jkharvey

A new 401k plan is adopted in March 2024 with deferrals effective 7/1/2024, but all other provisions, including the SH Match provisions, have no delayed effective date. I am probably overthinking this, but logic tells me that compensation paid in the period before the employee could even make deferrals (1/1/-6/30) would not be counted when calculating the match. Since the match is tied to the employee deferrals, is there any situation where the IRS would include the compensation before the effective date of deferrals in that SHM calculation? Thank you

The controlled group is made up of 3 partnerships. One of the partnerships reports K1 loss. Is the combined compensation of the other 2 entities reduced by the loss or is that entity ignored?

The 401k plan includes Basic SH Match provisions, but no one made deferrals in 2023, so no ER SH contribution is required and no testing is required. Does the question at 14b refer to design only , so SH option should be selected, or is it N/A in a year with no 401(k)(3) testing requirement? Thoughts? Thank you.

We have a 401k plan with a participant who died a couple of years ago. The beneficiaries are the 2 adult children. The daughter has already received her distribution, but the son will not respond to any contact from us or from his sister. He did respond when we first contacted him and said he would complete the paperwork, etc. He never did and now does not respond to mail, calls, etc. We cannot even do a forced rollover because we have no SSN to provide the platform that holds the assets. Any suggestions are appreciated. Thank you.

The employer changed payroll providers at the beginning of 2023 and for some unknown reason the deferral election of one participant was not properly implemented and for 8 months no deferral was withheld from the participant's weekly payroll. The employer, however, continued to deposit the participant's elected amount. We are working on how to properly correct. My questions are this: 1. Am I correct that this would meet the definition of Failure to implement an employee election found in Appendix A of the EPCRS Rev Proc 2021-30? 2. If this does meet EPCRS definition above, then correction would be QNEC equal to 50% of the amount provided by the employee on the deferral election. Since the employer has actually deposited an amount greater than 50% of the required QNEC, is it permissible to leave the excess in the Plan for this participant? Thanks

The person is not a US citizen or even located in the US. I am going to ask if this worker ever comes to the US to do any work, but it doesn't appear that he does.

A prospect we have been working with is in the software industry and uses a third-party Employer of Record for a worker that they have in the United Kingdom. This Employer of Record is the legal employer of this worker. Our plans typically use the Non Resident alien exclusion. I'm trying to determine if this arrangement would meet the Non Resident Alien with no US Source income exclusion and the question stops there. If it doesn't, has it been anyone's experience that the arrangement holds up to the IRS standard that this worker is not actually the employee of the plan sponsor?

401k plan with ADP Basic SHM provision is amended for 2022 changing to a Triple Stack Match. When the SHM was calculated, the amendment was missed, so only the 1st tier (4% of comp) was calculated and timely deposited. The correction is going to be made this week for the other required tier, but obviously will be deposited after the deadline for 2022 415 purposes. EPCRS Revenue Procedure 2021-30 provides at Section 6 .02 (04)(b) A corrective allocation to a participant's account because of a failure to make a required allocation in a prior limitation year is not considered an annual addition with respect to the participant for the limitation year in which the correction is made, but is considered an annual addition for the limitation year to which the corrective allocation relates. However, the normal rules of § 404, regarding deductions, apply. Can the Plan rely on this provision when making the deposit for the 2022 plan year before 12/31/2023, or is that provision only going to apply if the correction is made 1/1/2024 or later since "technically", there isn't an EPCRS correction needed until 1/1/2024?

The Plan Sponsor made payment of back wages in 2022 pursuant to Department of Labor Wage and Hour Division investigation. The Wages were reported on W2 form for 2022. None of the employees elected to have deferrals taken from these back wages and no employer contribution was made to the plan for 2022. In the 2021 Plan Year the Employer did make a matching contribution as well as a QNEC to correct the failed ADP test. I understand that the Regulations discuss the back pay as it relates to 415. Related to this back pay, my questions are as follows. : 1. Is the Plan required to rerun the 2021 ADP/ACP test to include the additional wages? 2. Is the Plan required to recalculate the Match for 2021 to include the additional wages? 3. Is the Plan required to recalculate the QNEC allocation? Thank you.

The 401k/PS plan has 1 year of service eligibility. Two NHCEs were allowed to defer before meeting the requirement. The plan is going to be amended to allow them to make deferrals but they will not be eligible for PS contributions. Are they required to receive the 5% minimum gateway (Plan is cross tested)? Thanks

A participant who also happens to be a Plan Trustee took out a plan loan a couple of years ago. The participant terminated in 2020, but was not removed as a Trustee until 2022. The documents specifically provide that a party in interest under Erisa 3(14) who terminates employment with an outstanding loan will be treated as an employee whos employment has not terminated and for any other applicants, the loans become due and payable at termination. Our question is this. At the point this former employee was removed as a Trustee is that loan due and payable? Thank you

We have a 401k/PS plan that provided 100% vesting for Employer discretionary PS contributions. When we prepared the cycle 3 restatement, we included a change in that vesting schedule making it 2-6 graded. The restatement was effective 1/1/2021 and the employer signed it 4/15/2021. Eligibility requirements are 1 yos/21 yoa and 1/1 7/1 entry dates. One employee hired 1/21/2020, so met eligibility at 1/21/2021 and entered the plan 7/1/2021. Does this participant have to be 100% vested following the pre amendment provision or is he subject to the amended graded schedule since he did not become a Participant until after the later of the restatement's effective date or adoption date? The plan document makes reference to an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective being required to have his Vested interest as of such date not less than it would have been without regard to such amendment. Thank you

We are seeing an increase in the number of VFCP letters received from the DOL as a result of 5500 reporting of late deferrals. Is anyone else seeing this increase? Are you seeing any further DOL activity (investigations) as a result of the letters? I have read a post from fall of last year on the subject, but am wondering if there are any more recent updates. Thank you

Larry Starr...you hit the nail on the head here. The participants are absorbing the costs which is the reason for my concern.

The standard distribution fee from the plan is 75.00. If a participant is "forced out", however, the fee is 125.00. The forceouts are always the amounts that are less than 1,000. The original theory behind the additional fee was that there is additional work involved in setting up the rollover IRA. For amounts, however, that are not rolled to an IRA, i am concerned that this fee could be looked at as discriminatory since it essentially is only going to be applied to NHCEs. Any input is appreciated. Thank you.