Bri

Tell the recordkeeper they're wrong and that they will fix it. Returns can be amended. Thursday edit: Sorry, I didn't see the part about it being the TPA's error rather than the recordkeeper's. TPA should do a make-good for the guy until he can get his big tax refund!

That sounds like a nondiscriminatory manner, so it might be okay in the document/trust language.

It's going to depend if the document defines it. Assuming we get to use "any definition satisfying 414(s)" (or words to that effect), then it's Administrator's choice whether to use "only as a participant" versus "full year." That being said, I think if you have different ENTRY dates for the two plans.....well, since the normal coverage/nondiscrim rules say to use the lowest eligibility rule between the plans, I'd probably use the pay starting from the earlier of the dates. But that's because I don't bother to calculate the separate plans' portions to the overall test under their own definition of pay and then add the resulting EBARs for each participant. (Does anyone do it that way, as in.....can you?)

Unfortunately you can't use the otherwise excludable rule on someone who has the standard 1, but not 2, years of service. The contributions basis won't work - her contribution rate was already lower than the owners'. I had thought about if she were to get the same 6, then they're good with a uniform contribution rate, at least. (And as the DB plan is still non-PBGC unless/until she enters, the 6 plays nice with the deduction limit still.) (If the "greater of normal/TH" formula argument allows her "well, it's more than zero" to be nondiscriminatory even though it's less than the owners' amount, then my only problem may indeed be the failing 401k test. Ahh, takeovers.)

Just want to make sure I've thought this through properly: Company has 3 employees. 2 owners employed since 2015 or so, and staff person hired May 2020. Staff person is a decade older than the owners, so cross-testing is not a consideration. [Edit: Dang, I wish I hadn't posted this in the cross-tested section then, I suppose.] Generous CB plan has 2 year eligibility, so it has been owners-only so far. 401(k) plan has 2 year eligibility for company contributions, 1 year for 401(k). For 2021, prior TPA was allocating only 3% to the staff person, as a nonelective top heavy minimum (listed as profit sharing on their report). But 6% each PS to the owners. The nonelective test has me thinking. Even though the staff person is nominally only eligible for the 401(k), the TH requirement is forcing her to get a nonelective contribution, one that is not going to pass when compared to the owners' amounts. (As in, it doesn't matter if staff person hasn't met the normal eligibility for a nonelective contribution, the top heavy requirement made her eligible anyway, and now she's subject to her rate against theirs.) If they give her 6%, I suppose they could be done. She's not eligible for the CB plan at all. And the DC plan would have a uniform allocation rate, so each plan passes coverage/nondiscrimination separately. Or are they indeed okay with just the 3? The allocation to the staff person is the greater of the plan's "normal" formula, or the top heavy formula. (Since her share would legitimately have been zero.) And the plan would pass coverage if she were not considered benefiting, because she's not "normally" part of the coverage test anyway, having not gotten the 2 years of service yet. (Thinking 1.401(a)(4)-2(b)(4)(vi)(D)(3) here) Thanks. (Never mind that they didn't get any deferrals out of the staff person, so I've got other reasons to think about the 3% and how it's not enough of a QNEC if they allocated it that way.) --bri

Check your language on participant benefit elections. If there's any reference to the requirement that the election be made on a form "approved by the Administrator" or words to that effect, that could be something that allows the Plan Administrator to require it. (Perhaps an attorney wants to chime in that requiring spousal consent places an undue burden on a participant with a valid claim for benefits.)

I believe so - the correction is under EPCRS, so the 1099 gets a code E which means taxable in the year of the refund, rather than the year the actual deduction was claimed for the deferral.

It depends on the distribution timing policy. If your plan allows for withdrawals of rollover money at any time, then you'd have a benefit offset. If the rollover money isn't distributable until some later time (age/service/etc.) then you have a deemed distribution instead.

Why wouldn't the AP simply elect what they want from the various available options, rather than trying to force the form of payment through the Order?

If the true-up were going to be offset by a payable, then I'd say there would have had to be 1099s for those amounts issued before they were even deposited. update to Nate's emoji: I just meant that if the claim is that they have a contribution receivable but also that amount as a corresponding payable, in an attempt to "deem them no longer a participant as of 12/31", then that payable should have generated a 1099-R for the same year, so that the participant indeed is deemed to have a zero balance from the offsetting receivable/payable.

Safe harbor amounts aren't late until the 12/31 following the end of the plan year - that's the date they were truly due. (As CBZ noted, that's independent of their deductibility.) Unless we're talking about a payroll-based SH match, those are due by each succeeding quarter-end.

It should be just a matter of your document's definition of an Eligible Employee. It sounds as though you've got a specialized plan document, and those can say they invalidate upon specific common-law employees becoming eligible. But if the document restricts its use only when there's an owner and family members, you might be okay.

I saw something that the old 2020 expiration date for the HATFA disclosure was just updated to 2034 for the ARPA impact. Since 2022 is the required start for the 15-year amort, and my plan didn't have a 2021 stabilized shortfall, I'm thern doing my unstabilized MRC based on 7-year because it's all hypothetical, indeed.

Does the plan document, SPD, or any "written administrative procedures" outline the specifics of what's expected to occur? My natural inclination is that when a suspension is lifted, deferrals should start right back up - but that's in the absence of any established, communicated, procedures to the contrary.

One plan for union employees, another for non-union employees? That's commonly done.

I like the argument that "getting your amounts early" is a benefit/right/feature. So if you miss one NHCE you probably still pass coverage on it.

If 2012-13-14-15-16 were five one-year Breaks in Service in a row, then I suspect the Plan Administrator did exactly what was supposed to happen. The agent won't question that - just let them know that the 100 percent refers to being vested in "the rest" of their balance after the forfeiture at the 5 BiS point.

Relius can do it. (ya know, because it's just one interest rate and not segments....) But I *am* surprised not to see any sort of printed-off list at this point with the factors based on interest/mortality required for a 12/31/21 statement. One column for the SLA and one for the QJSA presuming an identically-aged spouse.

Aren't those essentially dividends paid to the shareholder of the S-corporation? (And thus, not wage income - and taxed at a different rate, too)

Did the participant elect out of withholding? Is his state one where withholding is mandatory? RMDs don't necessarily have to have withholding. And absent an election, the FITW is generally 10%, but could have been waived by the participant. In which case there may indeed be no free throws pending.

^^^True, the limitation year definition is something to watch for here.

I guess in this case I'd suggest Box 5. I'd say add any 125 amounts to it, but if he's the owner then that's likely zero. Your 9827 number sounds like the S-corp medical, in box 1 but not 5, leads you to the 76K number as "income".

Is this a situation where the S-corp. 2% shareholder medical deduction is included in Box 1 but not Box 5? Typically I see this question when there are 401k deferrals showing up in Box 5 but not Box 1. This sounds like there aren't deferrals though, so the Box 1 number is the "gross".

Does the notice itself get modified, or do you just have better-looking numbers? (Smaller minimum due, better FTAP, et cetera)

I'm not Mike, but.... 1. No penalty, it's a corrective distribution with no "adverse" consequences other than not being able to keep the funds sheltered. 2. The associated earnings on the contributions through 12-31 must come out, too. (Or, investment losses would reduce the amount to refund.) 3. It can't stay as a 401(k) contribution - there were no wages to defer from. So if it's going to stay as a contribution to the plan it would be a nondeductible employer contribution, subject to a 10% excise tax to pay and remit via Form 5330. And it will continue to be subject to the tax every year until it can be absorbed under a future year's deduction limit. (If he ends up with a loss in 2022 he'll owe the penalty again.) --bri