Bri

Just wondering how everyone out here would view this: Plan is a large employer. There's a 50-on-5 match, payroll period basis. Not safe harbor, and they do choose, operationally, to make the match deposits each week. Everyone's deposits for 2017 were fine except somehow, an owner's missing one week's worth. $375 in 401(k) deferrals and a $187.50 match. (He's salaried and these amounts were consistent every week.) If this were a small plan, they'd have the 7 business day safe harbor. Since they are prompt with their deposits, there's at least some sort of argument that, "Hey, we *could* say one deposit was 30 weeks late. Or we could say that the next 29 deposits were all 1 week late - but within 7 business days." Anyway, that's not exactly where I'm going with this one - I would like to at least suggest that the fact that the guy's been getting match contributions all along, that those almost serve to "cover" the 401(k) amount due by the deadline for the deposit. At no point during 2017, was his account underfunded relative to his payroll withholdings. The plan sponsor has a requirement to keep pace with the funding of the deferrals, and not the match (which could be deposited up until tax filing day in 2018). I suppose a potential snag is that if this "early money" went in before the paycheck that was missed, then it could be construed as accelerating funding of the plan. Can you tell I'm trying to avoid reporting $375 on the 5500 and preparing a 5330? :) Thanks.

I'm going off on a tangent here, but the instructions do later say that if there are still assets and participants, then you don't mark the box as the final return - such as the case if you've got a plan that has become eligible to file a 5500-EZ instead in the future (like a sole prop who previously had employees in his plan but there are none anymore).

Nobody's going for the "change the definition of compensation for 401(k) purposes to exclude paycheck three in a month" argument? :) Inclusion ratio and all!

Can an -11g amendment be used here? Increases benefits....you could do it in a nondiscriminatory manner (only pick NHCEs who already have balances? is that a contingent benefit issue?) spitballin' out loud to myself on a Friday afternoon.

I got the QPA (QKA didn't exist yet), and then got my CPC at my next job within a couple of years. Testing setup was definitely different, though, back when there was just one C-3 and C-4 exam to take instead of any modules, plus getting letters of recommendation (from my prior job!)

I've seen docs (ASC, not FTW) that provide for an optional true-up at the employer's discretion. So it may come down to your specific text, as to whether or not the plan would allow it, (as opposed to it having to fall under the scope of any additional match contribution rules in your document)

If you hurry!!!!!! you can still have it be a safe harbor plan :)

To Appleby's point - the document itself may have language in it that "cancels" benefit accruals if common law employees meet the eligibility....but not necessarily so it's definitely worth a look.

When in doubt, have the payroll company transfer the withholdings to a plan-named checking account. At least that way you're around the lateness issue with the prohibited transaction, dealing only with (only!) the fiduciary issues of the trustee having the funds but not having them in the participants' accounts. I would suspect then that the delays with the platform are more "forgivable"....

Well.....same filing, different version. 5500-EZ version 1.1 rather than 2.0!

I don't think that's true, because if you have employees past NRA, the actual table affects how much the succeeding APRs decrease after that age. It's not like a 66 year old's APR would be always, say, 97% of the age 65 APR. Which, if we're splitting hairs on EBARs out to five decimal places (thousandths of a percent), can make a difference.

If you have a short plan year, too, then you can get 5500 Bingo if you later amend the return. (Extra points if on extension.)

I think 1 is easy, not particularly different from showing that a DC plan contribution does a similar thing. And for 2, a parallel could be drawn to a DC plan with an NRA payout policy, too. (Sure, nobody's plan has that any more, but it could). It's a construction company, so turnover's pretty common. I suppose we'd let terminees (of course we'd use 100% vesting since we'd be using D-B money) take their lump sum or equivalent annuity sooner than NRA. (Maybe not too readily, since the seasonal nature of the industry tends to lead to rehires.)

Does anyone have any experience with using Davis-Bacon / Prevailing Wage fringe amounts to fund cash balance plans for employees? Here's the setup - Sponsor has about 100 employees, and probably 75% of them work Davis-Bacon jobs, and they get serious fringe amounts. Like, amounts between 10k and 30k per year are not uncommon. We use them in their 401(k) test, for instance, and the representative contribution rate for targeted QNEC purposes is a very nice 16%. Anyway, the sponsor (or at least his CPA) was intrigued by the idea of a cash balance plan to get the owners (in their 50s) significant plan amounts. (Actually their DC plan is standalone 401k except for the Davis-Bacon amounts.) They don't even need all the D-B amounts in their ADP test, which would allow us to use still a bunch of them for 401(a)(4) testing between two plans. (DC plan would have individual allocation rates, basically being the D-B amount.) Could they steer some of those prevailing wage fringe amounts into a cash balance plan design? Figure we'd give most staff people a 3% of pay contribution credit and a 5% interest credit each year. For the majority of the folks, their fringe amounts would cover either or both of those additional accruals. Any issues preventing this? Is it really different from funding a DC plan's allocations with the Davis-Bacon amounts? I could imagine any particular labor regulatory board not being thrilled with funding their interest credit that way (although is that even necessarily true?), but I'm not sure I see much difference between putting $5,000 of Davis-Bacon money as a contribution credit into their DC account versus funding a cash balance contribution credit for them. Am I missing something (obvious or not)? Plus, the Davis-Bacon amounts are currently in the low twenties as a percentage of 404 payroll, so perhaps a CB plan alleviates some deductibility concern, too. (And would be PBGC.) Sponsor figures if he's got to contribute the 3% on top of what they're already going to get for their fringe, it's a dealbreaker, but if he can split the fringe between the two plans (required amount to CB, the rest as DC), he'd be more willing to proceed. Thanks. --bri

Too bad this is 2016 and not 2017 - Maybe coulda just -11g the excess above 23.164%. Otherwise you've got one HCE getting a little extra but an NHCE getting even more extra, so I think that might have flown.

I would suggest amending the plan in the future (before the first plan year you know will be TH, if possible) to provide the safe harbor match to non-key HCEs in addition to NHCEs. I've seen that in some adoption agreements, at least.

The catchup limit definition includes a reference to 415 wages, I believe, where you still can't have your regular deferrals + catchup deferrals exceed your wages. So if it's going to stay in the plan, it would have to be re-categorized as a profit sharing allocation. Then as his annual additions exceed his wages, some of the 401(k) being re-categorized as catchups. (But now the total 401k amounts are not greater than wages.)

Well, you don't have a case where money was withheld from a participant's pay and held onto by the plan sponsor. But rather the money wasn't withheld from pay at all. So I think that takes it outside the range of that question, since they're not so much "participant contributions".

I would probably review the plan document, just to shore up the wording of "payroll period" or "per paycheck" basis, how it exactly states that the match gets calculated. I could see an argument for either answer. And then if it's still open-ended, the Plan Administrator has to make the call, and stick with it as it might affect each individual participant going forward.

I, as an ERPA, get to pick the beer for the office on Fridays. But really, I think it's just stuff like that....VCP applications, determination letters, and audits of plans other than any actuarial calculations.

So the amounts being used to repay the loans aren't being included in their taxable income each week? (Either fringe or not)

What's the actual problem? Starting the successor plan too soon? Plan 1's termination at least provided a distributable event for the rollover.

Good point, Tom - I was still thinking in my head of a plan where there was going to be extra HCE PS anyway (like a "3 and 9" setup).

I'm not sure why you'd give any "little bit extra" as safe harbor rather than just profit sharing. At least as PS, you could impute disparity on the rate in any potential 401a4 testing

Then the excess portion represents an ineligible IRA contribution - get it out of the IRA with its allocable earnings