Mike Preston

My point was exactly the opposite, ESOP Guy. The rules on compliance with a9 are completely different in the event of death before RBD. See 1.401(a)(9)-3.

If a non-5% owner the RBD is 4/1/2019.

You also need each partner's 1040 Schedule SE and any pass-through deductions claimed on the 1040.

The only way that is ever possible would be if there was some sort of plan imposed limit.

Second half??? Do you mean the last 7 months of the year in question? Assuming you do I don't think there is any alternative but to treat $1,175.67 as an excess that may not be characterized as catch-up contributions. Corrective action is required.

Here are the questions that require answering: 1. Is there a Plan imposed limit? If so, what is it? If not, skip to 4. 2. Does the plan require correction under 415(c) before correcting for a Plan imposed limit? 3. Are violations of a Plan imposed limit included in ADP testing? 4. What is the 415 dollar limit? $54,000? Other (Sometimes documents are drafted poorly)? 5. If 415(c)(3) compensation is less than 4, what is it? 6. What are the annual additions other than from elective deferrals for the limitation year? (Usually the plan year ending July 31, 2017) 7. What amount of catchup limit was used as of the end of the year ending in 2016 (7/31/2016)? 8. What were the deferrals from 8/1/2016 through 12/31/2016? 9. What were the deferrals from 1/1/2017 through 7/31/2017? 10. What were the deferrals from 1/1/2016 through 7/31/2016? 11. What is the ADP limit for the plan year ending 7/31/2017? If you try to do the calculation without knowing the answers to all of these questions there can be circumstances that trip you up.

Indeed! Thanks. Corrected.

Yes.

Correct.

I'd be surprised if it turns out to be an issue.

Well, it depends on the amount. Assuming no employee cost and no 179 deductions get in the way, you could have W-2 of anything up to $62,555 without it impacting the calculation.

If you want an excel derivation of exactly what ETA said, try this: http://docs.wixstatic.com/ugd/fa3ca5_ec07f19859c940098c4be9cbdf18f0dd.xls?dn=Loan Maximum Calculator.xls You will have to enter the information that is specific to you.

I get it now. Sorry. You didn't mean that your employer was the state of California. You meant that your employer was located in the state of California. 401(k) plans for companies who have employees that receive tips as part of their income are notoriously complex arrangements. While it is certainly possible that your employer is doing something wrong, it is also quite possible that things are just fine. The basic rule is that the compensation that a safe-harbor plan must use is defined in Internal Revenue Code section 414(s) and its regulations. There is no requirement to use any specific definition and the regulations allow for an almost unlimited number of variations. The basic premise, however, is that the definition of compensation can't discriminate against those employees who aren't highly compensated (generally those who make less than $120,000/year). There are a number of ways that a plan's definition of compensation might satisfy 414(s), so one can't say that by excluding cash tips a plan necessarily violates the rule that a safe harbor plan must use a definition of compensation that satisfies 414(s).

Whose sh? The state of California? Really?

As per usual, I'm with Bill. Is the OP sure it isn't a multiple-eployer plan?

Most assuredly.

This may help or hinder and it may or may not be what was alluded to: https://benefitslink.com/src/irs/tam9735001.html

Either.

I wouldn't go along with it unless an ERISA attorney is involved. Seems a clear violation of the 2550.408b-1(a)(1)(i), the requirement that loans be available to all participants on a reasonably equivalent basis and for the same reason that loan minimums in excess of $1,000 are not allowed. If that cite doesn't float your boat, then keep reading until you get to 408b-1(a)(3). One of those will surely kill this bad idea.

1) An SCP correction is better than no correction. 2) An SCP correction seems clear.

Yes, but if you are rate group testing on a benefits basis it is probably easier to pass the ABT on a benefits basis, as well.

Calavera, if the participants are younger than age 62 and the early retirement factors (lump sum actuarial equivalence factors) use less generous than 5% adjustments (think 8% prepost) then by changing the actuarial equivalence factors (think 5% prepost) the 415 lump sum "magically" increases. This is a clear violation of 1.401(a)(4)-1(c)(2) because the plan has been operated for however long under the less generous actuarial equivalence factors and unless you go back and find those who were paid out less than what they would have been it is very difficult to cure the 1(c)(2) problem. I suppose another view of it would be that it is a violation of 1.401(a)(4)-5 (timing of amendment rules). I would have thought this silliness was eliminated when 417(e) rates rendered actuarial equivalence factors moot for lump sums but I guess old habits die hard. Unless fully explained as to what a client is potentially giving up it is unlikely that anything other than 5% should be used in the document.

Lotsa nots. One too many?

Haven't been reading too many posts the last few days, huh? Answer to question: no.

Alice in Wonderland?