Bri

I believe you actually have to - and see if your document has any overriding language in the section permitting the waiver indicating as such that the sponsor may have to make contributions anyway.

I suppose that since 5330s are typically mailed, they would therefore be subject to manual data entry. In which case the expository details would indeed get picked up by someone at the Service. Whether that actually helps, though......

They would be receivables if you also adjust the outstanding loan balances down to their value as of those payments posting. Like, let's say 12/31's payment is scheduled payment number 59. Either the loan balance is still at payment 58 (higher balance) with no payment receivable, or it's as of payment 59 (lower balance) with the payment in transit as a receivable. I've done it both ways, but always consistently within one plan's batch of loans. And I sorta remember being mad that John Hancock's recordkeeping "accrual" basis would adjust for receivable contributions but not receivable loan payments. (Does that sound accurate?)

That sounds as though it would conflict with the 100% as elected, so I'd say that's an operational error to use a different integration level.

Are you asking if the plan can use any other integration level below 100%? That's certainly fine. It looks as though your answer on (b)(4) of the adoption agreement you snipped in here shows an election explicitly for 100 (before the parenthetical note that it's not to exceed 100%). If you choose 46% of the TWB, then your tier three level is 1.3% as the "applicable percentage" as listed under Section 3.04(B)(2)(c), as I type the text from your snip. It's 2.7 if you choose 100%, or something less than 20%. It's 2.4 if you're between 80 and 100, and 1.3 if you're between 20 and 80% of the TWB.

As someone who has a history of doing 5330s for late deferrals AFTER July 31, I will say the only time the IRS ever came back for additional interest was when the original computed tax amount was up around $500. (A couple of weeks late for a couple of years, inadvertently presumed to be just December amounts posting early in January.) Anyway, I suspect the size of the penalty might be coming into play, as to whether or not the IRS pursues any additional amounts.

I would think that's an appropriate way to self-correct an insignificant error. Obviously document the calculations for any audit.

I don't have a spreadsheet for it, but I do know the typical 4-step process is: a) everyone first gets their 3% to cover TH b) only then does the "excess piece" kick in, where folks next get up to 3% of their excess pay. If the contribution is just barely over a flat 3%, then you get a somewhat odd-looking case of people maybe getting 3% of pay plus only 0.6% of their excess pay. But often the whole 3% on excess pay (above the integration level) ends up filling up, too. c) Then with everyone at 3+3, you scale everyone up to as high as 4.3, 5.4, or 5.7% of combined "compensation plus excess compensation", depending on your integration level. Here's where, if the contribution amount runs out, you might end up the folks all getting 5.2% of compensation plus 5.2% of excess compensation (it's the same rate in both parts there, unlike in (b) above d) Once everyone's maxed out their excess piece there, the rest is pro rata, comp to comp.

I might suggest it being deemed a QNEC to avoid putting any sort of vesting schedule on it. But yeah, your conforming amendment is going to need data on who actually got the CODA option versus who was just given the 1,000 unilaterally as a plan contribution versus those who got it unilaterally as a bonus.

Check as to when the service may be disregarded. Sometimes it's spelled out specifically for "participants" but I do recall seeing a round of restatements changing that up to "employees" in the BPD so that it was clear that there'd be a minimum of five years before you could ignore any prior service. Basically the rule of parity, but for someone who wasn't a participant yet.

I found this in DOL Reg. 2530.200-2(c): (4) In the case of hours of service to be credited to an employee in connection with a period of no more than 31 days which extends beyond one computation period, all such hours of service may be credited to the first computation period or the second computation period. Crediting of hours of service under this paragraph must be done consistently with respect to all employees within the same job classifications, reasonably defined. Basically I was looking to see whether the hours have to be specifically performed in the actual year, versus what's on the payroll records. Typically I would have asked a sponsor to lock in on "the actual 12 months" (such as hitting 1000 in their first 12 months, or double-checking whether to credit vesting for someone who came over on a census file with 998), but perhaps that's not absolutely necessary as long as it's done consistently.

You've got the basic gist - forfeit the match they shouldn't have gotten, use it to fund everyone else next week. As for the 401(k) amount - they can issue that refund as an EPCRS correction, code E. It'll be taxable this year if they do it now, and will essentially serve to offset the extra deduction amount which will show up on their W-2 at the end of the year. Another valid choice is to run a makeup paycheck showing "negative 401k" - that way the participant gets it in his/her paycheck. And the account balance is then also forfeited, since that was an erroneous employer contribution, which the employer would use in the future, too. If the person's already been overpaid, then it goes into the latest EPCRS rules for recovering Overpayments. I suppose you could look into whether or not the post-severance compensation is at least eligible to be considered 415 compensation, and possibly do a corrective amendment to adjust just his definition of compensation for 2022. And could the extra match be re-categorized as a discretionary nonelective amount for the person? One of those things where, if the testing's not an issue, just retro-fit the document to match what you did so that nobody's faced with re-issued tax forms and that the person's payment amount ends up conforming to what's in print.

May have to get into the weeds of the trust agreement, too - can one trustee act on behalf of all, does there need to be unanimity? Would the sponsor appoint a new trustee from among its current employees, but how long does a trustee "on the way out" retain the position? How soon will the recordkeeper be alerted if there has been a change at trustee. Ah, paperwork.....

I wouldn't think the participant pays back the withheld taxes, but rather just his 80% amount. A revised 1099-R would need to be issued, and I'd think the sponsor would amend its 945 filing to illustrate the overpayment of the taxes due. So that gets the sponsor the credit for the tax amount. The 1099 shows $0 for the second year, and no withholding "credit" either, for the employee. I don't know if the EFTPS folks would send BACK to the sponsor the overpayment of federal taxes, but the sponsor should be able to apply that excess against a future amount due for the next guy to be paid out, no?

1) You would indeed use the more lenient eligibility between the two plans. So in your coverage testing group, it's everyone with 3 months. 2-3) This answer will depend on the nature of the contributions/benefits under the plan. But the eligibility provisions don't need to be uniform. It's just that plan B might have a few more people in that 3-6 month range who aren't benefiting. Have you considered separate testing for employees who haven't met the maximum age/service conditions of 410(a)? That could throw all these newer employees into a separate test, maybe with no HCEs anyway.

Would it be appropriate - if possible - to get the YTD payroll data from the sponsor and calculate a sort of year-to-date 2022 ADP? Since this is self-correction, would an IRS examination agent balk at such methodology? Obviously easier with a smallish plan than with one where the eligibility for 1,000 people needs to be scrutinized.

On the "Leaderboard", if you have the white banner just below the main blue menu

Just read Q35 to DOL FAB 2008-04, it's 10% of the prior year's amount "handled", so unless one wants to get retentive and look for the highest asset value at any point during the prior year, I like the prior EOY/current BOY thinking.

Typically the inflation guard rider requires the bond to cover 10% at the time it's purchased, and only then would the increase be in play if needed. (Still waiting for my first claim on their bond.) I used to do 10% of the BOY asset value on the 5500, but I forget the specifics as to why it wouldn't have been the EOY value.

I was wondering why I'd been listed with the gold cup for yesterday when there were at least three other folks with the same 2 "reputation points". Then I refreshed the page and our names were shuffled, so I was then listed with the silver. Refresh again, and listed fourth. Then back to first. I surmise all our profiles say we last "won" the day on May 24th. I had wondered if there were some underlying tiebreaker algorithm in play. Honestly, it's not a vanity thing! 🤪 --bri

Yup, it's still 5% total in the DC

The SH gets forfeited with its earnings. The employee's 1099-R for the refund (should be code E for an EPCRS correction) would determine what year it's taxable. Typically they're taxable in the year they get them back, even if that's a different year from the original deduction shown on their W-2. So maybe they end up taxed at their 2022 marginal rate rather than their 2021 rate.

I'm thinking back to a Relius seminar I went to led by Robert Richter (whose voice is like a friendly version of Belichick!), who mentioned that any -11g amendments typically don't get you the extra deductibility - you have to use the rules of the plan as they were in effect on actual 12/31 (not including anything adopted retroactively). So while the overall dollar amount might be under the 404 cap for the plan, I suppose the hangup is whether or not making a contribution for someone beyond what they would have had in the first place, then becomes a qualifying ordinary business expense like it would be for the original plan layout as of that date.

Does their previously-executed form indicate what employer and plan the election applies to? (Makes a merger more likely to be okay, compared to a new employee at the acquiring entity.)

I think they'd just be on the hook for a THM, then. Whether that's 3 or 5 depends on whether he's in an excluded class of employees, versus just being a participant with a 0% benefit formula on the DB side. If you make him completely ineligible from the DC plan, too, then you owe him nothing, and he still counts in the tests as a zero.