Mr Bagwell

You will have coverage problems with this idea.

How would you pass BRF?

That is an interesting twist I have not heard of.....

I'm guessing we are on the same page, Larry. I would do 1 year wait all day long. I only suggested 6 months in this case because maybe it would be a happy medium for the dual eligibility ask. Maybe the employer would say, 'I can live with telling an employee to wait 6 months and be willing to kick in the safe harbor after 6 months". After all, the employer was willing to do immediate eligibility for deferrals, which would probably involve everyone. Rock on.

I don't like dual eligibility safe harbor plans. Just stating my bias up front. With that said, the pitfalls are: 1. will the plan become top heavy? If so, the group eligible to defer but no SHM will need a Top Heavy Minimum. Be prepared at some point to explain this concept to the employer and have them be some form of upset. 2. You have to watch for employee(s) that become immediate HCE's. It's not likely, but it does happen. Of course, this HCE will max out and ADP will have huge failure. Be prepared to explain this and have them be some form of upset. The groups should be not be a big deal to test. Generically speaking, separate testing should solve the questions in your mind. You would have in essence, the safe harbor group and the non safe harbor group. The distain I have for the safe harbor dual eligibility comes from the simplicity of a single entry safe harbor plan vs. the many checks I have to do with the dual eligibility version. Please don't think the dual design is easier to administer than a non safe harbor plan. It is not. Now go sell them on a 6 months single eligibility, participating compensation, safe harbor match plan. Of course the dual eligible plan should cost more than the single. My two cents.

Congrats!!

I'm right there with ya Larry. Thanks

And if I remember correctly from the EOB.... you just replace the amount forfeited. You don't have to figure earnings. Sorry, my references and EOB are at work. I debated whether I should take them home...….lol.

Yes.

Thanks, Peter. I thought I saw something earlier.... but the board has blown up in the last month....LOL. And searches sometime elude me from finding what I want.

I'm with you CB. I have powers above me with the conclusion that a person that happens to work full-time at a reduced pay wouldn't qualify. I don't get it.

What do you think about the following statement? “Individuals who continue to work full-time on a reduced salary are not eligible.” So if I have a self-employed individual that has the ability to work full-time, but can't drum up the work for obvious reasons, can't take a distribution for adverse financial reasons. I didn't make this up. Thoughts?

Ah, I get it. I didn't mean the "testing of the merged in plan".... that's just how it came out.... I really meant "testing of the merged in participants". My power of deduction is saying that the participants that got merged in will have census information from 1/1/2020 to 3/31/2020. And everyone else will be full year. Correct?

Makes sense. thanks for the help! The merger documentation..... I may return to that later. The funds were received to the new plan 1/3/2020. I would take Bird's position that the final return is for the 2019 year. What do I do about the testing of the merged in plan? Just use the census data from 1/1/2020 to 3/31/2020 (merged in plan) and the full year data, of course, for the plan we already have?

I realized a nice surprise has fallen into my lap this week. (Sarcasm implied) A control group of 3 employers had 2 plans. Employer wanted to consolidate the 2 plans into 1. The 2 employer plan has a plan year end of 3/31/2020. The employer merging in has a plan year end of 12/31. The money from merging in plan was moved at beginning of Jan 2020. I just noticed the nuance to this and started asking questions.... I don't do the takeover stuff. Does the plan merging in need a short plan year to match up to the same plan year end? Seems like a "yes" to me. Any guidance would be appreciated. Thanks

I'm still trying to piece this thread together.... but, the 5 employees hired after the switch don't count yet in the coverage calculation. they haven't met eligibility conditions.

Cynch, The average deferral part is out because the plan is safe harbor match. Look at example 8, Appendix B, in EPCRS. It's pretty much what you are asking.

I would think the underpaid would need to be fixed. If my memory serves me right, the overpayment per EPCRS is gone and forgot about. $24 is less than the allowable overpayment. Not sure why you went to the Cross tested plan argument, when it doesn't apply. The plan was sh match for 2019. Can't un ring that bell. Push to get the safe harbor match difference paid and be done.

An employee is sending in some after tax dollars as a rollover to us and I cannot recall a situation like this in my past. A co-worker researched and determined that this is good to be rolled over to one of our Plans. That's the details.... What source would you build in Relius to put these funds into? (I have a call into Relius also.) Would you put into a rollover source and name it Rollover EE Voluntary? Not sure if I can track basis with that source. Would you build an after tax source and name it Rollover EE Voluntary? I think that opens up the tracking of the basis, but not sure if this source picks up in top heavy calculation and I would think it would be excluded from top heavy calculation. (of course, it depends on the Plan doc) Any thoughts on this?

I agree Austin, it's a goofy ride. And it can be very subjective.

Maybe... I've had to do a couple of these calcs over the last couple of years. From reading the EOB, you take into consideration the involuntary and voluntary terminations and start to do the calculations. I'm leaving out other details...…. Generally speaking, you look at the plan year as a whole. It may be a little early in the year to determine if really a partial plan term occurred. They may rehire back the terminated and squeak by on the percentage. So yes, they might get 100% vested, but at what date? I don't want you paying out at 100% and have that bite you in the end.

My assumption is that you are doing your 2019 calculations. 2019 401k Elective Deferral limit is 19,000 not 19,500. To piggy back on Mike's comment above. The Plan you have set up now will need to be adopted by the second s-corp and the wife's sole proprietorship. Any chance that has been done? It's not that difficult, but if it hasn't been done for 2019, you may be out of luck.

No.

For others that see this topic later..... The EOB section mentioned above is contextually speaking of the owner/HCE depositing their profit sharing early in the year, not after the year end. Example, owner deposits profit sharing in March 2020 for year end 2020.

I'll stab at this one too. You can use different compensation for match as long as you pass 414(s) testing. I don't know what your base definition implies. I really think I do, but based on the Match question 1, maybe the employer is calling some base compensation something as unreasonable.... just to not spend a few dollars on match. When the employer starts to push up against the 3% match mark, you have to start thinking about safe harbor match..... because for another 1%, testing is off the table (provided no dual entry) and life is good. Try to keep it simple the best you can.