Bri

all related CG/ASG entities, or just a multiple employer plan? That affects some of the consequences obviously....

Isn't there a spot in the ASC software to program the "meaningfulness" at whatever level you want, with it defaulting as 0.5%

Is that just for Subchapter S, or could a C-corp. legitimately pay its owners $0 ?

maybe just Secure 2.1, currently in beta....

You can forfeit them, they weren't supposed to have those allocations in the first place. Put the plan in the position it would have been if it had been done correctly, and so those ineligible folks still end up with $0.

The ADP test measures for discrimination the deferrals for everyone eligible to defer. The lack of compensation made these people ineligible to defer, so I leave them out.

7.5% is usually the highest the gateway has to go, but your testing numbers will determine if a lower gateway applies.

I think it counts in the testing, unless you can also show it's also a 415 excess because of extra-large profit sharing. But it would take me an hour to dig to find where I got that from.

That's right - think about if this were really two separate plans, the same methodology applies. It might even be a little more obvious because those 5 NHCEs really would be zeros in "plan A" rather than just treated as being part of "component B".

Well whatever they've done seems to have broken DB transaction processing.

Wait, even though they're in a different component, they're still going to be measured for the rate groups as non-benefiters.

The trick is to keep track of which Code section's attribution rules govern which determinations. For CGs it's 1563 and so that's where the "minor child" trip-up has happened so often they finally legislated it out in Secure 2.

Might as well.....and he can exclude HCEs from the SH if he doesn't want to feel it's even mandatory for himself.

On a potential bright side, if nobody deferred then the MDO will be based on the 0% ADPs for both HCEs and NHCEs affected.

The past service counts even though it's before the effective date of the plan. (Not like vesting where you can often ignore pre-plan years.) What about using the top-paid group election to move some of the non-owner docs into the NHCE group?

Can the .txt file be opened in Excel and converted either to the exact format, or else easily imported under a custom-defined Transaction Import or Takeover transaction?

I'd say yes, presuming the merger documents address their and all the old plan's participants' assets. (Transferred, not rolled over, semantically speaking.)

How about a 4/1 plan effective date with a full calendar-year-ending-in-the-plan-year limitation year?

I use "statutory exclusion" to refer to people not meeting 410(a)(1) and (4). Hired March 2021, entered July 1, 2022, terminated August 2022 before their "must be in" date in September 2022. Thought being, test the plan of employees like this consisting of just her. (She needs a 5% THM because she hit 1000 hours, as the DB plan spells out its TH comes from the DC plan for the 5.) And then everyone else would the actual gateway because they're tested against the owners. If the plan were able to also test top heavy separately for the excludables, then her disaggregated "plan" would meet the 401a26 exemption, I think, so that she wouldn't need a specifically meaningful benefit. I ended up not disaggregating after all, was probably a $300 difference out of like 500,000 in company contributions due, and most of it isn't vested anyway.

Fun stuff here, doing a DB/DC combo. One terminated NHCE is the only statutory exclusion. But she did get to 1000 hours and is getting a contribution credit, but not enough to cross the theoretical 0.5% threshold. My hope was that I could leave her out of the "main test" so that she gets a 5% top heavy minimum only under the DC and not the normal gateway 6.5% rate. Problem is, if I disaggregate the statutory exclusions, then I've got a "plan" with just the one NHCE who doesn't "benefit". And the Regulation 1.401(a)(26)-1(b)(1) excludes NHCE-only plans from 401a26 if (a) not top heavy (b) no HCEs (c) not aggregated for 410b or 401a4. The conclusion I'm drawing here is that I can't wait for the disaggregated top heavy testing under SECURE 2.0. Because I'm thinking either (a) increase the CB credit up to 0.5%, or (b) just test her with the non-excludables and give her the higher gateway. And since (b) is cheaper than (a), I feel like I wasted an hour trying to carve her out in the first place. Any other thoughts? --bri

If all your rate groups (not including deferrals) pass at 70%, then you don't need to pass the average benefits percentage test (which does include deferrals).

How about the new overpayment-don't-recover option new to Secure 2?

If there's no pay to substantiate it even as a nonelective contribution, why not use it to pay admin fees?

I had a plan like this, the one employee, NHCE, not told about the plan - ERISA counsel said the IRS is okay with using 3% as the MDO (and that it would cover the top heavy minimum, too).

It's more an issue when trying to pass coverage when using the average benefits test rather than ratio percentage test.