Dazednconfused

Participant makes a Roth 401k election 1/1/24, they just notice that nothing is being withheld from paycheck in June, however, the correct Roth contributions per election have been funded to participant's Roth account (not sure how this happened). So, nothing withheld from paycheck but Roth is funded. The correction, in my thought process, is MDO, since failure to implement correctly. I would use EPCRs to correct the MDO, provide notice and fund a qnec, but question about the Roth that has been funded. My thought was to transfer the $5k that has been funded out of his Roth to the forfeiture account and use later. Is there an issue with that since it is in a Roth source? Is there a better solution in this case? Thanks in advance!

Thank for the input. Then I guess the next issue is 401k deferrals and that mess, looks like in year of termination 2018, participant had deferrals. Seems like a fun issue to resolve.

Participant terminated in 2018, in 2021 agreed to a settlement, part of which wage income of $6k monetary consideration for disputed lost wages. The wages were paid as w-2, nothing in the settlement addresses plan contributions. I am on the fence if this should be considered back pay and allocated an allocation based on 2018, I read 415(c)-2(g)(8) but wondering if the 'disputed lost wage' would have otherwise been included (such as underpaid for hours worked).

Plan's definition for compensation is 3401(a), no other adjustments. This would exclude group term life amounts from deferrals & employer allocations, correct? It must be close to the deadline my mind is mush.

SEP, owner was only participant, was funding 20% monthly based on her compensation for 2021. Now realizes the only employee is eligible as of 1/1/21. Owner has stopped contributions and now is considering removing her contributions instead of funding (with lost earnings) contributions to participant through the same period. Can contributions be removed because the owner changed their mind? I see corrections process for excess contributions but not sure this can be considered excess? If they can remove, I assume the same process for removing excess? Thanks for any help.

Eligibility for rehired employee. Plan Eligibility states '90 days of service' (no hour requirement is stated), plan uses actual hours, not elapsed time. Entry date 1st of month following. DoH: 1/28/19 DoT: 4/15/19 Rehired: 11/11/19 I think DoP is rehire date, or 12/1, after they worked the actual 90 days of service was completed. I believe the intent of the employer was 90 days of actual service but I don't see where a day is defined to credit service. I have read other posts regarding situations like this but most say the document uses elapsed time, in this case the doc states actual hours. Would the spanning service apply in this case? So, other than amend the doc to match what the employer intended, some general opinions? Thanks for the assistance.

Thank you for confirming. I am getting some push back from cpa regarding the limit, must be something in their program that doesn't include employee comp.

Profit sharing only plan (cross test), sole prop with 3 participants all receiving contribution of $11,000k (their total comp is $220,000). Owner's Schedule C line 31 is $265,000 before employee contribution. I come up with 1/2 se tax $11,287, so net comp of $242,712 before owner contribution reduction. Could the owner do a maximum $54k or is the maximum around $48,540? I seem to be getting the 25% deductible limit of participating compensation and owners 20% deductible limit which goes on their personal 1040 crossed up right now. Thanks in advance.

Plan has 3 months of service for 401k (entry month following) and 1 YOS for safe harbor 3% and Profit Sharing. There are 3 NHCEs and 1 HCE that enter the plan in 2017 for deferrals only, HCE deferred the max, 3 NHCEs are at zero, so OEE ADP test fails. Can the HCE be tested with the non-excludable group and the NHCEs be carved out and thus pass ADP? In reading regs (and other posts) this can be done but I am not sure if it applies with different eligiblity periods for safe harbor and deferrals (and I just might be fried for the day). Thanks!

We just got a new plan and a participant (HCE) took a $35,000 loan back in late 2009, the loan note and amortization schedule is interest only payments until final principal and interest payment (so the loan is already bad from the beginning). However, the Plan document he provided didn't allow for loans back in 2009 (he is looking for any amendments but cant recall). If the Plan didn't allow for loans, how is this corrected? Is this considered an 'overpayment' but since it was back in 2009 can it be paid back (as an overpayment)? Thanks.

Hi, Plan is top heavy for 2013, safe harbor 3% and employee deferrals are the only contributions for the year. Compensation is considered from date of entry (7/1 in this case), a participant enters on 7/1/13 and is employed on last day. Would the new participant's 3% safe harbor contribution be based on compensation from his entry date of 7/1 or their full plan year compensation? I believe that since only safe harbor contributions & deferrals are funded for the year they are considered not to be top heavy and can use the compensation from 7/1 on for the 3% allocation, am I off the mark? I know any PS allocation would be full year compensation just fuzzy at the moment on the safe harbor.. Thanks.

Hi, Not even saving match, this plan doesn't waive allocaiton conditions upon death, so not sure why they are fighting this but for some reason they don't want to withhold her deferrals on the final check...I think the elections are in force as well. Thanks,

Hi, A participant dies, she had vacation time and personal time due and the employer does not want to withhold 401 deferral contributions on the final check for her vacation & PT, is this allowable? The plan does not exclude any type of compensation and I haven't found anything that seems to nullify her election form upon death. Thanks for the help.

Welfare plan has a plan year end of 12/31/11, one insurance contract end is 2/28. On the 2010 Form 5500 Schedule A, we reported the contract ye 2/28/11, which should have been reported on this year's 2011 form schedule A. Has anyone run into this? Is it ok to report the contract again in 2011 or just keep reporting as is? Of course the correct thing is to go and amend the 2010 Form and remove the contract year 2/28/11 and put on the 2011 but of course I don't really want to do that so I am wondering if others have run into this and what they have done. Thanks in advance.

We missed an amendment for a welfare plan that amended the year end from 1/31 to a 12/31 year end effective 1/1/2010. However, the 2009 Form 5500 was filed for 2/1/209 - 1/31/2010 py. The extension was filed on July 28, however using the 1/31/11 year end so it is due date 11/15/11. Anyone run into this before, best options? Could I file under short year today (10/17/11) even though the extension has the incorrect plan year end of 1/31/2011? Thanks.

For 2010, many of the plan's deferral contribuitons were late, I reported amounts on 10a on short form. The contributions have all been funded as well as the late earnings and 5330 filed. Do I need to attach anything (schedule of delinquent payments) with the SF form that shows payments made and when? I don't think I do I just have to have everything in order if/when DOL letter comes. Thanks,

I am completing a Schedule D for a client with funds at ING, under the 5500 package from ING it states use for part 1(a) 'Map Contract - Seperate account D' (it is a map contract), for part 1(b) do I enter ING Life, and for part 1© ING's EIN and plan number? I know the ING's EIN but not the plan number. I read the Schedule D instructions and it would appear that I would use '000' here but just wondering how others have completed. I have emailed ING for the plan number but no one seems to know what I am talking Am I on the right track? I have completed these with John Hancock funds but they provided all the data. Cheers!

Participant should have entered plan 4/1/10, but actually was notified on 10/1/10, began Roth deferral contributions of 15% at that point. The Plan is a safe harbor non-elective 3%, which was calculated correctly for 2010. In reading the correction for the missed deferrals the employer will have to make up a QNEC for the 4/1/10 thru 10/1/10 of 50% of the compensation for that period. My question is regarding what contribution percentage to use in calculating the QNEC since it is a safe harbor plan. Would I use his elected 15%, the plans ADP percentage or 3% since it is a safe harbor non-elective plan? Also, I didn't see anything extra that I needed to do since his deferrals were Roth, or did I miss reading it? Thanks all,

Participant is rolling out of a plan with regular deferrals & ER contributions and wants to rollover and convert to Roth IRA. I believe on the 1099-R I would report the gross distribution in box 1, taxable amount in 2a which would be gross distribution, in box 7 is a 'G', and in box 4 the amount of tax withheld. Question is box 4 and withholding, can the participant elect no withholding or is there a 20% that must be withheld at the point of distribution? From what I have read I think that since it is a rollover they can elect no withhold does this sound correct. It is way to early to think about 1099r's! Thanks,

Company mistakenly 'mis-coded' some participnats salary deferrals and they were not funded along with the associated match (match on a vesting schedule) for more than half the year. Since this has happened some of these participants have left. Some of these corrections are around $10 in deferral and match, everything I read says they will need to fund, however, they may be able to FF the amounts because they are under $75 under the corrective distribution, is this on the right track? Also, when the ER makes up the deferral and match, should they fund as a deferral or QNEC and match or QMAC? Thanks all

Participant in SEP received a lump sum distribution, then he decided he didn't need the cash for what ever reason. If within the 60 days of the distribution can this be returned to the SEP Plan account (he will pay entire amount back including any tax) or does it need to funded into a different IRA account? Thanks,

If a participant's compensation for a pay period is not enough to cover their deferral election what is the correct way to handle? Do you defer all pay to try and meet the election form? Thanks,

Plan has immediate entry for deferrals, YOS for ER. Past years only owner and son were employed and contributing. In 2010, they hired four employees (all employed on last day), two employees deferred, however, so did owner and son at a much higher rate. Since only the owner and son were participants in 2009, the plan would be TH for 2010. I am thinking that there is a TH requirement for the new EE's since they are participants on DOH for deferrals, am I correct? Or is there some rule out there I am not seeing... Thanks for the help,

Thanks, yes the contribution was funded after the 2010 plan year in Feb 2011 on behalf of the 2010 ps contribution. So the $87,000 is the true contribution for 2010, and that should have been receivable to the plan. The additional $3,000, can be used for the 2011 (since it was all deposited in 2011) and allocated at year end 2011, since wasn't due or in the plan as an asset for 2010 I guess I can 'ignore' for 2010 ye 5500 reporting and use the $87,000 as the true er contribution. Any thoughts on above process.. Thanks again all.

Employer funded a profit sharing very early and we noted that there were a couple of 'mid year' participants whose allocations were based on full year compensation but should have been from date of entry. We will move the overfunding amounts to Plan FF account and be used per plan document. Lets say the ER funded $90,000 but should have been $87,000. What should be reported on 5500? Is it the $90,000 which the er claimed on their corp return? I am thinking that is correct since the amounts moved to FF and will be used accordingly. Thanks.