Bill Presson

That's what I would do. Nothing you're doing actually affects the 401(k). And nothing you're doing will make anything worse for the SIMPLE.

Well, apparently it lives somewhere! A little surprised this issue hasn't shown up before.

FDP software still lives?? Wasn't it purchased by Relius?

SECURE Act allows you to make existing 401(k) plans SHNEC retroactively. He's got until 11/30/20 to do it and use 3% and until 12/31/21 to do it and use 4%.

Why?

Can't he elect safe harbor nonelective for the year and forget the testing?

Yes, but in the middle of the current restatement period, we would just accomplish both items at the same time instead of doing one now and the other later.

Frankly, it's not your responsibility unless you're a fiduciary. You should send a certified, signature required letter to the wife explaining what needs to happen. Copy their attorney if you know who it is. Then, if she doesn't respond, you're done.

Agree with this.

I think that's probably safe to do.

But the plan year didn't change. A brand new plan was created that overlapped the other plan. I don't know the answer as to why it was done this way, but I would have preferred to do it differently. BTW, I don't know the 415 limitation answer.

I think the specific question here is: can a participant defer the maximum 402g limit + catch up in 2 separate calendar years, but 1 plan year? If yes, then are the 2 catch up limits BOTH added to the 415 limit to determine the maximum allocation?

Or tell them it seems wrong and ask for their legal or CPA back up. The time to make it right is now, not after it happens.

I'm glad someone else posted this. I kinda wanted to do so, but was questioning myself. Didn't seem right.

As long as the date the plan started that was on the SS-4, I don't see the issue on the timing. If the plan you're creating is actually a 401(k) instead of a cash balance, then I would see a problem with the DB name. For a CB plan, I don't. If it's a big concern, change the name of the trust with the IRS.

I wouldn't worry about that too much. The date for the notice is a safe harbor anyway. If the owner woke up on December 30 and decided to make the plan safe harbor, you could do the amendment and the notice the same day and make a facts & circumstances case that it met the requirements.

Aren't all cash balance plans defined benefit plans? I wouldn't worry about it too much. But it would have been easier to just name it XYZ Retirement Plan.

I think this is the section that Bird is referencing. this is from 1.410(b)-6 Excludable employees (f) Certain terminating employees - (1) In general. An employee may be treated as an excludable employee for a plan year with respect to a particular plan if - (i) The employee does not benefit under the plan for the plan year, (ii) The employee is eligible to participate in the plan, (iii) The plan has a minimum period of service requirement or a requirement that an employee be employed on the last day of the plan year (last-day requirement) in order for an employee to accrue a benefit or receive an allocation for the plan year, (iv) The employee fails to accrue a benefit or receive an allocation under the plan solely because of the failure to satisfy the minimum period of service or last-day requirement, (v) The employee terminates employment during the plan year with no more than 500 hours of service, and the employee is not an employee as of the last day of the plan year (for purposes of this paragraph (f)(1)(v), a plan that uses the elapsed time method of determining years of service may use either 91 consecutive calendar days or 3 consecutive calendar months instead of 500 hours of service, provided it uses the same convention for all employees during a plan year) Essentially, if you have a requirement that someone complete 1000 hours OR be employed on the last day in order to be eligible to receive a contribution, then you get to exclude terminated employees with less than 501 hours of service from 410(b) coverage testing. This is irrelevant to the grouping method. But, if you don't have those requirements and instead just use the individual grouping to not make a contribution to this terminated participant, you have to include them in 410(b) coverage testing.

DeltaRat, depends entirely on the plan document. If you have a copy of the Summary Plan Description, it should outline your options in the distribution section. Union plan rules have some quirks and you might have some restrictions if your career change is just a move to another job, but still covered by the same collective bargaining agreement.

Lay it all out and give them the fees required to fix everything. Don't skimp. And then let them make the decision. Help a client that wants help all day long, but don't make a client's problem, your problem.

To add to Alonzo's answer, generally a sole proprietor has to make the deferral election prior to 12/31, but the deposit can be made as late as the tax filing deadline or as soon as the schedule c is finalized.

That seems to be outside the scope of this board's expertise.

It's a combo plan so the gateway is higher.

No. The deferrals have to be allowed for 3 months.

They're just giving you their operational requirements. There's nothing in the regs requiring that. Pretty sure providing the notice on date of hire for immediate eligibility plans is deemed timely.