K2

How can one know that they altered a plan document?

I'd look closely at the language regarding the due date. Can it be interpreted that the due date is the filing deadline plus extensions regardless of whether or not the plan actually goes on extension? Or is it explicit that it must be deposited prior to the actual filing. If so, that's bad language. With regard to the deduction, I would infer that the client doesn't care about the deduction since they already filed. The amount contributed is deductible on the 2017 return. If I recall correctly, amounts contributed for a prior year (in this case I'm talking about the 2017 deductible limit) that were not previously deducted are added to the deductible limit if the only reason that they weren't previously deducted is that they were contributed after the filing.

Oh, it's a 403(b) plan. https://www.tiaa.org/public/pdf/Making-Sense-of-403b-Transfers-Fact-Sheet.pdf

Just be careful if this is an LLC taxed as a sole prop, because if you wipe out all of his income than your three year average drops in years two and three and you can end up with an overfunded plan. Careful planning is required.

No he doesn't. I understand that the 415 limit is 100% of the three year average of compensation, but when you have less than three years of compensation you shorten the averaging period to the number of years you actually have. By "have" I mean the length of the participant's employment period, not that you can't find the records or that their compensation was zero.

Yes, you can exclude a location. You have to pass coverage, and for the DB you also have to pass minimum participation. Coverage should be easy in the PSP if you have only the owner as an HCE and he is not benefiting. The minimum participation standard is that at least 40% of the employees in the controlled group are covered by the DB plan.

1-104(a)(4)-5(a)(2) addresses the timing of a plan amendment and whether it's discriminatory. If you have a chunk of NHCEs leave active status and then you do an amendment that just improves vesting for the actives, you should at least consider this requirement. (2)Facts-and-circumstances determination. Whether the timing of a plan amendment or series of plan amendments has the effect of discriminating significantly in favor of HCEs or former HCEs is determined at the time the plan amendment first becomes effective for purposes of section 401(a), based on all of the relevant facts and circumstances. These include, for example, the relative numbers of current and former HCEs and NHCEs affected by the plan amendment, the relative length of service of current and former HCEs and NHCEs, the length of time the plan or plan provision being amended has been in effect, and the turnover of employees prior to the plan amendment. .....

I agree with Bill. The document would say everyone is in their own group and then you don't have to worry about definitions and people moving from one group to another. I wouldn't bother to exclude group C from the plan, but you certainly could.

Congratulations!

I've had plans that are a mix of balance forward and daily. Usually it's the profit sharing component that's trustee directed balance forward, with the other sources being at a recordkeeper. IN your case, you want company B to have their assets as balance forward. I don't know of anything that would prohibit that. That said, would you have to do BRF testing on that? I would say yes, if you are restricting access to one investment option only to a select group of people, then it's a BRF to test.

yes

The determination of 5% owner status is made in the plan year that ends within the calendar year in which the person turns 70-1/2. I assume this is a calendar year plan. Under the top heavy rules, is this person a 5% owner in 2017? Yes. So, as Lou said, once a 5% owner, always a 5% owner.

That seems like a reasonable approach.

Send the deferrals in now and make an adustment on the next check.

Perhaps they were rolled over

I'd start by saying you should of course check the document section on the gateway. Does the document itself allow you to raise a participant to a level needed to satisfy the gateway. If yes, you're done. If not, then I would think an -11g would be in order.

I had an office manager once who was skimming from the company. She inflated her salary and gave herself a higher contribution than the staff. She eventually got caught and went to jail. Fortunately the client didn't think it was out fault that we didn't catch her skimming, but in retrospect the signs were there for the potential for her to have been misdirecting us for her own benefit. So with that said, IAW CuseFan. If the non-owner client contact is directing you to allocate more to her/him than the owner, a call to the owner is warranted.

For the win?

Typically the point of a new comp allocation is to give higher contributions to the key, loosely defined, people at the company, whether that's the owner or anyone else. That said, it would be unusual to see a non-owner benefiting at a higher rate than an owner, and it would be a red flag in the sense that you would want to verify that this is the client's intention. Not that it's wrong, just that it's outside the norm.

When it comes to age discrimination, people who are over age 40 cannot be discriminated against, but there's no reverse discrimination law. So from an ADEA (Age Discrimination in Employment Act) perspective, there is no violation. That said, your plan will have to do a test, called the ACP (Average Contribution Percentage) test that compares the average match rate for HCEs (Highly Compensated Employees) to NHCEs (Non-HCEs). As you point out, the older employees are likely to be higher paid, so this match structure could create a problem for the test. BTW, an HCE is someone who makes more than $120,000 in a year. If the plan fails the ACP test, however, the usual result is a distribution or forfeiture of match to the HCE. Typically the HCE may lose the tax benefit of the match, but not necessarily the money. There is also another test, of benefits, rights and features, or BRF testing. Here you have to show that the availability of the match isn't discriminatory in favor of HCEs. I presume your plan's TPA does this calculation and that it passes. In short, while it doesn't seem fair, it also isn't necessarily illegal.

I don't see any reason that you can't do it now.

It all comes down to what the document says. I could certainly see this being an outcome, in fact the likely outcome, unless steps were taken in advance to keep them out. It's possible the document could have been drafted to accomplish all your goals, but that's water under the bridge at this point, you have to go by what the document says.

I agree with Bill. The ER may end up making a contribution for the earnings if it was their fault. If the RK screwed up, they should make up the lost earnings.

From the EOB Last day of work is usually the date of retirement. Suppose an employee’s last day of work is December 31. Is his date of retirement after that date, which would push retirement into the next calendar year and postpone the RBD by one year as well? According to the IRS, the determination of retirement date is one of facts and circumstances, but normally the last day of work is the date of retirement. The IRS explained its position in a Q&A session with the Taxation section of the American Bar Association held on May 9, 2003. See Q&A-12. However, if the employee returns to work on a sporadic basis, or there is other evidence of retirement occurring on a later date, then there may be a later retirement date for RBD purposes.

What time did he get off of work?