jmartin

We use ASC for our DC/CB testing (including 401a26). We have some plans where in the CB plan, the "staff" get the minimum amount possible. Just enough to satisfy the meaningful benefit (401a26 test). There has been some discussion within our actuaries that the meaningful benefit in ASC (typically calculated at .5%) isn't really enough. Granted the .5% meaningful benefit isn't set in stone law and instead people point to the infamous Schultz memo. I am curious if others use ASC's calculation of the meaningful benefit or are uncomfortable with the value being presented out of ASC? Hope that makes sense.

Have a 401k PSP where the doctors have investments in different brokerage firms (Schwab, Fidelity, etc.). This plan recently voted to update their trustee listing to incorporate all 12 current owners. An advisor for another doctor at the company advised the plan sponsor that all 12 trustees must report their SSN and DOB to Fidelity (custodian of doctor's assets) due to the Patriot Act. I tried researching the Patriot Act and did not have any luck. Is the advisor correct?

Let's say I have a mep plan with 4 companies. Companies 1&2 are a controlled group. Companies 3&4 are a separate controlled group. Can 1&2 have one matching rate while 3&4 have a different rate? I know that I have to pass ACP test for companies 1&2 and then separately 3&4.

Follow up question. It looks like on his 2017 tax return he only deducted $54,000. If that is true, would this only be a deposit issue and therefore vcp not needed?

Taking on a new client (solo - EZ). They never filed 5500EZ for 2016-2019 so we are working to clean up. While working on these 5500's I discovered they deposited $500 to much in 2016 ($500 past 415 limit), and $35K excess for 2017. There were no contributions made in 2018 or 2019. What would you recommend as the best way to fix the excess contribution? I am thinking that he needs to remove this money from the plan along with earnings. Thoughts?

A plan terminated in 2019 with last distribution say 10/31/19. One year wait is 10/31/20. I know a new plan could start 1/1/21 for sure. What about anything in 2020? Could they do a short plan year say 11/1/20-12/31/20 and have everything prorated? Safe harbor would be a no go.

If we just recently completed restatement of a 403b plan, when would the next cycle be due?

there's company A and B. As of 12/31/19 all nhce's of company A "terminated". They were all hired 1/1/20 by Company B. There are two remaining hce's ( the two owners). They are not expected to have any ownership in company B. The two entities are still hashing out what to do with company A (asset sale, etc). The two owners of Company A (only two employees) are expected to have capital gains from at least the sale of goodwill in 2020. Question. Can you count that as plan compensation for 2020 and in so doing make contributions in 2020?

Please consider the following facts: We have a new plan. Safe Harbor Match Calendar year plan. 2019 is the first year. Effective date 1/1/19 Effective Date for 401k and SH Match is 5/1/19 Plan does not exclude pre-participation wages (so full year) Adoption Agreement indicates match is allocated at end of plan year The underlying plan document seems to talk about match true up being "optional" The question is does this plan need a match true up? Is it optional and the client can choose not to make it if they wish. IF they do, or if it is required, what wages do we base the true up on? Do we use wages for the entire year or wages only since 5/1? Below is the wording from our plan doc on match true ups... MATCHING CONTRIBUTIONS (a) Amount of Matching Contributions. Subject to the limitations described in Article 5, the Company shall contribute to the Plan an amount specified in the Adoption Agreement on behalf of each Participant who made a Matched Employee Contribution and who has completed any service requirements specified in the Adoption Agreement. Notwithstanding the foregoing, a Participant shall be eligible to receive an allocation of Matching Contributions only to the extent such contributions are permitted in the Adoption Agreement. (b) Contribution and Allocation of Matching Contributions. Matching Contributions shall be made to the Plan and promptly allocated to the Matching Contribution Accounts of Participants who meet the requirements of Subsection (a) and in the amount determined pursuant to Subsection (a) as soon as administratively feasible after the end of the periods described in the Adoption Agreement. (1) The Company may make an additional Matching Contribution ("true up") on behalf of each Participant in the amount of the positive difference, if any, between the Matching Contributions that would have been allocated to his Account had such contributions been determined on the basis of Compensation for the entire Plan Year and the Matching Contributions previously allocated to such Participant's Account.

Have a profit sharing only plan with a current plan year end of 6/30/20. They have talked about changing to a calendar year end. Is it too late to amend for a 12/31/19 plan year end? They extended their taxes so would still have time to make payment. Or did they have to amend before 12/31?

I pass ABT, coverage, and non discrimination. But the relius report says I fail 401a4. Granted I cant really use relius since it converts to a benefit equivalent but I would think I look at the simple ps allocaiton percent. To pass the real 401a4 would I need to have enough nhce with the same years of service allocation as the two hce's. In other words take say 8 people with years of service less than 15 and give them an allocation like they did have 15 years of service?

We have a new plan where the profit sharing is allocated as follows: .067% of plan compensation times number of years of service (max 15). There are two HCE's, both with 15+ years of service. There are 103 NHCE with a varying degree of years of service. How would we test this? Due to the years of service variance of the nhce's the plan would easily fail gateway (if you were to cross test) but is it even subject to that? Would this be a Benefits, Rights, and Features perhaps?

perfect thanks

We have a client where a partner wants to deposit his $63k 415 limit in January of 2020. His comp will be way more than the max and we'll for sure pass all testing when the year end arrives. Question is that because he is a HCE, can we "fund" his employer contributions before the NHCE's are funded? Or is the only requirement that all employer be funded by tax return due date?

Every audited plan I have seen used accrual accounting where you would indicate receivables on the schedule H. Can an audited plan use cash basis accounting for 5500 purposes?