TPApril

According to the quote, the sentence is preceded by: Benefits not taken into account if employee not employed for last year before determination date. I would say it's still objective. btw, Plan Sponsor is going to have that inactive employee work during current plan year so that the plan will not stay Top Heavy.

Company with multiple doctors, set up so each doctor has their own corporation with its own plan, and then there is one plan for employees. All plans are combined for testing (they also mirror each other). One of the doctors is exiting the firm toward the end of the year and going independent. As such she will exceed 1000 hours while within the Controlled Group, but not after she departs. I think hours are only relevant for Controlled Group testing since she will definitely work 1000+ hours for her own Corp. Since employer contribution requires last day worked, I believe the contribution itself will not be included in the combined testing which will reflect a $0 for her. Just curious if there are any differing thoughts?

The status of non-owner related 'inactive' employees who are not working hours but not terminated on the books has always been a challenge for me. With the ADP test for instance, 5500 employee counts etc.

Thank you for your interest in my question. Participant is non key and has never been key. This calculation is as of determination date 12/31/21 for plan year 2022. They were included in all prior calculations.

Participant has been working part time for years, under 1000 hours. In last plan year they worked zero hours, but they are not formally terminated. My recordkeeping system has excluded them from the Top Heavy Test. But his balance is so large, that it makes a difference whether the plan is top heavy or not. Include or exclude him?

Thank you (again with embarrassment) for setting me straight. I really meant to separate the 'trust' from the 'plan'. Owner of this one-person plan 'simply' wants to convert his trust account at his brokerage without formally selling all assets, distributing/rolling over into an IRA and then rebuying everything. I've just never been involved in such a transaction.

Never had a plan do this before, but plan allows for in-kind distributions. Any particular issues out there for self directed brokerage accounts that would like to basically rename their plan as an IRA and treat the value on that date as the direct rollover? (Edit a few days later: aw fiddlebeans, another terminology error on my part - I meant to type 'trust', not 'plan' in the phrase 'rename their trust'.)

As we enter into another economically challenging time, I have a business owner who needs money for a short term issue. He wants to, and can, take an in service distribution, and then return it to the plan within 60 days. I'm thinking he is better off putting it into a new IRA but the advisor is saying to put it back into the plan. What do other piggy bank owners do with such distributions? He understands he will receive a taxable 1099-R.

You know how you get a plan from another TPA and you simply don't know what the daisy is going on? This plan has all participants with money in a Pooled account, and half the participants have an additional self directed account (my first post was wrong). So apparently 404(c) only applies to those s/d accounts. I've simply never seen that. In fact, I haven't seen a plan with all self directed brokerage accounts that was designated as 404(c). I've only ever seen it with the traditional recordkeepers and there's always a QDIA attached. I guess, Luke, we can leave it as is.

Peter, Luka - thanks. I'm new to this plan, looking at it more closely, I see that there is actually a pooled account and participants who don't make an election just have their contribution put in there. I kinda feel like this plan should not have been set up as a 404(c) plan to begin with, just a plan that allows self directed brokerage accounts. Besides that I'll be checking to make sure that all participants have had the chance to open a brokerage account, I'm thinking to just remove the 404(c) indication in the restatement.

okay, I cannot believe I typed HCE and NHCE instead of Key and Nonkey when I know better. This is not an odd top heavy/HCE provision, it is a standard provision of trying to change it from allocating the top heavy minimum to both Key and Non Key to only Non Key during the plan year. I think it's a yes.

Has anyone ever had a client literally sign off that they will not hold your firm responsible for their plan errors/issues/etc.?

There is no default investment alternative whatsoever. It's a small plan so new participants don't come along on an annual basis. Also, there is a profit sharing contribution set up.

There is no default investment alternative whatsoever. It's a small plan so new participants don't come along on an annual basis.

I guess I never saw this situation before - All participants have self directed brokerage accounts. Plan is set up as a 404(c) plan. There is no QDIA. I thought 404(c) plans had to have a qdia.

I agree wholeheartedly with you Bill, and while we have recommended seeking an attorney's advice on multiple issues, and we are continuing to do so, this Plan Sponsor simply won't spend the money.

Plan sponsor has finally agreed to correct a plan by depositing long overdue safe harbor contributions (w/earnings). They would like to terminate the plan, but they do not want to do the following: Submit a formal VCP correction Restate their plan document I cannot stress enough, getting this deposit made is a tremendous achievement that we celebrated with jellybeans in the office. I know we are not the only ones with awful clients. I also know the standard recommendation is to 'fire the client', but that frustrates me because that doesn't really solve the problems. That being said, I'm just looking for thoughts on helping them terminate the plan under those conditions, aside from incredibly caveated letter at what their risks are going to be.

Peter - you would think so, but this question has to do with a couple of deadbeat plan sponsors of very small plans who need to be begged and cajoled simply to sign their 5500. Annual fees as it is exceed any earnings within the plans. The goal is to ease their way out of their plan. Any such plan termination would indicate such outstanding issues as the unfulfilled restatement.

I understand a plan is not required to restate if it terminates prior to 7/31/22, albeit it must be fully up to date, including at this time the Hardship and SECURE amendments. That being said, if a plan does terminate but does not yet distribute assets in full by 7/31/22, would there be any qualification issue? I'm thinking it's okay but wanted to throw that out.

Prior Plan Doc states that both HCE and NHCE will receive top heavy minimum. Any reason it cannot be removed for HCE for new restatement? Assuming yes, with last day required, any reason it would be treated as accrued? In other words I believe it can be removed for current plan year without removing an earned benefit by the HCE. Edit after receiving several responses below: I should have typed Key and Non Key above instead of HCE and NHCE.

CuseFan - are you saying that when counting hours included towards a vacation payout, you would only include those hours that were accrued during the current year?

Do employers generally track hours separately from pay, ie W-2 pay? So W-2 reports pay for pay date 12/31 of the prior year, paid on 1/5. Employee had 970 actual hours worked in the current year, but when hours are reported alongside payroll, there were 1010 hours worked. Say the 12/31 hours reported on the 1/5 payroll are not included, but the terminee has 40 hours of vacation pay. In both those situations, what do companies generally do, count the hours?

Luke - thank you but that's not it. Just curious if there has been a trend for employers to ask all new employees for marriage certificates.

My understanding is that in years past HR departments would not ask for Marriage Certificates. When Marriage Equality became legal, some departments started to ask only same-sex couples for their Marriage Certificates, which ultimately was determined to be discriminatory and not a recommended practice. Any thoughts if HR departments are now asking for Marriage Certificates from all new hires these days? This would be mostly related to setting up their medical benefits with spouse coverage included.

That would be a great idea Peter Gulia.