TPApril

Possibly related - 401(k) plan's 415 amendment included only post severance pay that was 'regular compensation'. In practice, final paycheck includes unpaid PTO. 401(k) is taken from that full amount and match based on that full amount. Does this require a VCP to correct that 415 amendment and subsequent plan document restatement to include this PTO in the plan's definition of compensation?

Plan Design challenge here... All that being said about their desire to maintain the two plans, setting up a 3% safe harbor feature in the 401(k) plan would still be a 'defined' contribution, even if the MP was reduced from 10% to 7%, with a total 'defined' contribution remaining at 10%. Given the ability to take advantage of the catchup feature in the 401(k) plan, I'm still trying to guess why this wasn't done by the prior tpa (who I admire and respect, so skill set was not an issue).

Plan Sponsor understands the ability to stop and/or change MP contribution rate, but they feel in the local business environment that they want to retain the separate plans. That being said, I don't know why the prior TPA did not present the safe harbor option for the 401(k) plan, or if they did why they didn't proceed with it, so I'm trying to ponder reasons against it before we present it.

Company currently has a 401(k) plan and x-tested MP plan w/10% to general staff (10-20% to HCE partners). What would be a reason against making the 401(k) plan a 3% nonelective safe harbor plan and reducing all class rates in the MP plan by 3%? Highest HCE rate is currently 20%. Reason for change is currently no HCE participates in 401(k) plan but this would make catchup available to those over 50. Understood that s/h contribution is fully vested etc.

Looking for clarification - VS plan restated for PPA does not request DL. In 2017 they amend the plan by making changes to PS contribution. Plan becomes IDP. Correct that no DL will be required at that time? Think they should request one at current time even though there is no divergence from the checkboxes?

ok I think I get it (summarizing my thoughts more than asking a follow up question)... When doing taxes, a person can only include up to the 402(g) limit, even if more than that was actually deferred. When the person is following the rules, that distribution will occur to correct for it, and as you say, the 1099-R indicates that it is not a taxable item in the current year. as for your Roth scenario - good question!

In this example where a 1099-R will be issued with code P for excess deferrals in the prior year, it can occur that this is determined after January, specifically when person realizes they deferred to two separate unrelated plans over 402(g). So when distributing excess deferrals prior to 4/15, there is a 1099. Is this 1099 normally issued right then, or wait until January of the following year when 1099s are normally issued even though now it's a year too late?

Break in service generally defined as working < 500 hours in a plan year. Say a participant terminates 1/31/10 in a calendar year plan year, having worked < 500 hours. Is forfeiture after 5 full plan years at 12/31/15, or rather after 5 plan years of break in service, ie 12/31/14?

The relationship issue that i'm referring to is that the individual in question is part of an affiliated service group. are there repercussions to the other plan in the asg?

investments are mostly non participant loans which i have little details about. also real estate, ltd partnerships. i agree with the advice to 'run' but as i implied, it just aint so easy due to certain relationships...

One person plan in which participant seems to believe she is above the law. Problem 1 - prohibited loan of $200,000 with no interest in resolving it Problem 2 - no interest in taking out RMD by due date, she says there is no cash in the plan TPA has explained the repercussions, qualification issues etc. but she simply is not concerned. Due to relationships, the easy solution of firing the client is not so easy. So attempting to think creatively, looking for some thoughts - if the loan were corrected and 'converted' into a distribution from the plan, can that distribution be treated as the RMD? Loan is from a year prior though than the year of the RMD. Challenge is she does not want to submit for VCP on this.

New but related question on existing thread: Issue is the match formula was applied wrong to some employees so they received more match than the formula allows. Plan is going to move these amounts to forf acct. Question: should there be earnings and gap earnings applied to these amounts?

you make a good point Tom. I guess I shoulda clarified that it is an HCE in question. I will just test without it.

Looking at process - if there is an excess match deposited in error that has not yet been removed by 12/31, is the ACP test run including that amount, or it is assumed it will be forfeited appropriately since it wasn't correct to begin with and the ACP test is run with the correct match?

Actually, lectures are appreciated - i'm an eternal student... Plan sponsor will not be doing anything in this regard. They have no interest in amending the plan for just 1 person, as they see that as a greater unfairness, and they have no interest in increasing liabilities since as it is they are annually defending the plan's active status.

jpod - there is no benefit in the plan to single participants who die prior to benefit start date. Plan sponsor has no intention to falsify documents. They thought about amending plan until they were informed of an increase in liability of adding such a benefit.

well there is no POA for the single participant. Plan Sponsor in question is trying to find a way to provide a benefit on behalf of a beloved longtime employee.

On the topic of Power of Attorneys - 55 year old single (no children) participant in a DB plan in car accident and is now on critical life support. There is no POA. Her sister has asked how she can be authorized to become an alternate beneficiary to receive benefits the 1st of next month. or have participant elect a 10 yr certain benefit. No issue of any other family member or contesting. I'm not aware that there is a way to provide such a benefit but wondering if there is. If there was, the next question would be what if she dies prior to the benefit start date.

Can non-profit board members be covered by benefits that are offered to employees? Being paid, are they considered employees?

Bill - i have corrected and edited my question to say 'covered ee's'. Thank you for pointing that out. Still hoping for some thoughts though .

I can't say I fully understand my original question of 3 years ago, but here's 2 related questions: 1. Similar to KennyH's question above - there is a control group, two separate companies, but same ownership, so being treated as one control group in one plan. As they are separate companies though, would they be treated as a Single Employer or Multiple Employer? 2. New company effective 2/1/15. As an offshoot of a prior company, they start with > 100 covered ee's. They set as a calendar plan year, and the medical plan goes into effect on 3/1/15. Question is - do they need to file the 5500 for 2015? I cant seem to tell if they started with over 100 covered ee's since the moment there was coverage there were over 100, or since coverage started a month later if they were really 0 at the boy in which case no 5500 until 2016?

Your question is essentially my question. The BPD indicates it is an Annual True Up but the Match doesnt have to be made at any particular time. The longstanding procedure as I understand has been an ongoing trueup every pay period.

mphs77: Yes to your question, the match would continue even when there is no actual 401(k) (ongoing trueup), ok, that makes sense then. thanks.

Facts: -Immediate 401k entry for new hires, 1 yr match entry -Based on % deferral rate election, ee can max out 401k early, but match will continue to be allocated on a payroll basis up to the 3% of pay -New ee maxes out 401k prior to match eligibility, so no actual 401(k) is made after such date Question: 1. Can ee receive a match somehow on a prorated 401k amount (ie 3% of pay since match eligibility)?

401(k) safe harbor top heavy plan terminated on 9-30-2015. Payroll periods end on 9-18-2015 and 10-2-2015. For purposes of contributions including 401(k) are they run through the payroll ending 9-18-2015 (prior to plan term) or should partial pay through 9/30/15 be calculated so as to make all affected contributions?