R. Butler

Plan is a safe harbor plan meeting safe harbor a 100% match on the first 4% of deferrals. Plan has a flexible discretionary match that would generally meet ACP safe harbor requirements except that plan sponsor only wants to match pre-tax deferrals. Two NHCEs make Roth contributions, no HCEs make Roth. I think that is a problem because the ratio of matching would be higher for HCEs than NHCEs. Plan would pass ACP testing, but I still don't think they can exclude Roth deferrals from the discretionary because they specifically elected that both the "ADP and ACP test safe harbor" provisions will be used for any Plan Year in which any type of matching contribution is made. Since they've elected that ACP safe harbor provisions will be used, I think that they have to use the safe harbor provisions and can't revert to ACP testing. Am I missing something? This is a takeover plan for us and in prior years the service provider did allow the discretionary match to be made only on pre-tax deferrals. Thank you for any guidance.

Plan sponsor declared a profit-sharing contribution for 2022 and communicated to participants the exact amount that they would receive. The plan sponsor changed their mind and decided not to remit. Is that permissible once communicated or did the benefit accrue? Thanks for nay guidance.

Thank you.

401(k) plan is closed MEP. Two employers share common ownership, but not sufficient to be related group. A 401(k) is not a pension plan. I don't see that the Schedule MEP should be filed for a 401(k) plan. I assume that plan sponsor should attached the same schedule that applied prior to 2023. Am I missing something? Thank you for any guidance.

Plan sponsor currently wants to have a service requirement for match of 250 hours in 12 months. If employee works more than 250 hours, but less than a 1,000 hours during the eligibility period, can we still disaggregate because they didn't complete 1,000 hours of service? Thanks for any guidance.

I should know this, but I am having a brain freeze. Since partners deduct their own profit-sharing contributions on their own personal returns, is the funding deadline for a partner the due of the personal return or is it the due date of the partnership return? Thanks for any guidance.

Plan has different eligibility requirements for deferrals and safe harbor match. If a participant is eligible for deferrals, but not the safe harbor portion, must that participant receive a safe harbor notice? Generally the notice requirement is satisfied if notice is given to each employee eligible to participate, but I can't determine if that means eligible for safe harbor or for the plan in general. Thanks for any guidance.

Sole owner dies in 2022. Business had participants other than the owner so 5500-SF had been filed in all years. By the end of 2022 all assets had been distributed except for the deceased owner's. They have a final filing for 2023, do they file a 5500-EZ or continue with the 5500-SF? Thanks for any guidance.

Since the DOL will now provide that whether or not IQPA annual audit is required will be based on the number of participants with account balances, this becomes a more relevant question. Is there a consensus about whether plan sponsors who file the 5500 using the cash basis also determine the number of participants with an account balance on a cash basis? Thanks for any guidance.

Participant dies without a beneficiary. Estate is the beney under the plan document. CA has a small estate affidavit to help small estates avoid probate court. By using the small estate affidavit the death proceeds could be made payable directly to the beneficiary of the estate rather than the estate. Should the plan sponsor be concerned that creditors might have a claim? Creditor claims do not appear to be specifically addressed in the small claims affividavit. Thank you for any guidance.

Plan defines compensation as 3401(a) wages. Participant receives payment under a state paid leave law. Payment is actually made by the insurance company, but the income will be reported to employee on a W-2. It is my understanding that this would generally count as compensation under the plan even if paid by the insurance company. Does that sound correct? Plan does contain 414(s) exclusions, but I don't see that a paid leave program is a fringe or welfare benefit. Does that sound correct? Thanks for any guidance.

Thank you

Okay. So just so I understand. The ratio percentages for the rate groups are not calculated using just the HCEs and NHCEs for just the component plan, but by still using all employees of all component plans. I know that is true for the ABPT, but I thought the ratio % test looks just to the employees in the component plan. Let say plan has 2 HCEs & 19 NHCES. Rate group for one of the HCEs has a ratio % of 68% (2/2 & 13/19). If I move 5 of the NHCEs with lower EBARS to component plan 2. I still calculate the ration % for the one HCE group using all 19 employees instead of just using the 14 remaining in component plan 1?

Yes, but I have no HCEs in that component. All of my HCEs, I left in the other component. That is the question, can I do that to avoid ABPT? Component plan one has all 12 HCES and 14 NHCEs. Component plan 2 has 5 NHCEs. Each component passes coverage. Component plan one can pass each Rate Group at 70% with just the 12 HCEs & 14 NHCEs. It would not pass ratio with all 19 NHCEs. I move 5 NHCEs to component plan 2 with no HCEs. Is that permissible?

There are several NHCEs that are not in any rate group. Pulling those NHCEs out and putting them in their own component plan brings the rate group %'s up an avoids the ABPT. That was the reason for the 2nd question. Thank you

A couple of questions: 1. When restructuring do I have to an HCE in each component group? As long as each group passes coverage, I don't think so, but hoping to verify. I do understand that doing that may mean plan has to pass ratio percentage test at 70%. 2. If each rate group in the component plans pass ratio at over 70%, do I have to pass the ABPT on the whole? Normally I wouldn't look to the ABPT if every rate group is over 70%, but in this case the only reason that is happening is because I restructure. Thanks for any guidance.

Never mind on this. I actually think you can distribute directly to the participant for the same reason the plan could distribute an ineligible deferral directly to the participant.

Plan sponsor failed to implement a request to reduce employee deferral withholdings. Is there a basis for issuing a corrective distribution to the participant or must that be corrected through payroll with the excess amounts that were remitted being moved to the forfeiture account? My understanding is the latter, but hoping for guidance to the contrary. Thank you.

Participant is requesting a hardship distribution for purchase of an RV that will be used as participant's principal residence. Plan document allows for hardship distributions for safe harbor purposes. I see no issue with allowing the hardship distribution. Recordkeeper is asserting that the IRS requires that a principal residence be a "fixed" dwelling and that they have unequivocally indicated that a motorhome is not considered a principal residence. The recordkeeper offers no documentation just their assertion. Has the IRS indicated that an RV cannot serve as a principal residence? Thank you for any guidance.

Thank you

Plan excludes bonuses from compensation and has a potential 414(s) failure. Assuming ADP and ACP testing passes using 415 comp are corrective contributions required? I read conflicting information about that. Thank you for any guidance

Plan sponsor is considering excluding certain HCEs, but not all, from the safe harbor from a safe harbor match. Would such a design still be considered to be a plan consisting "solely" of a safe harbor 401(k) arrangement? Thanks for any guidance.

Company A acquires Company B in a stock acquisition. Employees of Company are immediately moved to Company A, Company B dissolves. Company A sponsors a retirement plan; the plan does contain provisions that employees acquired in a 410(b)(6) transaction are excluded through the transition period. A couple of questions -- Does the fact that employee were transferred to Company A negate the transition period in regards to those employees? I don't think it does. The employees were still acquired as part of a 410(b)(6) transaction; it is essentially what happens in an asset sale. Company A's plan was restated for Cycle 3 after the acquisition; no change in coverage as a result of the amendment. Does the restatement end the transition period? I am thinking that the restatement does not end the transition period, but I am a little more uneasy about this part. Thanks for any guidance.

Plan sponsor has both a DC and a cash balance plan. I know that DB plans have to be funded within 8 1/2 months after the end if the plan year. Does the plan sponsor still have until the extended date of the tax return (10/15 in this case) to make the DC contributions? Thanks for any guidance.

We've answered yes many times and also only two DOL audits one of which did not report late in deferrals. That plan failed to attach an audit to the 5500. During the audit the DOL deemed a couple of deposits late during that audit, but nothing big. Although the DOL doesn't audit much when they do they want your first born child. They are going to make the audit worth the government's time. I have seen 60-70 IRS audits and the only one resulted in anything. We missed a 5330 on an $800 ADP refund.