Bill Presson

You can’t defer more than you earn. You can have catchup contributions go above compensation only if there is an employer contribution to push the number up. But with zero compensation, that’s not an option either. Maybe he doesn’t deduct something this year so he has income to defer on?

Plan participation doesn't impact that determination.

If it’s an ASG, she’s key and so are the kids.

Assuming he's 100% vested (same really applies if less), then typically he would get 100% of whatever was in the account when it was liquidated and sent. So he did get earnings whenever it was processed. And I don't believe that the brokerage firm wasn't able to see what the participant was invested in at the time. Not that it really matters, but they're saying they can't run a report from X date to liquidation? Please.

Is the plan pooled or participant directed? How often are valuations done?

Obviously the employer was in error. But I don't believe the participant asserting that she doesn't look at her pay confirms. Anyone on a tight budget does. And anyone that is 62 and a Luddite, I guarantee is reconciling her checkbook constantly. She knew. If I was the employer, I would let it stand. But I would offer to give her an employer loan of $X to cover the extra federal taxes to be paid back over the next year.

Time to have them lay all the cards on the table.

Is it possible, the policy is supposed to be allocated to a single participant? Probably the one paying the premium personally? which shouldn’t be happening.

That would be incredibly unusual. Who owns the policy? I’ve seen “key man” policies owned inside a plan before (though unusual) but the plan pays the premiums.

Thanks for this reminder, Peter. I don't think we remember to lean on this often enough.

Yes.

Are they getting SHNE? If so, they have to get gateway also.

Yuck. Tell him to roll his own money to an IRA and make the investment and not taint the plan.

Holy crap, Batman.

And a pox on all the M&A attorneys that still don't bring in the TPA to get these things done timely.

Agreed. If the plan had last day requirements, I would argue the other way.

You have until 11/30/2024 to make the plan SHNE for 2024 with a 3% contribution. From 12/1/2024 until 12/31/2025, you can make the plan SHNE for 2024 with a 4% contribution.

The plan document will outline when a rehire re-enters the plan. That’s the cite.

I've always wondered why companies don't offer free or reduced 401(k) plans to people that buy the payroll services.

Well, yes, it gives HCEs more flexibility as well. I don't see that as a negative.

I've always preferred clients do an annual true up. If they are willing to do the match, what difference does it make when the participant does the deferral. Instead of maxing out early, maybe the participant is paying off some debt the first half of the year and then is able to defer. Why should the intent be to only benefit the ones maxing out early? There are a number of reasons why a participant might change their deferral amount once or twice during the year.

**edited because I was wrong***

@TPApril Don’t want the obvious to slip past, Ms April.

Any chance the investment is less than $50,000 and they could borrow the money to fund the investment personally?

And this is why we don't have the 3% SH go to HCEs...flexibility before they even think they need it.