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.

I have a 401k plan that is asking if they can merge into the plan of another employer. There has been no transaction between the 2 companies. They are still separate ongoing entities. The employees in my 401k plan have all had their employment terminated with the plan sponsor. All of these employees were hired by another company and now the 2 companies are asking if the plans can be merged. the language in the document doesn't specify that a merger may only take place as a result of an acquisition. What about the participants that terminated? If we are allowed to merge, do they have to be offered an opportunity to take distributions since their terminations occurred before any merger? Thank you

I would like to find out how others handle this issue. Let's say that for whatever reason too much money has been deposited into the Deferral source at the end of the Plan year. Perhaps it was a duplicate payroll submission or an error in the amount submitted. Let's say that it was definitely not an intentional prefunding. Do you simply allow those amounts to stay in the participant's account and be used to reduce the next required 401k deposits? (I didn't think that this was permitted). Do you require the employer to allocate as a discretionary contribution? Do you move the funds to a suspense account to be used to reduce a future Employer contribution, but not an employee deferral? Do you move to suspense and first use to offset any current year receivable of ER contributions? Thank you

This snap-on was executed by the Volume Submitter sponsor on behalf of the Plan Sponsor. it was effective 1/1/15 and executed on 11/15/2015. The Snap-on included language to amend the following sections: Eligibility, Contributions (SH and Elective Deferrals), Contributions (matching PS and other Contributions), Vesting, In-Service Withdrawals,

If any of you are familiar with the FT William document, I have a quick question, please. I have a takeover plan that used the FT William document. They are not providing me with an actual PPA restatement Adoption Agreement, but only a snap on amendment for the adoption agreement. Did FT William provide an actual PPA restated adoption agreement and my client is just not finding it or did they truly only do snap on amendments to the EGTRRA Adoption Agreement? Thanks

Yes, I should have mentioned that it will pass 414(s). The Plan will allow me to exclude bonus comp from receiving Match which includes SH Match.

Is it permitted to exclude any elective deferrals made from year end bonus pay from the SH match? if so, how are those amounts tested for ADP/ACP? Does that throw out the entire ACP safe harbor and test is run as it normally would be? What then about those elective deferrals that have no SH match? Are they tested separately?

When an employer self corrects an error of matching contributions calculated on compensation in excess of the 401(a)(17) limit, are those amounts subject to 4972 excise tax? I don't find this addressed in the EPCRS Revenue procedure. I have never had an IRS auditor ask for this on audit, but someone else in my office is asserting that we do need to compute and pay the tax on a 5330. Thank you

Self-employed individual with a 401k/PS plan has a net schedule C for 2016 (before 1/2 SE tax and before his PS contribution) of 100,000. The 404 deductible contribution is 18587 (provided I did that math correctly). He can contribute the 18587 for PS and then max out the deferrals, 24000. The total deductible contribution becomes 42587. The individual, however, made a contribution in excess of this amount. Any suggestions on how to remove that excess? could it be returned and considered a reversion subject to 4980 excise tax? I understand about the excise tax for nondeductible and "using" up that amount in subsequent years, but there may not be compensation in 2017, so we are looking at how to remove it from the account, if possible.

Thank you RatherBeGolfing. You explained what I was trying to wrap my brain around. The fact that this payment would not have been made had she not agreed to the reduction to part time.

We have a client that changed a full time employee to part time. The employer actually prepared and the employee signed a document that reads "Severance Agreement and General Release". This document states that the employee and the company separated on Marcy 31, 2017. There is another letter that is an "offer" for the part time employment effective as of 4/3/2017. As part of the Severance Agreement the Employer agreed to make monthly payments of XX amount for a period of one year and this amount would be paid in 26 installments on the normal payroll schedule. I know that if this was pure severance, it would not be plan comp. I am hung up, however, on the concept of "severance". Did this employee actually sever employment? Just because a document was prepared and signed does not create severance (form over substance)? If we decide there isn't severance, would this NOT be Plan comp for some other reason that I am missing? Thanks