Lou S.

I'll play devil's advocate. New plan accepted the funds and deposited them to the trust. After the check cleared what authority did the new plan have to make a distribution after the fact? I'm not sure why this is now becoming the old plan's problem when they processed a rollover per the participants instructions and the new plan cashed the check. At that point as old Plan I'm thinking I'm done. I'd take their cashing the check as their acceptance of the rollover.

Our IRS approved document has this language in the Adoption Agreement. If Eligibility was a protected Benefit I'm not sure why it would be needed. Amendment or restatement to change eligibility requirements q. [ ] This amendment or restatement (or a prior amendment and restatement) modified the eligibility requirements and the prior eligibility conditions continue to apply to the Eligible Employees specified below. If this option is NOT selected, then all Eligible Employees must satisfy the eligibility conditions set forth above. 1. [ ] The eligibility conditions above only apply to Eligible Employees who were not Participants as of the effective date of the modification. 2. [ ] The eligibility conditions above only apply to individuals who were hired on or after the effective date of the modification.

Your logic makes perfect sense for someone who was a participant in 2017. I mean chances are pretty good it is pay earned while a participant and the document will define whether it is 2017 or 2018. In this case though the employee wasn't employed on or after the effective date of the plan so how do they ever become a participant?

Which protected benefit under 1.411(d)-4 would it fall under? https://www.law.cornell.edu/cfr/text/26/1.411(d)-4 Not definitive but see the final slide of this 2016 ASPPA conference presentation https://www.asppa-net.org/Portals/2/PDFs/2016AnnualHandouts/WS29.pdf

Was it wages for services performed? Was it post separation pay? What does the Plan say about compensation? If she has no services performed after 1/1/2018 she is probably not entitled to a contribution in this case as she likely never even becomes a participant in t he Plan. Had the Plan been in effect the prior year she would likely be entitled to the contribution as it was most likely wages earned while a participant it would just be a question of 2017 or 2018 contribution.

Or one could argue he was always just 1 payment behind and payroll was entering the dates wrong.

Yeah. Sounds like your are done. The plan is written to expand coverage so yo pass testing, it is irrelevant that they get $0.00 because they didn't defer.

Is it an adoption agreement and master text? If so the adoption agreement probably has a questions like "if you fail the test do you use the fail safe language yes/no" If that's the case and you answered "yes" than I think you are in luck and you get to use your option 2 and pass coverage because it was already in the document, if you had to add it in at this point as an 11(g) amendment I don't think you could.

Pretty sure option 2 is a big no go as your corrective amendment has to provided "meaningful" benefits in operation. I think option 3 would be acceptable if you pass afterwards.

A corrected 1009-R for $0.00 can be filed cancelling the original 1099-R.

In other words she could get the full profit sharing contribution. If this is 2018 we are talking about and she $24,500 deferral on $30,000 income she could receive an employer allocation of $11,500 before you have a 415(c) issue on the 100% of pay issue.

I think in this case your document calls for a 5% TH minimum which must be provided for 2017. But someone else may have past experience with this that would allow the lower 3%. However I think because they were participants in both for the plan year you will have to provided the higher benefit for 2017.

Were they designated ERISA Plan Administrator, or just the party you hired to perform administrative functions? It is on the the Plan Administrator to maintain plan records not the the third party to house your offsite storage and retrieval systems. If they do still have the data it may be in storage and could have a retrieval cost, or some of the data you are looking for may be beyond the scope of their records retention. Are you asking them to dig through old files for data at not cost?

It sounds like you need to look at the Affiliated Service Group (ASG) rules to determine if an ASG exists. After some digging I would be somewhat surprised is this isn't an ASG.

HCE1/Owner is a participant in both plans, correct? That's the assumption I'm going on anyway. So DB and DC both have key participant so you have a required aggregation group so I'm not sure why the DC plan would be exempt. Q1- DB TH minimum is always 2% accrual as far as I recall (subject to limits in 416). I seem to recall the 3% DB dealing with buying back fractions a long time ago, maybe old 415(e) related on super top heavy. Q2 - No Q3 - If HCE2 is excluded from DB you would need to give a TH minimum in DC plan but it could be offset by SH match if the plan allows. Q4 - He is excluded from the DB plan and thus not a participant in the DB the DC minimum of 3% would apply. The plans should spell out the method being used to satisfy TH.

Thanks. I guess that was clarified in IRS Notice 2016-16. I'll have to go back and re-read that one.

Thanks Larry. I know you can amend out a safe harbor match with 30 days advance notice to participants but I was under the impression that if you have a 3% safe harbor written into the document for the year you could only amend it out mid-year if you had a "sever economic hardship." Did that change in published IRS guidance and I missed it?

Unless a maybe notice was handed out for 2107, under what theory can you get away with not giving the 3% non-elective for all of 2017 without disqualify the plan? I think you might be in the position of having to give the 3% non-elective for all off 2017, the safe-harbor match for the part of the year that was amended in, and you still might be subject to ADP/ACP testing for the year.

Then she sounds like an eligible employee.

Is she a partner with self-employment income on her K-1 subject to self-employment taxes? Is she eligible for the Plan?

In this case with the facts you describe you aggregate the compensation from both and then limit it for 401(a)(17).

Is it only deferral and safe harbor match? If yes you are deemed to be "not top-heavy" Additional employer contributions (with certain additional match exception), voluntary after tax contributions or forfeiture re-allocations will "blow your top-heavy exemption".

Why do you want to risk a potentially discriminatory pattern of amendments so one employee making seven figures can defer taxes on $18.5K (or $24.5K) of income?

I'm not a CPA but I thought Partner traditional 401(k) contributions got deducted on their 1040 not the K-1.

A rollover is a contribution. A contribution is not a loan payment. What more do you need?