Lou S.

$19,000 deferral + $6,800 psp = $25,800 < $27,200 100% of pay so you are OK for 415. Since the PSP does not cause you to exceed any applicable limit (in this case 415) you don't have any deferral to recharacterize as catch-up.

C.B. Zeller your math is correct as it pertains to 415 but if I understand the OP correctly the $12,800 employer contribution would exceed the deductible limit. Unless there are other participants and this cross tested somehow as $12,800 / $27,200 ~ 47% of pay.

The refund is the $3,135.58 plus earnings. The first $2,800 plus earnings is refunded as excess deferral. The remaining $335.58 plus earnings is refunded as excess contribution. You do not need to refund the $2,800 twice as both excess deferral and excess contribution but you will have two 1099-Rs in this case.

What does the document say? If not addressed what do the Administrative Policies say? If not addressed in Administrative Policies, now would be a good time to set and document them for now and the future. If you do allow election, it would be good to also have default order if election is not received timely enough to meet IRS deadlines.

Put them on your prototype now, give them a discount on restatement?

Amend the return.

K2 is correct assuming your plan document offsets top-heavy for matching contributions received. I think most do this, but there is an option to not offset the TH by matching contributions so double check your Plan document terms.

What does your document and or termination amendment say?

I should probably know this but if you are submitting a 2019 Schedule SB before you receive your EA renewal letter, do you use the 17 prefix or the 20 prefix?

I'm not a lawyer, but it may depend on the terms of the Plan and whether or not a beneficiary designation of a spouse is revoked on divorce or if an affirmative new election must be made to change the beneficiary.

It is possible the spouse, now ex-spouse, was once named as beneficiary and your mother did not update the form after the divorce. So from the Plan's perspective they may have a valid beneficiary designation that was never revoked. I'm not saying this did happen, just that it is a possibility.

Does the 10 year rule to non spousal beneficiaries apply to death benefit payments after 12/31/2019 or to deaths after 12/31/2019. That is if a participant died prior to 12/31/2019 but the distribution is not elected or processed until after 1/1/2020 can the non-spouse beneficiary still take advantage of the old "stretch IRA" rules by rolling to inherited IRA or are they locked into the new 10 year payout rule?

I'll join the chorus. This seems totally fine. As long as your new plan allows for loans.

Ok, thanks both. I can see some confusion ensuing in the transition period. Fortunately it's a short transition period.

So what happens to a working non-5% owner who attains age 70.5 prior to 13/31/2019 but doesn't separate service until after 1/1/2020? Does that mean they have a 2020 RMD due by 4/1/2021 even though they are not yet 72 because they attained age 70.5 before 12/31/2019? Or do they come under the new rule and don't need a 2020 RMD because they are not yet age 72?

1st ask to get a copy of the Summary Plan Description (SPD) and ask them where the 20% limit is spelled out. 2nd check to see if the plan allows for Catch-up contributions for employees age 50 and over. If it does then by law you are allowed to defer 20% + the Catch-up limit. If there is no 20% limit in the document, ask why they have not been following the terms of your election which is 30% of pay.

I would say he's still a participant with a right to accrue future benefits. Though his current benefit is $0 due to the offset from the prior payout.

Why? I mean assuming using the correct 2019 limits $30,000 pay $25,000 deferral (19K in 415 limit, 6K not part of 415 limit) $7,000 PS contribution. You get $26K in 415 limit which is less than 100% limit.

You can't defer more than 100% of pay. Employer contributions plus catch-ups can take you over the 415(c) limit [dollar or percentage] but someone with only $20K in compensation can't defer $25K.

I think you may need your election form to show that your employer was withholding the wrong amount or there is very likely no correction to be made as they are simply following the terms of the Plan. If you elected to contribute too much per pay period such that you hit the annual limit early and the Plan has a per payroll match, you may simply be out of luck for the remaining 2019 match. As for giving you and only you an additional match, probably not under the terms of the plan document.

The deferrals from 11/1/2018 - 12/31/2018 are all 2018 catch-up contributions due to exceeding the 2018 402(g) limit as stated above. As such you can ignore them for the PYE 10/31/2019 for all testing and limitation purposes. The 415(c) limit for limitation years ending 2019 is $56,000 and the catch-up limit for 2019 is $6,000. He has already used $1,245 of the catch-up limit in 2019 for exceeding the 2019 402(g) limit and and has $4,755 remaining in catch-up for calendar 2019. So you currently have ($56K limit - $19K deferral) = $37,000. If he receives a PS contrib of $37K or less you are done - assuming you pass all non-discrimination tests. Under this scenario all deferrals from 11/1/19 - 12/31/19 would be catch-up contributions for 2019 (assuming you don't exceed the $25,000 total limit for 2019) and these would again be ignored in the PYE 10/31/2020 testing. On the other hand, he can receive a PS contrib of $41,755 and deferrals $4,755 would be recaharterized as catch-up in 2019 in PYE 10/31/2019 due to exceed the Plan's 415(c) limitation. Under this scenario all deferrals from from 11/1/19 - 12/31/19 would NOT be catch-up contributions for 2019 (assuming you don't exceed the $25,000 total limit for 2019) and these would be included in the ADP and 415(c) limit for the PYE 10/31/2020 testing. I'm assuming limitation year = plan year in your document. Have I said before how much I dislike off calendar year 401(k) plans?

You can amend the formula for the year at any time prior to someone meeting the allocation condition to receive a contribution in the document. Once you have a participant who has reached the allocation condition you can not make it more restrictive for the year or you will have a 411(d) prohibited cutback. In you case once you have a participant credited with 501 hours you are locked in to the contribution. Also because a Money Purchase plan is a Pension plan, make sure you are also in compliance with the 204(h) notice requirements with respect to timing if you cut future accruals.

As long as the Plan's Trust is in existence you must comply with the RMD rules under 401(a)(9).

Link to thread where it is addressed It's the ASPPA code of conduct thread in the Operating a TPA subforum. If the link doesn't work.

Whether it is too late for 2020 could be up for debate. You've missed the 30-90 day "safe harbor window" before the start of the plan to distribute the Safe Harbor Notice for 2020 but you might be able to argue that the a notice distributed now before January 1 is timely based on facts and circumstances. Especially if you can show all participants have an effective right to change their elections before 2020 deferrals start and a sign off from every eligible participant might go a long way towards showing that. As for terminating and starting another 401(k), yeah successor plan rule will kill that. From IRS website https://www.irs.gov/retirement-plans/notice-requirement-for-a-safe-harbor-401k-or-401m-plan Timing requirement General Rule: Generally, the safe harbor notice must be provided within a reasonable period before the beginning of the plan year. The timing requirement is deemed to be satisfied if the notice is provided at least 30 days (and not more than 90 days) before the beginning of each plan year. If the notice is not provided within this time frame, whether the notice is timely depends upon all of the relevant facts and circumstances.