only the people not yet eligible for SHNE who must get a top heavy minimum, or everyone?

Yep, we used to send terminating clients a letter reminding them that they had received all of the records from us (on paper) and if they needed additional copies they needed to contact us within a specific time period. After that, our records would be purged. Although I think we actually kept them longer than we told the clients.

Lou's description is exactly what I was recalling. Except that I couldn't remember the last sentence. The underlying issue is that the company was sold in 2016 and the former owner would like to shelter some of that income before terminating the plan. Although he will be paying bonuses to employees in 2016, there won't be much compensation. He'd like to do a 25% profit sharing contribution for both years but deduct all of it in 2016.

I know that profit sharing contributions deposited after the end of the year but before the due date of the tax return can be deducted in the year of allocation. I think I also remember that they could be deducted in the year of deposit. If you choose to deduct them in the year they are deposited, do you use the allocation year or deposit year to calculate the 25% of pay limit?

If the deferral provision was not yet effective, I don't think you have any choice but to refund them.

Perhaps we could get my friends at the Grammy award winning Kansas City Chorale to perform some of these next year!