30Rock

Correct - one plan has a tiered match the other plan no match. Is this a matter of coverage testing even though other parts of the plan are being permissively aggregated in order to pass coverage?

Both plans have mirror safe harbor provisions using the 3% nonelective. One plan has a tiered match which does not qualify for the ACP safe harbor match and thus it must be ACP tested and BRF tested. My question is do I run coverage and exclude the non-benefitting employees of the other 401k in the controlled group? Or do i include them in the ACP and BRF test a 0? The BRF test has 3 match levels and they do not fall in any level since they are not match eligible. It seems that coverage test for the match is what I need? Thanks!

My question is on how to run the ACP test and the BRF test for 2 401k plans that are related but have different components - 2 related employers each have a safe harbor 401k plan providing the 3% safe harbor non-elective, but one 401k plan (401k plan 2) does not have a discretionary match (and this match formula is a tiered match based on years of service which requires a BRF test). The plans are being permissively aggregated to pass 410(b) coverage for the deferrals and safe harbor 3% non-elective purposes. It appears that the match component would have to be tested on a disaggregated basis because 401k plan 2 does not contain a match feature. So if the 2 plans pass coverage for purposes of the match by excluding the non-benefitting employees in 401k plan 2, then the ACP and BRF test for match would be run on the single plan level in 401k plan 1? Any help would be appreciated. Thanks!

Thanks I just added this to that forum!

Are employee and employer contributions to an HSA grossed up for 415 plan compensation purposes? I am not too familiar how contributions to these arrangements affect plan compensation. It looks like they can be run through the cafeteria plan - if so then I assume they would be considered Section 125 pre-tax amounts and then gross up the 415 compensation? Another way to set up an HSA is like an IRA and then take the deduction on your 1040. In this way, I assume the compensation is also included as 415 compensation in the employee's 401(k) plan? If an employer wants to exclude them, I think they have to be excluded under the plan compensation definition in the document? Any suggestions to assist me would be greatly appreciated!

Are employee and employer contributions to an HSA grossed up for 415 plan compensation purposes? I am not too familiar how contributions to these arrangements affect plan compensation. It looks like they can be run through the cafeteria plan - if so then I assume they would be considered Section 125 pre-tax amounts and then gross up the 415 compensation? To exclude these amounts under plan compensation, I assume you need to exclude them in the plan document? Another way to set up an HSA is like an IRA and then take the deduction on your 1040. In this way, I assume the compensation is also included as 415 compensation in the employee's 401(k) plan? Any suggestions to assist me would be greatly appreciated!

Employer safe harbor matching contributions were distributed for a hardship distribution.

Yes the plan allows for hardships, but the regulations do not allow safe harbor contributions to be withdrawn for a hardship.

A safe harbor plan distributes a hardship under IRS safe harbor hardship rules, to a participant. We know this is an operational failure. What is the correction and consequence? I can see it being treated under the overpayment rules and ask for the distribution to be returned (lets assume there are no other sources that can fulfill the amount of the hardship need). Does this distribution blow the safe harbor status of the plan by any chance, and are there any other consequences? Thanks!

Thank you all!

Yes the plan is governmental

What are the fund change notification requirements for a plan not subject to DOL ERISA rules? Is it a matter of state law? Thanks!

I think the issue at hand is whether we can use disaggregation in order to Pass ADP and ACP. If we can use it, then the plan passes nondiscrimination. So QNEC's and one to one correction are not relevant. Thoughts?

If running ADP and ACP test after the 12 month period - testing is being done now for the 2014 plan year, can the disaggregation method for otherwise excludable employees still be used? Thanks!

Document has not been drafted, just trying to consider all options.

If a plan with a safe harbor match and 100% vesting and no other sources, merges into a plan with a discretionary non-elective and tiered non-safe harbor match which both have a 3 year cliff vesting schedule, can the 3 year cliff apply to participants in the safe harbor plan that merges? Or does their 100% vesting have to carry into the merged plan? I think that the new non-safe harbor sources do not have to be 100% vested. Any thoughts?

I did ask, but as long as the participant is still employed and has an account balance, then a second loan is allowed. I assume the 2nd (not the 1st) will be paid via ACH.

We have a participant who took loan 1 out and then went on a leave of absence which has continued beyond 12 months. Before the first loan defaulted, she took a second loan during her same leave. Does the 12 month loan suspension for leave of absence start as of the date of the original leave, or can it start as of the date she took the second loan because she has not returned from the leave? I assume it is one bona fide leave, but just wanted to check! Thanks!

I have a sponsor that wishes to merge their money purchase plan into their 401k plan as of 8/31. There is time for the 204(h) notice to get distributed. However the money purchase plan has a 1000 hour allocation requirement which most participants will likely meet by the merger. So when the plans merge, will the 8/31 balance be subject to QJSA and other money purchase plan protections but the future contributions (which will be identical but as profit sharing contributions in the 401k) will not be subject to the money purchase requirements? Thoughts?

No we do not use fail safe and that would only apply to allocation conditions. This is an eligibility exclusion failure. I think probably bumping up the NHCE's benefit is the easiest route to pass ABT. But who do you bump up?

I have a safe harbor plan with an enhanced match of 100% up to 4% of deferrals. The plan excluded too many on-call employees last year and failed both Ratio Percentage Test and Average Benefits Test under 410(b) for deferrals and safe harbor match. How do you correct - an 11(g) retroactive amendment to bring in some of the on-call employees - 1. how do you determine which ones to bring in and 2. what is the corrective contribution for the missed deferral?

Technically it is not a short plan year. The 415 regulations state I have a short limitation year when the plan terminates so I know I have to pro-rate the 415 limit. But since I am not amending the plan to a short plan year I do not have to pro-rate the 401(a)(17) compensation limit. So I was wondering what TPA's do in terms of testing compensation.

I should have said use the date that all plan assets are distributed and if this is less than 12 months, then does the compensation limit get pro-rated?

When a 401k plan terminates mid year, I know this creates a short limitation year and the 415 limit is pro-rated. However what happens to the compensation limit for allocation purposes and ADP and ACP testing? Do you use partial year compensation, full year or compensation up to the date the 5500 is filed? Thanks!

If a participant enters the plan but receives no compensation because the first payroll date has not occurred yet in December, do they count against you in the 401(a)(4) test for purposes of the gateway? I would think $0 compensation would be a $0 contribution and thus not impact the test. Any thoughts?