Bri

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.

If there's no plan (or trust) established, then that 200000 is just more personal or business assets, right? So I'm not sure where VCP comes into play, since there's no plan. I think he just amends the return, pays the taxes, and tries again next year.

ASPPA just posted on this: https://www.asppa.org/industry-intel/glitch-blamed-erroneous-late-filing-form-8955-ssa-notices

Is that first termination date supposed to be 8/25/2021? We're discussing this concept currently on another topic post - the service doesn't have to be continuous across the 12-month measurement period. So 1/1/22 would have been the appropriate entry date.

I think it's one of those things where, the year is deemed complete at the end of the 12 months, as long as the hours were hit. The 12 month period has elapsed, the 1000 hours were met. The document language will govern, of course, but I think that's usually how they're phrased.

I haven't ever gotten a full explanation for this topic. 1.401(a)(26)-1 says: Exceptions to section 401(a)(26) — (1) Plans that do not benefit any highly compensated employees. A plan, other than a frozen defined benefit plan as defined in § 1.401(a)(26)–2(b), satisfies section 401(a)(26) for a plan year if the plan is not a top-heavy plan under section 416 and the plan meets the following requirements: (i) The plan benefits no highly compensated employee or highly compensated former employee of the employer; and (ii) The plan is not aggregated with any other plan of the employer to enable the other plan to satisfy section 401(a)(4) or 410(b). The plan may, however, be aggregated with the employer's other plans for purposes of the average benefit percentage test in section 410(b)(2)(A)(ii). In my situation, let's say I have 19 employees but 2 of them are otherwise excludable NHCEs. I've got 7 out of 17 nonexcludables (41%) but 0 out of 2 excludables benefiting. The problem is that my plan's top heavy. (Leading me to think I have to look at the population of a whole, and 7/19 is 37%.) And the follow up then becomes, does SECURE 2.0's provision to allow bifurcating for top heavy starting in 2024, give plans a loophole not previously available? Clearly the excludable "plan" for testing purposes would NOT be top heavy since it's just new folks with no Keys nor HCEs.

I'm sure his first regular paycheck was for his final time worked still as an ineligible employee, and that's still typically eligible compensation (lord help you if your document got cute there). Same concept applies, that the date of payment governs, rather than the date of service. Of course, if the bonus has been paid out to the participant, it's too late to defer from it.

He can do an EZ the year after the plan was still Title I. So if all the payouts done in 2023, then 2024 would be an EZ just for the one-participant plan.

I'd say no, but obviously be sure you apply those catch-ups towards each participant's catch-up limit for the appropriate calendar year, including other catchups that may occur in the surrounding years.

The first year or two my wife's company had her plan, (insert payroll company name here) prepared the 5500 with a 2/1 effective date since that was their recordkeeping date, although the actual signed document said 1/1. Once I became my wife's "administrative functionary" (sorry, I love that description from a different post), I changed that to 1/1 in year two or three, and the IRS/DOL never seemed to blink an eye / notice.

It's within 5 years from the valuation date for the first segment, so 5.000-19.999 typically get segment 2.

I'm pretty sure any reference to 20.5/12 comes from projecting a 1/1 valuation date through the 9/15 MRC due date the next year. But has nothing to do with the FT formula itself. You're not crazy.

Just kind of thinking out loud here - Ever have a client ask if they can add a DB plan when they already have a SEP, and then you have to tell them the 5305 Model SEP document precludes a second plan? A lot of times these sole proprietors have NO idea what sort of SEP documentation they set up years ago - so I was wondering it might be "obvious" that a custodian like Fidelity, Schwab, Merrill Lynch, etc. would or would not clearly be using a proprietary SEP document. So I wonder - is there a reasonably accurate list anyone maintains that would say "THESE guys definitely use their own SEP documents, but THIS custodian issues its customers the 5305, so be careful?" --bri

I believe it matters whether or not the plan is holding true shares of the mutual fund, versus being invested in an insurance company's pooled separate account. The pooled separate account might be nearly wholly invested in a specific mutual fund, essentially meant to mirror the fund itself, but would not be the fund itself.

If you're testing together, then the fact that they get safe harbor means they're going to need to get gateway. So if your plan document won't automatically provide gateway for anyone who fails under its normal allocation provisions, you may need an -11g amendment to increase their benefits. Fun to tell the sponsor, surprise, your one-year wait provision is basically moot.

All of those employees sound like statutory exclusions for 2022, and none of them have met the PS eligibility. Sounds like they'll just get their safe harbor, and like it. Unless you're not testing separately. Then you'd have to hope the document allows for an automatic increase/override to the allocation to cover gateway as needed. Or, if your group of statutory exclusions includes HCEs you have to test against.

The problem there is that only some of the weekly interest between 12/28 and 1/4 has actually accrued by 12/31. Does anyone get that crazy figuring it out or do we just say "close enough" and just use the remaining principal balance as of either payment line of the schedule?

If it's small enough to cover a final admin invoice, that's not atypical since the plan may reimburse the sponsor's direct payment of those expenses.