Mr Bagwell

No.

Yes

Thanks CB! That's what I was needing!!

I agree with you and Tom. I find that owners don't care what they have to put in for themselves, but knowing that they could do 3% instead of 4% to NHCEs (assuming everyone deferred) plus a little gateway, they are all over that. All depends on whose deferring, like Tom said.

No. The safe harbor 3% nonelective would be the cheapest because the 3% safe harbor would count for the gateway. So instead of the potential 7.09% (4 + 3.09) outlay, the Employer would be on the hook for 3% plus necessary amount for gateway. This of course all depends on whether the plan passes non discrim tests.

The safe harbor match does not count for gateway test. So the 3.09% will pass the gateway test. The ABT and Rate Group tests need to pass.

I'm a little dense today.... I need the following paragraph interpreted for me. It's safe harbor correction methods for employee elective deferral failures.... page 78. For the "No QNEC" needed. (i ) Correct deferrals begin no later than the earlier of the first payment of compensation made on or after the last day of the three-month period that begins when the failure first occurred for the affected eligible employee or, if the Plan Sponsor was notified of the failure by the affected eligible employee, the first payment of compensation made on or after the end of the month after the month of notification; Participant notified Employer that contributions weren't right 3/27/2019. The deferral failure started with the first payroll of 2019, 1/11/2019. There was an error by the Employer. There is two pieces to the above paragraph. The EARLIER.....? First piece throws me off on really what it means. Does this mean that if the Employer noticed the error, they have until first payment in April 2019 to get the correct deferrals started? The second piece I follow, the Employer can get the right percentages coded, send the notice, make sure the appropriate match is made and move on. The fix needs to be done in April 2019. It appears that the EARLIER date of correction needs to be implemented by first pay of April 2019. Am I interpreting correctly?

With a true up, no need to change the behavior. :)

Ok, I understand. And the answer is it depends. The true up is really coming from employees that defer the max early, and or change their deferral percentages at various times through out the year. Here are two of my legit examples: I have a true up plan that had a payroll total of 280,250.59. True up is 14,025.20. Another safe harbor true up plan was 191,176.06 per payroll. True up is 8,462.18. Even with these examples, it is highly dependent on the deferral patterns of the employees.

Are you looking for an analysis of how many plans are not true up vs plans that are true up?

Tom beat me to it. Unfortunately, you cannot have allocation conditions on safe harbor contributions. Being that he is already a participant, if he works, he gets the contribution.

I haven't figured out what the darkweb is.... Is it a different internet provider? Maybe a parallel universe web? Who knows.

Stella, Investing and what to do when is a difficult conundrum for even the experts. However, you need to find an investment person that you trust and work through your investment tolerance, time line, and strategy. Investing is a philosophy as much as a strategy. Find someone you trust and work through it.

You got it right ldr. Ah, fairness, schmairness. The employee who deferred is not losing out. :)

I'll let someone else provide the cite... but there are 3 contribution alternatives to being a safe harbor plan. 1. 3% nonelective contribution 2. Basic Matching: 100% of 3, 50% of next 2% 3. Enhanced Match: at least as favorable as the basic match at every rate of deferrals, but match rate may not increase and no HCE may receive a higher rate of match So when you create a safe harbor plan, you go and select the option in the adoption agreement to which design alternative the employer would like. For example, the 3% nonelective. (I'm discussing very simple plan design here. NOT dual eligibility. No Profit Sharing. No other match) So if you have safe harbor plan with solely deferrals and one of the 3 contribution alternatives. You get the top heavy exemption. It's a beautiful plan design for many employers. And should be simple to manage. I'm not sure where you went off the rails, but we want you back on the tracks.

I will. Tommy steps up and wins the game. His analysis is correct. My flaw was somehow thinking that part of the PS was recharacterized..... Deferrals get recharacterized. I knew the participant could get to 61k, but I didn't show my work... (algebraic joke)

I'm going to say the 6,000 goes into the ADP test. I'd say the 6k deferred had no failure to make it be catch-up. I'd say the failure occurred with the 55k profit sharing.

Ur fine on what you called it. The top heavy exemption is still in play whether it's safe harbor match or safe harbor nonelective.

If the plan consists of only deferrals and safe harbor contributions, the plan is exempt from a top heavy contribution. Yes, you can allocate the safe harbor on part comp if the plan is written as part comp.

Spouses ownership attributes to each other. Both 10% owners, so both are HCE and KEY.

Kevin provided the proof that it can have different eligibility requirements. For conjecture, I don't like dual eligibility for safe harbor plans. It just takes away the "that was easy" plan button. Instead of having a single entry date, I have to chase after and watch the safe harbor entry date. And then instead of not having an ADP test, and maybe an ACP test, I have to possibly run them both. Give me a single entry safe harbor plan all day long! I understand the employers want the employees to have the ability to defer sooner than the safe harbor. But the employer typically thinks the plan won't have any ADP test failures. Get this. I had a dual eligibility safe harbor plan add the two owners wives as employees. Of course, they maxed out at a 66% ADP. Needless to say the refunds are large and 2018 had losses. Ouch. Contributions are submitted via DVC and we were not given a heads-up. (not that we expected one) Clearly, I would have had the two wives just take the salary for 2018 and start the loading up in 2019 when they get the safe harbor match. It would be pretty rare to have an HCE hit in the first year of employment, but it can happen.

Don't forget 2018 is 275,000 annual compensation limit. 11,000 basic safe harbor match. Not sure if you were really talking 2017.... I don't want you fixing the wrong amount.

That's why I supply a letter detailing the above information for the participant to help/give the tax preparer.

From the 2018 1099-r Instructions... excess contributions... losses　 However, taxpayers must include the total amount of the excess deferral (unadjusted for loss) in income in the year of deferral, and they may report a loss on the tax return for the year the corrective distribution is made. Someone please correct if wrong... I would issue the 2018 1099-r for $900. But his tax preparer will include $1,000 as the overage, and will report a loss of $100, all in 2018.

No problem Tom. Thanks