Mr Bagwell

Thanks. That is what I was looking for.

Employee received too much match from too much compensation. The calculation of the match did not stop at 265,000. Employer thought the 265,000 was only for the safe harbor calculation....lol. The employee received his 2% match on 444,000... I need to remove the extra match and place into unallocated acct. The employer was questioning if they could reallocate the extra match as an employer non-elected contribution for 2016? Is this permissible? (I didn't use the term forfeiture because I don't think this is a forfeiture situation)

BG, I don't know how to attach a link.... but if you search in 401k forums for carve out is will bring up a thread named "otherwise excludable HCEs on ADP test". Look for response by Tom P. Dated 3/8/2016 I think it has what you are looking for.

Sorry for the confusion on the "suspension of allocation"..... It refers to the fail/safe language in the document. Our plan doc allows you to Apply or Does not Apply the suspension of allocation conditions.

The employee met eligibility requirements and became a participant 7/1/2016. I am bringing him in via plan document fail safe language.

I need help to see if my logic is correct... Small plan. 3 NHCE and 2 HCE. Discretionary match and profit sharing. Allocation suspension applies. Last Day and 1000 hours for match and profit sharing ( 2-tiered). Top Heavy Plan. Participating Comp. Semi-Entry. One of the three NHCE terminates in 2016. So 410b fails (m) and (a) at 66.67%. Can't use ABT because of suspension. So the terminated employee must benefit to pass 410b. For Match: the terminated employee does not defer so does not get match. No allocation condition is going to get him a match. I yes-override employee in Relius to get a passing (M) test. In essence I have removed the last day allocation provision and because employee is able to defer, the employee benefits for match..... at least that is my thoughts. Profit Sharing: the terminated employee shares in the profit sharing after "removing" the last day allocation provision. Employee came in 7/1/2016 so use compensation from 7/1/2016 to day of term. I would guess if Top-Heavy allocation would be greater than profit sharing, I would put in the TH contribution amount. Profit sharing is greater in this case. Am I missing anything in this scenario? Of course, I tell the bosses and sales team to ask about number of employees and design plan accordingly.....

Yes, that is what I was told.

I was doing some reading on the Common Paymaster. It talks of related employers. I don't think there is anything related other than location and some business may flow back and forth. I'm under the impression that the employees aren't leased. They do the work of their own attorney. I'm not overly concerned, just learning....

Jelly(k) was the fictitious name of the employer..... The employer is handling the payroll and benefits for another attorney's employees. But the attorney's employees deferrals are going to said attorney's 401(k) plan, not the one we administrate. I have seen PEO arrangements like this.....but I'm guessing that is not happening here.

We have a 401(k) plan that just keeps giving all year long...... If I use some incorrect terminology, please bear with.... We have a 401k plan (Jelly(k))for a group of attorneys. A org setup, PC. Pretty straight forward at this point. However, there is an attorney in the same building/floor that is NOT part of the A org PC, not an employee of said employer, that is practicing too. He has 3 employees that are run under the Jelly(k) employer for benefits and payroll. So the 3 employees get a w-2 from Jelly(k). The attorney then reimburses Jelly(k) for the 3 employees expenses. The interesting part is that the 3 employees deferrals go to the separate attorney's 401k plan. I don't think this is correct. Can this work? I'd think the 3 employees deferrals would belong to Jelly(k)'s plan, not the other. What are your thoughts on this?

Wouldn't the comp + excess comp be above the 265,000 limit in these cases where HCE's compensation is capped at 265,000?

Is the profit sharing a 2 or 4 tier formula?

I understand your concern. I just don't see it as egregious.

Austin, I would not use this memo for proof text for owner's spouse scenario you asked. The ADP scenario you mention is a manipulation so the HCE's can effectively keep and defer a little more into the plan. The NHCE's are not getting worked over to hold down potential benefits. I would use the spouse's zero to benefit the ADP test. I don't think it smells as bad as the floor I work on:)

K2, I'm curious what thoughts come about on this. Hopefully, some thoughts break lose soon.

Try Goldleaf Partners out of MN.

That makes sense. I was wondering why go through the hassle.

Rocket, Why are you trying to have such a complicated fee? Why not average the fee for the last 3 years and make it a specific dollar amount per participant and let the RA calculate and process? Go for efficiency.

That's how I understood it to be My2Cents.

The irony for me is that the controlling nature of HR is killing the effectiveness of auto enrollment and escalation.

Plan wants to add auto enroll and escalate for 2017 so we set up a conference call to discuss. Get this: Based on an auditors recommendation, the employer requires that ALL employees acknowledge and sign documentation each year for their 401k deferral percentage. So Joe comes meets with HR and HR says, "I see you are deferring 3%. Would you like to do that for next year?" "Yes, I would." "Great, sign here." We don't see where auto enroll would come into play because everyone is making an affirmative election. Same thing with auto escalate; employee is effectively making an election to increase, decrease, or stay the same each year. It appears that I would need to have the HR department repeal some of their procedures. Anyone have any suggestions or run across this before?

O'l Buckaroo, Put the ratio test and ABT on the back burner for a minute... how would the plan pass the gateway test for this cross tested scenario?

They were missed deferrals. I will exclude from a4 testing. Thanks!

Thanks

9/30 PYE 3% ER Safe Harbor Cross Tested with two groups There were two employees (NHCE) that received QNEC contributions due to a missed deferral opportunity. Where do these QNEC contributions come into play when calculating the cross tested profit sharing allocation? How does relius handle the QNEC contributions when calculating the cross tested profit sharing allocation? What should I be looking/checking to make sure the calculation is being done correctly?