chc93

I recall reading somewhere in the past that a $0 deferral limit for HCE's will also not allow any catch-up... since the catch-up is a "deferral which would not be allowed with a $0 limit".

Can't the excluded class say something like "those employees in _____________ are excluded except for John Doe"... and do this in an amendment like the early entry employees?

You also might want to ask your software vendor the reason for stating that the plan fails 401(a)(26). Could be useful in the future.

Years ago, I recall hearing that the lowest vested percentage in the vesting schedule would be reasonable. So 20% with a 6-year vesting schedule.

This is my understanding too. It will literally take "an act of Congress" to remove that 7 month deadline.

One 5500-EZ... Jan - April short plan year... final filing edit... BG5150 beat me to it... by seconds, I'd imagine

Maybe... as others have continued to say... a "Solo 401k plan" IS a "traditional 401k plan". It's just that this "Solo 401k plan" has only one participant.

Put the staff participants on a platform instead of a pooled account?

[bolded]. The few times that we got numbers from the ASC valuation system that we couldn’t duplicate and/or didn’t understand, we emailed ASC support and usually got immediate responses… sometimes within hours.

Years ago, one ERISA attorney said that step-children are NOT attributed ownership. If adopted, they are attributed ownership.

§ 1.401(a)(26)-3 Rules applicable to a defined benefit plan's prior benefit structure (c) Testing a prior benefit structure - (1) General rule. A plan's prior benefit structure satisfies this paragraph if the plan provides meaningful benefits to a group of employees that includes the lesser of 50 employees or 40 percent of the employer's employees. Thus, a plan satisfies the requirements of this paragraph (c) if at least 50 employees or 40 percent of the employer's employees currently accrue meaningful benefits under the plan. Alternatively, a plan satisfies this paragraph if at least 50 employees and former employees or 40 percent of the employer's employees and former employees have meaningful accrued benefits under the plan. ************ Isn't the alternative of having meaningful accrued benefits imply accrued-to-date? Also, there is the simplified testing method that can use any single plan day during the plan year. ************ § 1.401(a)(26)-7 Testing methods. (a) Testing on each day of the plan year. A plan satisfies section 401(a)(26) for a plan year only if the plan satisfies section 401(a)(26) on each day of the plan year. An employee benefits on a day if the employee is a participant for such day and the employee benefits under the plan for the year under the rules in § 1.401(a)(26)-5. (b) Simplified testing method. A plan is treated as satisfying the requirements of paragraph (a) of this section if it satisfies section 401(a)(26) on any single plan day during the plan year, but only if that day is reasonably representative of the employer's workforce and the plan's coverage. A plan does not have to be tested on the same day each plan year. [all underlined and bolded is mine]

For me... it's IRS audits of plans, where they ask for prior 5500's...

Not really surprising. Even the IRS, when they audit plans, asks for prior year 5500's. Never made sense to me.

I thought I read somewhere in the past that setting a deferral limit of $0 or 0% means that NO deferrals can be made, including catch-up, since catch-up is a deferral and no deferrals are allowed.

As C.B. says, this gets you a "pseudo 12/31/2020" account balance that the regulations allow.

I think you file the 5500 first, then the DFVCP when you have the acknowledgement ID.

At least he stopped contributing after hiring employees. How many employees? Maybe the missed opportunity and lost earnings will not be that bad. Probably go VCP? At least no top heavy since he didn't contribute after hiring employees...

We do the same with ASC and FTWilliam. We experience excellent support from both using emails... turn-around always within a day or less.

I thought this wasn't necessarily true, and any assets in an IRA don't have protection from creditors, no matter where they come from.

Also, plan documents often provide that distributions to terminated participants would be done as soon as administratively feasible. Usually past practice will be looked at for reasonableness, and I don't think the next day after termination is reasonable. If the terminated employee is rehired before an administratively feasible time period, then I think he is out of luck.

Hi SSRRS... unfortunately, I'm not even a novice (let alone expert) in issues of estates and companies of owners that pass away. But, I'll offer my 2 cents. I don't have a clue for item 1. For item 2, if the company was dissolved before the owner passed away, the plan had to have been terminated, since a plan cannot exist without a sponsor. And if so, I think the excess assets would go to the owner up to 415 limits at plan termination. Then, any excess would go to the company who pays the 50% excise tax, assuming the company lasts long enough after plan termination and before dissolving. Complicated, at least...

Sounds like since the owner and spouse have died, there is no "beneficiary" for any benefits... no benefits left to be paid to any where... including the estate, correct? Then the excess assets will revert to the Company/Plan Sponsor, who ever that is decided. Maybe the Company will be in the owner's estate... in which case, the owner's estate. Seems like I talked myself in circles.

For such terminated participants, especially ones with very large account balances (over $100K), how do you force a "mandatory distribution".... rollover to IRA, cash distribution, etc?

I forget how that worked back then. Maybe a distribution request for the total account balance, but administratively paying only a partial first, satisfied the requirement of all or nothing? As opposed to a distribution request for a "real" partial distribution... which might not be allowed.

Back in the day when we did a lot of annual valuation pooled plans with institutional trustees (banks, trust companies), the trustees had the plan administrators adopt a policy of paying 70% or 80% of the prior valuation balance, with the remainder after the end of the current plan year. Plan document had the "as soon as administratively feasible" stuff. Some participants took that partial distribution, others didn't and just waited for a single distribution. Maybe an administrative policy would still work?