Bill Presson

I've been involved with insurance in plans for a number of years. Usually it doesn't make sense. Almost every time it involves the agent using the plan money because it's easier than getting the insured to write a check. The "seasoned money" is a term of art meaning "money available for withdrawal" and using that money to pay for life insurance just means that you can exceed the incidental limits without disqualifying the plan. Taxes are still due because it's equivalent to an inservice withdrawal. You seem to be using that amount however to then calculate the incidental limits. And those are based on cumulative premiums, not annual premiums. The loan availability will likely change drastically if you spend as much as you're indicating on life insurance. Lots of moving parts.

Yes. This means my interpretation is right. As soon as someone gets to 1,000 hours, they are eligible. They don't wait until finishing the 12 months. This has yuck all over it. Just because something is legal doesn't mean it is a good idea.

BG, could be, but I've seen some documents that don't specify having to wait until the end of the service period. Just says 1,000 hours in the service period. The OP didn't say either. But I agree with asking the attorney. One of the benefits of having an attorney draft a document.

"first Entry Date preceding" likely means 1/1/19 for your two examples. Yuck. WCP

Thank you, KevinC!

All, what if the plan starts/is adopted December 1 and deferrals are only available for that month of the year. However, the plan is retroactively effective 1/1 and allows PS and SHNEC to be made for the entire 12 month period. Would that check all the boxes?

I saw this earlier this week on the RMS website. They are a TPA as well, so buyer beware: If I Suspend the Contribution, can I Restart the Contribution Later in the Year if Circumstances Improve and Still Retain Safe Harbor Status if I “Make Up” the Contribution? In the case of a safe harbor matching contribution, because the employees may have changed their deferral elections based on the notice informing them of the cessation of the match, safe harbor status is lost for the entire year. Although the employer may “make up” the match, employees cannot effectively “make up” deferrals for pay periods that have already passed. In the case of a safe harbor nonelective contribution, because the SECURE Act eliminated the requirement for a safe harbor notice for ADP purposes, and allows for retroactive adoption of a safe harbor nonelective contribution, we believe that an employer COULD stop/restart the contribution during the year and meet safe harbor status as long as the contribution is funded for the entire plan year. However, we are advising clients who are considering this approach to seek independent ERISA counsel on this matter.

Sorry. Had to. ?

I don't think you're missing anything. And it's silly that they asked you to research the question.

Sorry, just now seeing that you asked me. But @Kevin C is the one that answered.

True.

It might be aggressive but I think it's doable. Will the after tax contributions pass the ACP test?

This was actually fascinating. Thanks to you both for an excellent discussion.

Yes, after the first two.

Assume you're talking about a 403(b) plan? I wouldn't show them as eligible for 2019 if they have no ability to defer.

Yeah. I wanted to say that too.

In addition to the above, you should also make sure you have access to all the w-2 forms for the years in question. And find any statement if any money ever went in. Is it possible that you THOUGHT you elected to make a contribution but never actually did? If there are no deferrals showing on the w-2 forms, the employer didn't fail to deposit anything.

Since the document they used likely had a 2017 effective date, then I would definitely file it under DFVC.

What is the S Corporation doing? Where does the money come from? The current partnership is having to file a 5500SF anyway since the kids participate. There is always attribution under 1563 between a child and parent until the age of 21 and then there are exceptions. I'm assuming they are trying to slide by something here, but would appreciate additional details on the goal of this weird plan.

Banks create money when they loan. They aren't loaning their own money or their customers money. But they do have regulatory capital requirements that they have to meet if their loan balances grow.

That's almost a direct quote from what I say. But some are still convinced it will mean more work. Not many, but a few.

I tell clients this all the time and some refuse to believe me.

We file it with the parent company as the employer. Then on lines 11 & 12 we list each QSLOB. Your client will be one QSLOB and the new entity will be another. They both have to qualify.

It's so tiring telling people that we could have provided options if they had only consulted us prior to the transaction. The M&A attorneys should be sued for malpractice.

Well, I left off a long part of what I had in my head: ", but often the bonuses are in excess of the maximum compensation limit." (edited to add after comma since I forgot to include)