Bri

I think so - I read it as though the participant has to "leave 1,000 behind remaining in the plan"

(Looks like 2678 is the form to appoint an agent for tax reporting/depositing, including Forms 941 and probably most relevant, the 945 for a plan.)

Good point - sometimes plans will define allocation groups as HCEs and non-HCEs, so changing a definition mid-year has at least the potential to inadvertently but improperly cut back benefits.

Unless you think you can make more $ off them for the VCP application, of course.....🙂

Isn't there something that says the TPG election must be made by across all plans of the employer to be valid? (Either a regulation or even something in the plan's document.) I always took that to mean that if one of a controlled group's plans didn't have the election, it basically invalidated it across all the plans.

If an allocated amount is enough to qualify for the "active participant" box on the W-2 (which affects the taxpayer's IRA deductibility) then why shouldn't it be good enough to count for 404 purposes?

I think this blurb from the 1.401(k)(3) regs has it spelled out as plan year quarters: (ii) Periodic matching contributions. The safe harbor matching contribution requirement of this paragraph (c) will not fail to be satisfied merely because the plan provides that safe harbor matching contributions will be made separately with respect to each payroll period (or with respect to all payroll periods ending with or within each month or quarter of a plan year) taken into account under the plan for the plan year, provided that safe harbor matching contributions with respect to any elective contributions made during a plan year quarter are contributed to the plan by the last day of the immediately following plan year quarter.

My guess is that 1 is bad and 2 is good, since the tax deadline is not 9-15 in the case without an extension.

Did they actually establish the trust, or rather just create an account? (Just wondering, since often trust agreements get paired with the plan document.)

September 15 is only 8 full months (through August) plus a half. 9.5 months from 12/31 is the middle of October.

That doesn't sound right. The 3E code is specifically for a situation where the sponsor has two plans, one for himself and one for his employees but has to test them together. (That way, the employees' Summary Annual Reports don't reveal the owner's riches, like if a small plan has 3 million dollars in it and the staff people are low in quantity and experience, and realize the only way their plan has that much money in it is if it's all the boss's.) You can use an EZ without needing the 3E code, and if this guy hasn't had employees in years, the 3E code wouldn't apply since there's no coverage test issue.

Sounds like it'll depend on how long ago the last non-owner participant still had a benefit in the plan.

Depends on if they've got a minor child inducing a controlled group despite the non-involvement.....that law goes away soon but not for 2022.

Definitely appropriate to do it that way.

I was told once by a client maybe 15 years ago that the K1/W2 combo was appropriate for a business in New York (state). I don't remember the whole deal other than it did add only a few thousand dollars from the K1 to the partners' wage amounts.

This is the law change coming from SECURE 2.0, that you can completely disaggregate for 416 (top heavy) purposes. Soon, the same people you're testing separately for 401(k) purposes will be able to be tested separately for TH purposes. And so since their separate test very very likely will have no Keys, their subgroup will be not top heavy, and so folks in that situation can be skipped for the 3%. (Even if the "statutory" employees are in a top heavy plan for their population.)

Nope, and the PBGC wouldn't have an open file for the plan, either. Regular termination rules still apply, though.

I'll agree too! (And add, this at least smells more like a reasonable claim for "mistake of fact" than most excuses folks try to throw out there. But definitely just fix it the easy way as everyone above is suggesting.)

still active The definition of retired/separated in the instructions says "i.e., individuals who are retired or separated from employment covered by the plan...." and although that hints at some leeway since "hey does the union job no longer mean covered by the plan?", I think it's generally accepted they count among the actives while their employment with the sponsor is active.

and here it is (in part):

I was told I could listen to the radio at a reasonable volume.

Hey now, the HCE isn't making that choice, the Employer is. But yes, if you look at the AA for a pre-approved plan you can often find the language right there in the SH section, the Employer "may" elect to provide a lesser allocation to HCEs. So it's an ongoing option each year.

Agree with Peter here - I would suspect some HCE somewhere would rather have the refund, if they don't want a Roth account.

The overworked brain in my head on a Friday afternoon thinks, there's a big difference in the 2 year LTPT rule versus the 3 year LTPT rule because of the way people with 3 years of vesting get their choice of how to deal with a vesting schedule change. If I got vesting credit for 3 years of 501 hours why would I switch, such as if a plan said the heck with the LTPT rules and expanded "normal" eligibility.

To be fair, I'm not sure "make sure you're not going to lose money this year as a sole proprietor" should count as reasonable if the 27,000 is going in ratably over the year. *Maybe* if they're frontloading in January and coming off years of losses.